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What is LBTT?

On the 1st of April 2015, Land and Buildings Transaction Tax (“LBTT”) replaced Stamp Duty Land Tax in Scotland. LBTT is a property tax applied to residential and commercial land and buildings transactions (including commercial leases). In most cases an LBTT return will require to be made to Revenue Scotland shortly after the date of entry to the property by either the purchaser or tenant (normally submitted by their solicitor).

So what is new?

The LBTT regime brought in a new requirement for relevant commercial leases. The tax position needs to be reviewed every three years and a further LBTT return must be submitted on every third anniversary of the lease, known as the relevant date.

Why now?

The first cycle of three yearly returns is to be triggered on the 1st April 2018. This means that any lease entered into from 1st April 2015 onwards will be approaching the due date of the first three-yearly return. The returns must be submitted even where the terms of the lease remain exactly the same. If there has been a relevant change, for example, a rent review causing a variation of rent or an extension of lease duration, then further LBTT may require to be paid, or, a refund of tax may be due.

Which Leases fall under the regime?

The requirement to submit 3 yearly returns applies only to leases that were previously notifiable for LBTT purposes, i.e. generally those that commenced after the 1st of April 2015.

There is no requirement of three yearly returns for those who benefit from charities or group relief, or for those who are not notifiable for LBTT purposes due to the low rents payable etc. It is important to note that the requirement does not apply to previous SDLT Leases which have not yet fallen under the LBTT regime.


The timescale for submitting these returns is within 30 days of the relevant date. This shall be the 3 year anniversary of the effective date of the lease, normally the date of entry. The tenant is responsible for submission of the return and payment of any further tax due. If either of which is late, the tenant may be liable to penalties. An initial penalty of £100 is due for failure to submit the return on time and this can increase up to in excess of £1,600 after 13 months. Interest is charged on late payments also.

What should you do?

It is important to keep records to assist the completion of the returns and most importantly to diarise the dates for three yearly LBTT return. Revenue Scotland may issue reminders, however they have stated that failure to receive a reminder does not constitute a valid excuse or justification for failure to submit a return.

How can we help?

If you have any queries regarding three yearly LBTT returns we would be happy to discuss. We can review and assess your LBTT position and complete an LBTT return if applicable. Please get in touch with a member of the Stronachs Commercial Property Team for further advice.

Emma Stephen, Partner

Chambers Leading Firm 2020 bw

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