Land and Buildings Transaction Tax (LBTT) replaces stamp duty land tax (SDLT) for land transactions and leases relating to land in Scotland as from today, 1 April. LBTT is very similar to SDLT in most ways, but there are significant differences in relation to key reliefs such as sub-sale relief and significant additional compliance obligations in relation to leases. 

The rates of LBTT payable on non-residential transactions for each tranche of consideration are as follows (with the individual figures for each tranche being added together to produce the total tax charge on a progressive basis):  

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LBTT on the rent payable under non-residential leases is calculated (like SDLT) on the net present value of the rent at the following rates (again on the progressive basis outlined above):

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For leases, not only must a land transaction return be made and tax paid upon grant, a new return must be submitted, and if necessary any extra tax must be paid, every three years during the term of the lease taking into account any changes to the rent in the preceding period. So if a lease contains a rent review in year five, it is likely that there will be no additional LBTT due alongside the land transaction return to be submitted at the end of year three (assuming it isn’t a turnover lease). However if there is then a rental uplift at the year five rent review, there will be additional tax payable following the tax review at the end of year six. Similar returns and payments must also be made each time a lease is assigned and on the termination of a lease. With such additional reporting requirements, tenants should be very careful to keep all LBTT paperwork together over the life of the lease.