Land and Buildings Transaction Tax takes affect

Although residential leases are generally exempt and it is less common in Scotland than in England, leases are used for commercial property. As our duty of care to our clients, we are taking this opportunity to remind you of your obligation to complete your LBTT return and it is you the tenants responsibility to make the return.

LBTT legislation does not require a further LBTT return to be submitted to Revenue Scotland every time a change to the lease takes place, instead LBTT(S)A 2013 Sch 19 para 10 requires the tenant, unless the lease has been terminated or assigned, to submit a further LBTT return on every third anniversary of the effective date of the lease.

With LBTT reaching its third birthday on 1 April 2018, it is only now that the 3 year review starts to become effective. 

Also Assignations and terminations: A qualifying lease which is later assigned or terminated must be reported by the outgoing tenant (the assignor) within 30 days of the relevant date, being the date on which the lease was assigned or terminated.

If a return is required under Sch 19, any tax payable must be paid at the same time the return is made – within 30 days.

A bit like Non-Residential Capital Gains Tax reporting, even if no tax is payable, late filing penalties although not fair, have become a nice little earner for the UK & Scottish Governments.

Exemptions include:

- Leases which have never been subject to LBTT (i.e. leases which were and continue to be subject to SDLT or stamp duty); and

- Leases which have been subject to LBTT but exempted from charge because full relief is claimed on the first LBTT return.

Further reading and supporting documents can be found here, here and here

Should you have any questions please do not hesitate to contact us.