Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 6 paragraph 7

Rent credit on grant of new lease in place of old lease

Schedule 6 paragraph 7 provides relief from double taxation of rent where a new lease replaces an old lease over the same or substantially the same premises, by allowing the rent under the new lease to be reduced for tax purposes during the period that overlaps with the unexpired term of the old lease.

• Where a new lease replaces an old lease — through surrender and re-grant, a statutory renewal under the Landlord and Tenant Act 1954, a court order granting relief to a sub-tenant, or a lease granted to a guarantor — the rent under the new lease qualifies for an overlap reduction.
• During the overlap period (from the grant of the new lease to the date the old lease would have expired), the taxable rent under the new lease is reduced by the rent that would have been payable under the old lease for the same period.
• Only rent that was itself taken into account when calculating the land transaction tax on the original acquisition of the old lease counts as "taxable rent" for the purposes of the reduction.
• The reduction cannot make the rent under the new lease negative for any period — the minimum treated rent is zero.