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SCHEDULE 19Leases

PART 2Amount of tax chargeable: rent

Tax rates and tax bands

3(1)The Scottish Ministers must, by order, specify the tax bands and the percentage tax rates for each band applicable to chargeable consideration which consists of rent.

(2)An order under sub-paragraph (1) must specify—

(a)a nil rate tax band and at least one other tax band,

(b)the tax rate for the nil rate tax band, which must be 0%, and

(c)the tax rate for each tax band above the nil rate tax band so that the rate for each band is higher than the rate for the band below it.

Amount of tax chargeable in respect of rent

4The amount of tax chargeable on so much of the chargeable consideration as consists of rent is to be determined as follows.

Amount of tax chargeable in respect of rent: linked transactions

5Where a chargeable transaction to which this schedule applies is one of a number of linked transactions for which the chargeable consideration consists of or includes rent, the amount of tax chargeable in respect of the rent is to be determined as follows.

Net present value

6The net present value (NPV) of the rent payable over the term of a lease is calculated by applying the following formula—

where—

  • ri is the rent payable in respect of year i,

  • i is the first, second, third etc. year of the term of the lease,

  • n is the term of the lease, and

  • T is the temporal discount rate (see paragraph 7).

Temporal discount rate

7(1)For the purposes of this schedule the “temporal discount rate” is 3.5% or such other rate as may be specified by the Scottish Ministers by order.

(2)An order under this paragraph may—

(a)specify a rate or make provision for any such rate to be determined by reference to such rate or the average of such rates as may be referred to in the order,

(b)provide for rates to be reduced below, or increased above, what they otherwise would be by specified amounts or by reference to specified formulae,

(c)provide for rates arrived at by reference to averages to be rounded up or down, and

(d)provide for circumstances in which alteration of a rate is or is not to take place.