Land and Buildings Transaction Tax (Scotland) Act 2013 section Schedule 19, paragraph 6

Net present value of rent

Schedule 19, paragraph 6 sets out the formula for calculating the net present value (NPV) of the rent payable over the term of a lease for LBTT purposes.

• The NPV calculation converts the total rent payable over the life of a lease into a single present-day value.
• Each year's rent is discounted using a temporal discount rate, which reduces the value of rent falling due in later years.
• The formula sums the discounted rent for every year of the lease, from year one through to the final year.
• The temporal discount rate used in the formula is specified separately in paragraph 7 of Schedule 19.