How is the tax charge calculated on partial withdrawal of LBTT relief?

The taxpayer first calculates the full tax charge that would arise under paragraph 17 as if relief were completely withdrawn. Then, an appropriate proportion is applied to that figure based on the extent of the disqualifying event. The resulting amount is the actual tax due on partial withdrawal of relief.

What does 'appropriate proportion' mean in the context of partial withdrawal of LBTT relief?

The appropriate proportion reflects the extent to which the conditions for maintaining the relief have ceased to be met. For example, if only half of a property is affected by a disqualifying event, the appropriate proportion would be 50%, and only 50% of the full tax charge under paragraph 17 would be payable.

Can you give an example of partial withdrawal of LBTT group relief?

If a company claims group relief on a £1,000,000 property and the full tax under paragraph 17 would be £40,000, but only half the property is affected by a disqualifying event, the appropriate proportion is 50%. The tax chargeable on partial withdrawal is therefore £20,000, being 50% of £40,000.

Land and Buildings Transaction Tax (Scotland) Act 2013 section Schedule 10 paragraph 18

Q: What happens when LBTT group, reconstruction, or acquisition relief is only partially withdrawn?

When relief is only partially withdrawn under Schedule 10 paragraph 18, the full tax charge does not apply. Instead, only an appropriate proportion of the tax that would be due on full withdrawal under paragraph 17 is charged, reflecting the extent to which the relief conditions have ceased to be met.

Where relief is partially withdrawn, the amount of tax chargeable

Schedule 10 paragraph 18 explains how the tax charge is calculated when a group, reconstruction, or acquisition relief is only partially withdrawn rather than fully withdrawn.

When a relief from LBTT is partially withdrawn, the full tax charge does not automatically apply.
Instead, only an appropriate proportion of the tax that would be due on full withdrawal is charged.
The starting point for the calculation is the amount of tax that would be chargeable if relief were fully withdrawn, as determined under paragraph 17 of Schedule 10.
The appropriate proportion reflects the extent to which the conditions for maintaining the relief have ceased to be met.

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