Land and Buildings Transaction Tax review: Scottish government policy evaluation 2025-2026

A4 – Working Group Discussion – Frequency Of Review

General Considerations

1. Participants reflected on whether the current three‑year review cycle remains appropriate. While the regime aims to ensure regular reassessment of leases, some questioned whether the frequency strikes the right balance between accuracy, administrative burden and taxpayer understanding.

2. Stakeholders noted RS data indicating that the 3YLR process has generated around £6.5 million in net revenue since its introduction - averaging under £1 million annually - which raised questions about the overall cost‑effectiveness of the system relative to the administrative effort involved.

Extending the Review Period (e.g. to Five Years)

3. There was broad support for extending the review period to five years. Participants observed that many commercial leases run for five to ten years, and a five‑year cycle would therefore align more closely with market practice.

4. A longer interval was seen as a way to reduce administrative burden and avoid situations where multiple reviews fall within a short period. However, some participants noted that extending the period could risk lower compliance rates, given current challenges.

Shortening the Review Period

5. There was little support for a shorter review interval. Participants highlighted that more frequent reviews would increase the complexity and burden for both taxpayers and agents. Although some recognised that annual or near‑annual cycles might help maintain taxpayer familiarity with the process, this was not considered sufficient to outweigh the potential downsides.

Event‑Triggered Reviews

6. Some participants suggested linking review obligations to specific lease events, such as rent reviews, assignations or terminations. This approach could improve relevance by ensuring reviews are triggered by substantive changes rather than by fixed intervals.

7. However, it was noted that defining and administering event‑based triggers could require substantial legislative change and risk adding further complexity. Concerns were also raised about inadvertently influencing commercial lease structuring through tax policy.