Land and Buildings Transaction Tax (Scotland) Act 2013 section Schedule 19 paragraph 5

Calculating tax on rent for linked lease transactions

Schedule 19 paragraph 5 sets out the method for calculating how much LBTT is due on the rental element when a lease forms part of a group of linked transactions.

• When linked transactions involve leases with rent, the tax on rent must be calculated using a specific five-step process.
• The net present values of rent for all linked leases are added together to form a total (TNPV), which is then applied against the relevant tax bands and rates to produce a total tax figure for all the leases combined.
• The tax attributable to each individual lease is found by apportioning the total tax in proportion to that lease's net present value relative to the TNPV.
• Paragraph 6 of Schedule 19 provides the rules for calculating the net present value of rent payable over the term of each lease.