Part 6 of schedule 17 to the LBTT(S)A 2013 makes provision for transactions involving the transfer of a chargeable interest into a partnership, or a transfer of a chargeable interest out of a partnership, in which the chargeable consideration is rent.
This will involve a partnership entering a lease as tenant, or a partnership granting a lease to a partner.
In such cases, the chargeable consideration is reduced to reflect the partnership shares and interests of the partners involved in the lease, and the calculation of the chargeable consideration in paragraph 4 of schedule 19 is modified to reflect that the partners involved may have had interests in the subjects of the lease prior to the lease being granted.
Chargeable consideration involving rent
LBTT is charged on:
- a proportion of the Net Present Value (NPV) of the rent; and
- a proportion of any consideration other than rent and market value of the lease.
The NPV of the rent over the term of the lease is determined as usual. Of this amount, the relevant chargeable proportion is chargeable, determined as:
(100 – SLP)%
Where SLP is the sum of the lower proportions.
Chargeable consideration other than rent i.e. a premium
Where there is consideration other than rent i.e. a premium, the chargeable consideration is determined in the same way as the acquisition of any other chargeable interest in land, that is it is equal to:
MV x (100-SLP)% – in the case of a lease this is taken to be the capital value of the lease.
Where MV is the market value (see LBTT2016) and SLP is the Sum of Lower Proportions.
Transfer of a lease from a partnership where both partners are bodies corporate
Where a lease is transferred from a partnership that is a body corporate to another body corporate that is or has been a partner, and the SLP is 75 or more, then the chargeable consideration is taken to be the market value of the interest transferred.