Blog: LBTT – happy third anniversary?

Robin Mitchell

As the third anniversary (April) of the introduction of Land and Buildings Transaction Tax (LBTT) approaches, Robin Mitchell offers a timely reminder of tenants’ responsibilities.

Land and Buildings Transaction Tax was introduced in 2015 to replace Stamp Duty Land Tax in Scotland. One major difference is the need for additional returns to be submitted by tenants every three years during the term of a lease, as well as on assignation and termination.

With the third anniversary of the introduction of LBTT now imminent, tenants have started to receive reminders to submit these additional returns, so it is timely to consider what tenants’ responsibilities are.

The three yearly return

Any lease with an ‘effective date’ on or after 1 April 2015 will fall into the LBTT regime. This means that both leases entered into and leases which have been varied (eg by extending the term of an older lease) since that date will trigger the liability to submit three yearly returns.

The purpose of the return is to inform Revenue Scotland of any changes which have occurred since the original effective date and, if there have been any relevant changes, to recalculate the tax due. This includes both rent increases and rent reductions, with increases resulting in additional tax being payable and reductions allowing the tenant to make a claim for repayment of tax overpaid.

With the majority of commercial leases containing a five yearly review cycle, we do not expect many leases to have been amended so as to require a tax adjustment after the first three years, but there will be instances where rent is reviewed more frequently or the lease contains turnover rent or other provisions whereby the rent could not be accurately stated at the outset, resulting in payments being due.

The tax rates to be applied are those which were in force as at the original effective date, notwithstanding any changes in rates since that date.


After a considerable amount of lobbying, Revenue Scotland has agreed to notify tenants (but not the solicitors who submitted the original return) ahead of the third anniversary, and subsequent three yearly anniversaries, of the original effective date. It does however remain the responsibility of the tenant to ensure that the three yearly returns are made on time.

Submission of the Return

The returns can be made either by way of paper submission or on-line using the Revenue Scotland website. In each case, the submission requires to be made no later than 30 days after the third (and sixth, ninth etc) anniversary of the effective date. Any additional tax due also needs to be paid within that 30 day period. Penalties will be imposed for late submission and late payment.

What do I need to do?

If a tenant has acquired a lease of premises since April 2015, they need to make sure they are aware of what the effective date was, and (whether or not they receive a reminder from Revenue Scotland) should contact their solicitor in advance of that date, providing copies of the original and any subsequent returns and any reminder received. The solicitor can then advise on whether any further tax is due to, or by the tenant, and assist with the submission of the three yearly return.

  • Robin Mitchell is a real estate partner with Shoosmiths
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