Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 6 paragraph 8

New leases granted after prolonged holdover periods

Schedule 6 paragraph 8 deals with the situation where a tenant remains in occupation after their lease has expired and is eventually granted a new lease more than a year after the original lease ended, with the new lease backdated to cover some or all of the holdover period.

• Where a tenant holds over after a lease expires and receives a new lease more than one year later, special rules apply to prevent double taxation on the overlapping period.
• The new lease is treated as starting on its stated commencement date, even though it was granted later, and the rent for the backdated period is reduced by any rent already taxed under the holdover tenancy.
• The holdover tenancy is treated as a fixed-term lease ending at the last full anniversary of the original termination date that falls before the new lease is granted.
• Rent is only offset against the new lease to the extent it was actually taken into account for tax purposes on the holdover tenancy — and the reduction cannot produce a negative rent figure.