Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 19 paragraph 24

Reduction of rent where new lease granted in place of old lease

Paragraph 24 of Schedule 19 provides relief from double taxation of rent where a new lease replaces an old lease over the same or substantially the same premises, by allowing the rent under the new lease to be reduced by the rent that would have been payable under the old lease during any overlapping period.

• Relief applies in three situations: where a tenant surrenders a lease and receives a new lease back from the landlord; where a sub-tenant receives a new lease following termination of the head lease under a contractual entitlement; or where a guarantor of a tenant's obligations receives a new lease following termination of the guaranteed lease.
• During the overlap period — from the grant of the new lease to the date the old lease would have ended — the rent under the new lease is treated as reduced by the amount of rent that would have been payable under the old lease for that same period.
• The rent figure used for the old lease is the amount that was taken into account when calculating the LBTT originally chargeable on the old lease, not necessarily the actual contractual rent at the time of termination.
• The reduction cannot make the rent under the new lease negative; it can reduce the taxable rent to zero at most.