Transactions in relation to leases are notifiable (in other words a LBTT return has to be made to us) except in the following circumstances:
- the grant of a lease for a period of seven years or more, where the chargeable consideration is less than £40,000 and the ‘relevant rent’ is less than £1,000 per annum (see also section 30(4) of the LBTT(S)A 2013 regarding ‘relevant rent’);
- the grant of a lease for a period of less than seven years, where the chargeable consideration does not exceed the nil rate band;
- the assignation or renunciation of a lease where the lease was originally granted for a period of seven years or more and the consideration for the assignation or renunciation of the lease is less than £40,000; and
- the assignation or renunciation of a lease where the lease was originally granted for a period of less than seven years and the consideration for the assignation or renunciation does not exceed the nil rate band.
Note: The effective date in these circumstances is the ‘relevant date’ for the purposes of the ‘relevant date’ field in the LBTT return.
An LBTT return in relation to a notifiable lease must be made to us within 30 days of the day after the effective date of the lease. The date the LBTT return is required to be made by is the filing date (see LBTT1000).
Depending on the circumstances a further LBTT return may also be required at some point – see:
- return on three yearly review of a lease - see LBTT6015;
- return on assignation or termination of lease – see LBTT6017;
- return where lease for fixed term continues after end of term - see LBTT6020;
- return in relation to lease for indefinite term – see LBTT6021; and
- transactions which become notifiable on variation of rent or term – see LBTT6029.
Any tax due must be paid at the same time as the LBTT return is made to us. For this purpose, tax is treated as paid if arrangements satisfactory to us are made for the payment of the tax (see LBTT4008). Where the lease is to be registered, the LBTT return has to be made and any tax paid before registration can take place.
Guidance on How to make an LBTT return and pay tax is available separately on our website.
A tenant who fails to make a LBTT return to us by the filing date is liable to a penalty (see RSTP3005). If the return contains an inaccuracy, the tenant may also be liable to a penalty (see RSTP3011).
A tenant who fails to pay tax prior to the expiry of 30 days after the date payment is due (the day the LBTT return is made) is liable to a penalty (see RSTP3008). Interest will be charged however on the amount of any unpaid tax from the filing date until the date it is paid (see RSTP4002).
A tenant required to make a LBTT return to us, or who is the tenant in a land transaction which is not notifiable, is also required to keep and preserve certain records. See LBTT9001 for further guidance.