Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 Schedule 6 paragraph 10

Variable, contingent or uncertain rent

Schedule 6 paragraph 10 explains how Land Transaction Tax applies when the rent payable under a lease is variable, contingent, uncertain or unascertained, and sets out different rules depending on whether the rent relates to the first five years of the lease or to later periods.

• Where rent varies under the lease terms, or is contingent, uncertain or unascertained, special rules apply to calculate the LTT due.
• For rent in the first five years: if the amount is contingent, uncertain or unascertained, the general rules for such consideration under sections 19 and 20 of the Act apply — broadly requiring a reasonable estimate to be used, with later adjustment if needed.
• For rent after the first five years: the annual rent is assumed to equal the highest amount of rent payable in any consecutive 12-month period during the first five years, regardless of what the lease actually provides for later years.
• Inflation-linked rent adjustments (such as those tied to the Retail Prices Index, Consumer Prices Index or similar indices) are completely disregarded for LTT purposes.