Land and Buildings Transaction Tax (Scotland) Act 2013 section Schedule 19, paragraph 9

Treatment of consideration other than rent in lease transactions

Schedule 19, paragraph 9 deals with how LBTT is calculated on non-rent consideration (such as a premium) paid as part of a lease transaction, and how the nil rate band may be lost when the relevant rent reaches a certain threshold.

• Where a lease involves chargeable consideration other than rent (e.g. a premium), and the relevant annual rent is £1,000 or more, the nil rate tax band is removed for that non-rent consideration — the amount that would have fallen in the nil rate band is instead taxed at the next band up.
• The "relevant rent" is the annual rent for the transaction, or if the transaction is one of several linked transactions involving rent, the total of all the annual rents across those linked transactions.
• Where linked transactions involve land that is partly residential and partly non-residential, and the rent attributable to the non-residential part is at least £1,000, the linked transactions are split into two separate sets — one for residential interests and one for non-residential interests — for the purpose of calculating LBTT on the non-rent consideration.
• The "annual rent" is generally the average annual rent over the lease term, but where different rent amounts apply to different periods and the highest amount is ascertainable at the effective date, it is the average annual rent over the period for which that highest ascertainable rent is payable.

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