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Land and Buildings Transaction Tax (Scotland) Act 2013

Part 2 – Amount of Tax Chargeable: Rent

272.The schedule does not set out the bands and rates for the chargeable consideration which consists of rent. As set out in paragraph 3, these must be specified by the Scottish Ministers by order. Ministers must specify a nil rate band and at least one other tax band. To ensure the tax is a progressive one, the percentage rate tax band for each tax band must be higher than for the band below it. The first order made under this paragraph will be subject to the affirmative procedure, whilst all subsequent orders will be subject to the provisional affirmative procedure (see section 68). Paragraph 4 sets out how the tax on the rental element of the chargeable consideration should be determined. Paragraph 5 makes specific provision for the same calculation in relation to linked transactions. Paragraph 6 sets out the formula for calculating the net present value (“NPV”) of the rent payable over the term of a lease. That formula is used in the calculations under paragraphs 4 and 5. Paragraph 7 provides that the “temporal discount rate”, which forms part of the NPV formula set out in paragraph 6, is 3.5 per cent and empowers the Scottish Ministers to vary this rate by order. This order will be subject to the affirmative procedure (see section 68).

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Text created by the Scottish Executive department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Acts of the Scottish Parliament except those which result from Budget Bills

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