When is the second transaction exempt from LBTT under Schedule 7 paragraph 4?

The second transaction in a linked arrangement is exempt from LBTT when all requirements relating to the first transaction have been properly met. This includes submitting the land transaction return, following all applicable rules, and paying any LBTT chargeable on the first transaction in full.

What compliance requirements must be met for the first transaction to trigger the exemption?

The compliance requirements encompass all relevant provisions of the Act. The appropriate land transaction return must have been submitted, all applicable rules and conditions followed, and any LBTT chargeable on the first transaction must have been paid. Failure in any area removes the exemption for the second transaction.

Is the LBTT exemption for the second linked transaction automatic?

No, the exemption is not automatic — it is conditional. If there has been any failure to comply with provisions relating to the first transaction, such as a failure to pay tax due or submit the required return, the exemption falls away and LBTT may become chargeable on the second transaction.

What is the practical effect of Schedule 7 paragraph 4 on linked transactions?

The practical effect is that LBTT is collected on the first transaction, and the second transaction does not attract a separate charge, provided all obligations are met. This avoids double taxation where two transactions are linked under Schedule 7 of the Land and Buildings Transaction Tax (Scotland) Act 2013.

Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 7 paragraph 4

Exemption from charge for the second transaction

Schedule 7 paragraph 4 establishes that the second transaction in a linked arrangement is exempt from LBTT, provided all requirements relating to the first transaction have been properly met.

Where two transactions are linked, the second transaction may be exempt from LBTT charge.
The exemption is conditional on full compliance with all provisions of the Act relating to the first transaction.
Compliance includes the payment of any LBTT that is due on the first transaction.
If the requirements for the first transaction are not met, the exemption for the second transaction will not apply.

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