Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 6 paragraph 15

Reverse premiums and leases

Schedule 6 paragraph 15 provides that reverse premiums paid in connection with the grant, assignment or surrender of a lease are excluded from chargeable consideration for Land Transaction Tax purposes.

• A reverse premium is a payment that flows in the opposite direction to the normal premium payment in a lease transaction.
• On the grant of a lease, a reverse premium is a payment from the landlord to the tenant — effectively an incentive to take on the lease.
• On the assignment of a lease, it is a payment from the outgoing tenant (assignor) to the incoming tenant (assignee), and on a surrender, it is a payment from the tenant back to the landlord.
• In all three cases, the reverse premium is disregarded when calculating the chargeable consideration on which Land Transaction Tax is charged.