Three-year review – no further tax payable

Worked example for LBTT6014 – Three-year review of the tax chargeable.

Three-year review – no further tax payable

The effective date of a 5 year lease of a factory let for a rent of £50,000 per annum was 1 December 2015. The net present value (NPV) is calculated using the £50,000 payable in each of the 5 years.

An LBTT return was submitted and resultant tax of £757 paid, based on the calculated NPV.

The date of the first three-year review will be 1 December 2018, that being the day of the third anniversary of the effective date of the lease. A review return must be submitted no later than 31 December 2018.

The tenant must recalculate the NPV using the actual rent payable for the first three years along with the projected rent for the remaining term.

The amount of rent paid in the first three years was at the agreed rate of £50,000 per annum and this will continue to be used as the estimate of the rent for the remaining term. The recalculated NPV does not give rise to any further tax.

Even though there have been no changes to the lease and no additional tax is payable, an LBTT return must still be submitted.

Last updated