Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section 32

Temporal discount rate

Schedule 6 paragraph 32 specifies the temporal discount rate used in the net present value calculation for lease rents.

  • The temporal discount rate is the rate used to discount future rent payments back to their present-day value when calculating the net present value (NPV) of a lease.
  • The default temporal discount rate is set at 3.5%.
  • The Welsh Ministers have the power to change this rate by making regulations.
  • This rate directly feeds into the NPV formula in paragraph 31, which determines the taxable amount of rent for Land Transaction Tax purposes.

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