LBTT Refunds on Scottish Commercial Lease Extensions

A recent Scottish tribunal decision has clarified how Land and Buildings Transaction Tax (LBTT) applies to certain commercial property leases in Scotland, potentially opening the door to LBTT refunds for some tenants and businesses.

 
The decision, Archer v Revenue Scotland [2025] FTSTC 10, confirms that extending a commercial lease that predates the introduction of LBTT does not always create a new LBTT charge. For businesses that paid LBTT when extending older leases, this could be significant.

Why this LBTT decision matters

LBTT replaced Stamp Duty Land Tax (SDLT) in Scotland on 1 April 2015. However, many commercial leases granted before that date have since been extended.

 
The tribunal has now confirmed that where a pre-1 April 2015 commercial lease is extended by a minute of variation, rather than being surrendered and re-granted, the extension does not trigger a new LBTT lease. In those circumstances, no LBTT should be payable on the extension.

The key distinction: variation vs new lease

The decision turns on how the lease was extended.
 

A minute of variation continues the original lease, while a surrender and re-grant creates a new lease for LBTT purposes. Where a lease that originally fell under SDLT is simply varied to extend the term, the tribunal confirmed that this does not amount to the creation of a new LBTT lease.

What this means for commercial tenants

This decision has two practical consequences. First, tenants may prefer to extend older leases by variation rather than replacing them entirely, to avoid unnecessary LBTT exposure. Second, businesses that paid LBTT on the extension of a pre-2015 Scottish commercial lease may now have grounds to challenge that charge.

Can LBTT be reclaimed?

Whether LBTT can be reclaimed will depend on timing and how the extension was reported. If LBTT was paid within the last five years, an overpayment relief claim may be available. Older cases may still be pursued, but usually require an out-of-time claim to Revenue Scotland. Each case is fact-specific.

What to do next

If you hold or occupy commercial property in Scotland and have extended a lease that originally pre-dates 1 April 2015, it may be worth revisiting the LBTT position. A short review is often enough to establish whether a claim is worth exploring.

FAQs: LBTT and Scottish commercial lease extensions

Does extending a commercial lease trigger LBTT in Scotland?

Not always. Where a Scottish commercial lease was originally granted before 1 April 2015 and later extended by a minute of variation, the tribunal confirmed that this does not create a new lease for LBTT purposes.

What is a minute of variation?

A minute of variation is a legal document that amends an existing lease without bringing it to an end. This is different from surrendering a lease and entering into a new one.

When does LBTT apply to commercial leases?

LBTT applies to Scottish land transactions entered into on or after 1 April 2015. Earlier leases fall under SDLT unless a new lease is created.

Can LBTT be reclaimed on a lease extension?

In some cases, yes. Where LBTT was paid on the extension of a pre-2015 lease that was varied rather than replaced, a refund may be available.

Is there a time limit for claiming an LBTT refund?

Overpayment relief claims are generally subject to a five-year time limit. Older cases may require an out-of-time claim.

Does this apply to residential leases?

No. This decision relates to commercial property leases in Scotland.

Will Revenue Scotland appeal the decision?

Revenue Scotland confirmed in November 2025 their intention to appeal the decision. For any leases where the five year limit is approaching we recommend getting in touch before the deadline elapses.