10. Transitional Guidance

Assignation of Lease

• Where a lease of land was granted prior to 1 April 2015, an assignation of the lease on or after that date will not be subject to SDLT but may instead be subject to LBTT if a premium is paid or deemed to have been paid for that assignation.

• Where a lease of land was granted prior to 1 April 2015 and was relieved or exempt from SDLT, the first assignment of that lease which is not exempt from LBTT will be treated as the grant of a new lease for LBTT purposes (Article 11 of the Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014)).

Variation of Lease

• Increases of rent are treated as a grant of a new lease (paragraph 13 of Schedule 17A of the Finance Act 2003). An increase in the term of a lease or the extension of premises is also treated as the grant of a new lease.
• A variation of a lease of land in Scotland which falls within the terms of paragraph 13 will not be treated as the grant of a new lease for SDLT purposes where the effective date of such a grant would be on or after 1 April 2015.
• Under Article 12 of the Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014, a variation of a lease of land in Scotland involving an increase in rent will be treated as the grant of a new lease for LBTT purposes, with the chargeable consideration for that transaction, other than in respect of any premium, being the additional rent payable.
• Under English law and SDLT legislation, the increase in the term of a lease or the extension of the leased premises counts as the grant of a new lease. This is not the case under Scottish law. This means that (in the absence of a transitional provision), if such an event happened after 1 April 2015, such a lease would leave the SDLT regime but not enter the LBTT regime. Accordingly Article 13 of The Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014 provides that either the increase in the term of a lease or the extension of the leased premises (or both) is to be treated for the purpose of LBTT as the grant of a new lease and therefore chargeable to LBTT. However, because SDLT will have already been charged on the rent to that date of the grant of the new lease, LBTT is charged only on any increase in rent (i.e. the chargeable consideration for that transaction, other than in respect of a premium, would be the additional rent payable).