What does 'annual rent' mean under Schedule 13 of the Land and Buildings Transaction Tax (Scotland) Act 2013?

Under Schedule 13, 'annual rent' means the average annual rent calculated over the full term of the lease. You determine this by dividing the total rent payable over the entire lease by the number of years in the lease term, providing a single annualised figure for LBTT purposes.

How is annual rent calculated when the rent varies over different periods of the lease?

Where rent varies across different parts of the lease term and one or more amounts are ascertainable at the time of the disqualifying event, the annual rent is calculated by reference to the period during which the highest ascertainable rent is payable, rather than averaging over the whole lease term.

What does 'ascertainable' mean in the context of varying lease rents under LBTT Schedule 13?

Ascertainable means that the varying rent amounts are known or capable of being determined at the time of the disqualifying event. If the amounts are not ascertainable at that point, the standard calculation applies and the annual rent is simply averaged over the full lease term.

Can you give an example of how the highest ascertainable rent rule works?

If a 10-year lease has rent of £50,000 per annum for 2 years and £100,000 per annum for 8 years, both known at the disqualifying event, the annual rent is £100,000 — based on the highest ascertainable rent period — rather than the £90,000 whole-term average.

Land and Buildings Transaction Tax (Scotland) Act 2013 section Sch 13 para 17

Definition of "annual rent"

Schedule 13 paragraph 17 defines the term "annual rent" as used throughout the schedule, explaining how it is calculated both for straightforward leases and for leases where the rent varies over different periods.

Annual rent means the average annual rent calculated over the full term of the lease.
Where different amounts of rent apply to different parts of the lease term, a special rule may apply.
If any of those varying rent amounts are known at the time of the disqualifying event, the annual rent is instead based on the period during which the highest known rent is payable.
This definition is relevant whenever the term "annual rent" appears elsewhere in Schedule 13.

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