LBTT2015 - Arrangements involving public or educational bodies

Certain arrangements (see further below) involving some types of public or educational bodies (‘qualifying bodies’) do not count as chargeable consideration.

Qualifying bodies are:

• public bodies within paragraph 4 of schedule 16 of the LBTT(S)A 2013;
• grant-aided schools within the meaning of section 135(1) of the Education (Scotland) Act 1980; and
• any post-16 education body within the meaning of section 35(1) of the Further and Higher Education (Scotland) Act 2005.

The arrangements are where:

• there is a transfer of the ownership, or the grant or assignment of a lease, of land by a qualifying body (A) to a non-qualifying body (B) (‘the main transfer’);
• in whole or in part consideration of the main transfer there is a grant by B to A of a lease or sub-lease of the whole, or substantially the whole, of that land (‘the leaseback’);
• B undertakes to carry out works or provide services to A; and
• some or all of the consideration given by A to B for the carrying out of those works or the provision of those services is consideration in money,

whether or not there is also a transfer, or the grant or assignment of a lease, of any other land by A to B (a ‘transfer of surplus land’).

There is no need for the main transfer and the transfer, lease or assignment of any surplus land to be separate transactions. For example, there may be a lease by A to B which acts both as the main transfer in respect of part of the subject matter and as the transfer of surplus land in respect of the rest.

Where the above arrangements are entered into, the following do not count as chargeable consideration for the main transfer or any transfer of surplus land:

• the leaseback;
• the carrying out of building works by B for A; or
• the provision of services by B to A.

This means that LBTT will generally be charged only on any cash premium or rent paid by B.

The chargeable consideration for the leaseback does not include:

• the main transfer;
• any transfer of surplus land; or
• the consideration in money paid by A to B for the building works or other services referred to further above.

This means that there will generally be no chargeable consideration for the leaseback.

The above chargeable consideration rules applying to the main transfer, transfer of surplus land or the leaseback do not apply for the purposes of determining whether or not the land transaction is notifiable.

LBTT(S)A 2013 schedule 2 paragraph 17.

The Land and Buildings Transaction Tax (Qualifying Public or Educational Bodies) (Scotland) Amendment Order 2014.