Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 6 paragraph 3

Leases that continue beyond a fixed term

Schedule 6 paragraph 3 explains how land transaction tax applies to leases that continue beyond their original fixed term, either because the lease was designed to run on until terminated or because it continues by operation of law.

• A lease that runs beyond its fixed term is initially treated as lasting only for the original fixed term, but if it continues, it is deemed to extend by one year at a time for LTT purposes.
• Each deemed one-year extension may give rise to additional LTT, requiring the buyer to submit a return or further return within 30 days of the end of each extended period.
• If the lease actually terminates part-way through a deemed one-year extension, it is only treated as continuing until the actual termination date, and the return obligation adjusts accordingly.
• These rules are subject to separate provisions in paragraphs 4 and 8 of Schedule 6, which treat rent under a continuing lease as rent under a new lease.