Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 19 paragraph 4

Calculating the tax chargeable on the rental element of a lease

Schedule 19 paragraph 4 sets out the three-step method for calculating the amount of LBTT chargeable on the rental element of a land transaction involving a lease.

• The tax on rent is calculated separately from any tax due on other chargeable consideration (such as a premium).
• The first step is to work out the net present value (NPV) of all the rent payable over the full term of the lease.
• The NPV is then split across the relevant LBTT tax bands, and each portion is multiplied by the tax rate for that band.
• The amounts for each band are added together to give the total tax chargeable on the rent.