The Team

Scottish Budget introduces new 2% LBTT rate for non-residential leases
10/02/2020
Scottish Budget introduces new 2% LBTT rate for non-residential leases

Kate Forbes, MSP for Skye Lochaber and Badenoch, the Minister for Public Finance and Digital Economy, delivering the draft Scottish Budget on 6 February 2020, announced a new level of Land & Buildings Transaction Tax for non-residential leases.

 

The new rate applies where the net present value of the non-residential lease is over £2 million.

 

The new rate applies to all transactions that take place after 7 February. That means there was simply no time to take steps to mitigate the impact of this tax.

 

Up until this change, there was only one rate of LBTT on non-residential leases. It was (and still is) a 1% rate on all commercial leases where the net present value is in excess of £150,000. Where the net present value is less than £150,000, there is no Land & Buildings Transaction Tax to pay.

 

All Land & Buildings Transaction Tax on non-residential leases is based on the net present value. It’s a rather complicated calculation where the overall value of the rent over the period of the lease has to be calculated and reflected in today’s terms.

 

Thankfully, there’s an online calculator that does the sums for you. You can access that by clicking here.

 

If you require further information or wish to discuss the potential impact of Land & Buildings Transaction Tax on any non-residential lease you are considering, please get in touch.