Schedule 1 – Exempt transactions
163.This schedule is introduced by section 16 and lists seven types of land transaction which are exempt from LBTT. Where a land transaction is exempt under this schedule, section 30(1)(a) provides that no land transaction return is required. Paragraph 8 provides Scottish Ministers with a power, by regulations, to add to the list of exemptions, modify an exemption or remove an exemption. Regulations under paragraph 8 will be subject to the affirmative procedure (see section 67).
164.The first exemption is where there is no chargeable consideration (paragraph 1 of schedule 1). However, this exemption is subject to various provisions across the Act relating to market value. Section 62 of the Act provides that market value is to be determined by reference to sections 272 to 274 of the Taxation of Chargeable Gains Act 1992. There are several references to market value in the Act (see the explanatory note for section 62). In particular, market value is relevant to the formula that is used to calculate the chargeable consideration for transfers of chargeable interests from a partner to a partnership (paragraph 13 of schedule 17) and for transfers of a chargeable interest from a partnership to a partner (paragraph 21 of schedule 17).
165.The second exemption covers Crown bodies listed in section 80J of the Scotland Act 1998, who may not liable to pay LBTT (paragraph 2 of schedule 1).
166.The third exemption covers leases and licences of residential property (paragraph 3 of schedule 1). Because generally a lease of residential property over 20 years in duration may not be granted in Scotland, this exemption covers leases in Scotland that would be unlikely, because of their short duration, to attract tax. For the purposes of sub-paragraph (1)(a) a transaction relating to a lease of a residential property is exempt only where the main subject-matter consists entirely of an interest in land that is residential property or, where the transaction is one of a number of linked transactions, the main subject-matter of each transaction consists entirely of such an interest.
167.One category of lease that is not exempt is “qualifying leases” under the Long Leases (Scotland) Act 2012. Pursuant to section 1 of that Act a residential lease is “qualifying” if:
it is registered in the Register of Sasines or the Land Register;
it was granted for more than 175 years;
it has more than 100 years left to run from the appointed day laid down under the Act; and
the annual rent does not exceed £100.
168.A licence to occupy property (which is not a prescribed as a non-residential licence within the meaning of section 53(1) is also an exempt transaction for the purposes of this schedule.
169.The fourth and fifth exemptions cover transactions if effected respectively in matrimonial break-up proceedings and proceedings for dissolution of a civil partnership (paragraphs 4 and 5 of schedule 1).
170.The sixth and seventh exemptions cover transactions if effected in implementation of wills or the variation of testamentary dispositions provided there is no consideration (paragraphs 6 and 7 of schedule 1).