The three-yearly return requirement

Land and Buildings Transaction Tax (LBTT) came into force in Scotland on 1 April 2015, replacing the Stamp Duty Land Tax (SDLT) regime for land transactions in Scotland. A major difference between LBTT and SDLT is that the LBTT rules require tenants of subsisting non-residential leases to submit subsequent LBTT returns to Revenue Scotland every third anniversary of the lease.


It is the tenant's responsibility to submit the LBTT return to Revenue Scotland within 30 days after the third anniversary of the effective date of the lease (the effective date normally being the original date of entry under the lease). The tenant will need to submit a further LBTT return every three years thereafter (i.e. on the sixth, ninth, etc, anniversary of the effective date, for as long as the lease continues, with a final return due once the lease ends).

The first three-yearly returns will start to become due as from 1 April 2018 for Scottish commercial leases with an original effective date of 1 April 2015 or later.


The rationale behind the three-yearly return requirement is that over time LBTT is paid on the actual rent payable under a lease. Commercial leases often last a long time and may be varied in their lifetime, and/or may involve turnover or index-linked rents. The three-yearly return will pick up on any changes to the lease/rent which may have caused more (or less) tax to be payable. If it transpires that additional LBTT is due, this must be paid when the three-yearly return is submitted. Conversely, if it transpires that LBTT has been overpaid, the three-yearly return functions as an application to Revenue Scotland for a refund.

However, it is important to note that a three-yearly return will still need to be submitted even if no changes have taken place, and even if no additional tax needs to be paid.

Three-yearly return only required if LBTT return was required originally

Tenants only need to submit three-yearly returns if an LBTT return was previously required in respect of a lease. If the lease is an SDLT lease, or if the rent/duration of the lease was too minimal to trigger the need for a return to be filed, or if the lease benefited from full LBTT relief when first granted (resulting in no LBTT being payable at that time, and as long as the relief is still available) there will be no need to submit three-yearly returns.

Note that LBTT only applies in Scotland. English properties are still subject to the SDLT regime, under which there is no three-yearly return requirement.

Assigned leases

Even if a lease has been assigned to a new tenant within the three-year period (and an LBTT return submitted at the point of assignation, as is required), a return must still be submitted, by the new tenant, three years after the effective date of the original lease. The cycle does not restart on assignation, i.e. a lease assigned in Year 2 will still require a return to be submitted in Year 3 (unless it is terminated before then). Note that the three-yearly return must reflect any changes made to the lease/rent both before and after the assignation.

Early notice warnings

Revenue Scotland is aware that the three-yearly return requirement may catch many tenants by surprise. It will therefore be sending out notices to tenants reminding them of the three-yearly return requirement. These notices are due to be sent approximately three months before the first return is due, and so started going out from February 2018. However, even if tenants do not receive a notice, they are still required to submit the return and pay the tax on time.

The notices will be sent the first time a three-yearly return is due, but Revenue Scotland may well decide not to send notices for subsequent three-yearly returns.

Penalties for late and non-submission

As for any LBTT returns, Revenue Scotland charges penalties for late (or non-) submission of the three-yearly returns, even if no further tax is due. The first penalty amount is £100, but it can rise to as much as £1,000 (or more) depending upon the lateness of the submission. In addition, Revenue Scotland will charge interest on any tax that is late in being paid.

Visit for detailed guidance (Revenue Scotland will be updating the website soon with guidance about how to submit your return) and/or get in touch with your usual Dentons contact for advice on your three-yearly return and any other aspects of your LBTT liability.