Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions
615

becoming due and payable at the end of the period of 30 days beginning
with the commencement date.
      (5)
“The adjustment amount” is the difference between—
(a)
the aggregate amount of the pre-commencement instalments
determined in accordance with sub-paragraph (2), and
5
(b)
the aggregate amount of those instalment payments determined
ignoring sub-paragraph (2) (and so taking account of paragraphs 2 to
10).
      (6)
In the Instalment Payment Regulations—
(a)
in regulations 6(1)(a), 7(2), 8(1)(a) and (2)(a), 9(5), 10(1), 11(1) and 13,
10
references to regulation 4A, 4B, 4C, 4D, 5, 5A or 5B of those
Regulations are to be read as including a reference to sub-paragraphs
(1) to (5) (and in regulation 7(2) “the regulation in question”, and in
regulation 8(2) “that regulation”, are to be read accordingly), and
(b)
in regulation 9(3), the reference to those Regulations is to be read as
15
including a reference to sub-paragraphs (1) to (5).
      (7)
In section 59D of TMA 1970 (general rule as to when corporation tax is due
and payable), in subsection (5), the reference to section 59E is to be read as
including a reference to this paragraph.
      (8)
In this paragraph—
20
“the chargeable period” is to be construed in accordance with
paragraph 4 or (as the case may be) 5 of Schedule 19 to FA 2011;
“the commencement date” means the day on which this Act is passed;
“the Instalment Payment Regulations” means the Corporation Tax
(Instalment Payments) Regulations 1998 (S.I. 1998/3175);
25

and references to the total liability of E for an accounting period are to be
construed in accordance with regulation 2(3) of the Instalment Payment
Regulations.
Schedule 34
Section 212

Stamp duty land tax: higher rate for certain transactions
30
Introductory
1
Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with
paragraphs 2 to 9.
Higher rate of tax: main provisions
2     (1)
Section 55 (amount of tax chargeable: general) is amended as follows.
35
      (2)
In subsection (1), after “chargeable transaction” insert “to which this section
applies”.
      (3)
After that subsection insert—
“(1A)
This section applies to any chargeable transaction other than a
transaction to which paragraph 3 of Schedule 4A or step 4 of section
40
74(1A) (higher rate for certain transactions) applies.”

Finance (No. 4) Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions
616

      (4)
In subsection (2), for “That percentage” substitute “The percentage
mentioned in subsection (1)”.
      (5)
In subsection (5), for “74” substitute “74(2) and (3)”.
      (6)
In subsection (7), after “this section” insert “, step 4 of section 74(1A) or
paragraph 3 of Schedule 4A”.
5
3
After section 55 insert—
“55A
Amount of tax chargeable: higher rate for certain transactions
Schedule 4A provides for the calculation of the tax chargeable in
respect of certain transactions involving higher threshold interests in
dwellings.”
10
4
After Schedule 4 insert—
“Schedule 4A
Stamp duty land tax: higher rate for certain transactions
Meaning of “higher threshold interest”
1     (1)
In this paragraph “interest in a single dwelling” means so much of
15
the subject-matter of a chargeable transaction as consists of a
chargeable interest in or over a single dwelling (together with
appurtenant rights).
      (2)
An interest in a single dwelling is a higher threshold interest for
the purposes of this Schedule if chargeable consideration of more
20
than £2,000,000 is attributable to that interest.
Transactions involving a higher threshold interest
2     (1)
Sub-paragraphs (2) to (8) apply to a chargeable transaction whose
subject-matter consists of or includes a higher threshold interest.
      (2)
If the main subject-matter of the transaction consists entirely of
25
higher threshold interests, the transaction is a high-value
residential transaction for the purposes of paragraph 3.
      (3)
If the main subject-matter of the transaction includes a chargeable
interest other than a higher threshold interest, the transaction
(“the primary transaction”) is to be treated for the relevant
30
purposes as two separate chargeable transactions as follows—
(a)
a transaction whose subject-matter is all the higher
threshold interests, together with any appurtenant rights;
(b)
a transaction whose subject-matter is the remainder of the
subject-matter of the primary transaction.
35
      (4)
For those purposes, the chargeable consideration for a transaction
treated as occurring under sub-paragraph (3) is so much of the
chargeable consideration for the primary transaction as is
attributable to that transaction.
      (5)
The transaction mentioned in sub-paragraph (3)(a) is a high-value
40
residential transaction for the purposes of paragraph 3.

Finance (No. 4) Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions
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      (6)
“Relevant purposes” means the purposes of—
(a)
paragraphs 3 and 5 of this Schedule,
(b)
section 55 (amount of tax chargeable: general),
(c)
Schedule 5 (amount of tax chargeable: rent),
(d)
Schedule 6B (transfers involving multiple dwellings), and
5
(e)
any other provision of this Part, so far as it is necessary
because of any of paragraphs (a) to (d) to treat the purposes
in question as relevant purposes.
      (7)
If a transaction treated under sub-paragraph (3) as two separate
transactions is notifiable, each of the separate transactions (but not
10
the primary transaction) is also treated as a separate, and
notifiable, transaction for the purposes of section 76 (duty to
deliver land transaction return).
      (8)
The provisions relating to land transaction returns are to be read
with any adjustments that may be necessary as a result of sub-
15
paragraph (7).
      (9)
The reference in sub-paragraph (1) to a chargeable transaction
does not include a transaction to which section 74 (exercise of
collective rights by tenants of flats) or section 75 (crofting
community right to buy) applies.
20
Amount of tax chargeable: higher rate for certain transactions
3     (1)
Where this paragraph applies to a chargeable transaction—
(a)
the amount of tax chargeable in respect of the transaction
is 15% of the chargeable consideration for the transaction,
and
25
(b)
the transaction is not taken to be linked to any other
transaction for the purposes of section 55(4).
      (2)
This paragraph applies to a chargeable transaction if—
(a)
the transaction is a high-value residential transaction, and
(b)
the condition in sub-paragraph (3) is met.
30
      (3)
The condition is that—
(a)
the purchaser is a company,
(b)
the acquisition is made by or on behalf of the members of
a partnership one or more of whose members is a
company, or
35
(c)
the acquisition is made for the purposes of a collective
investment scheme.
      (4)
References in sub-paragraph (3) to a company do not include a
company acting in its capacity as trustee of a settlement.
      (5)
If there are two or more purchasers acting jointly, the condition in
40
sub-paragraph (3) is treated as met if it is met in relation to at least
one of those purchasers.
      (6)
In relation to a transfer of an interest in a partnership that is a
chargeable transaction by virtue of paragraph 17(2) of Schedule
15, sub-paragraph (3) has effect as if the following were
45

Finance (No. 4) Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions
618

substituted for paragraph (b) of that sub-paragraph—
“(b)
the purchasers (see paragraph 17(3) of Schedule 15)
include a company, or”.
      (7)
In relation to an event that is a chargeable transaction by virtue of
paragraph 17A(4) of that Schedule, sub-paragraph (3) has effect as
5
if the following were substituted for paragraph (b) of that sub-
paragraph—
“(b)
the purchasers (see paragraph 17A(5) of Schedule 15)
include a company, or”.
      (8)
For the purposes of sub-paragraph (3), paragraph 3 of Schedule 16
10
(bare trustees) applies as if sub-paragraphs (2) and (3) of that
paragraph were omitted.
      (9)
In the case of a transaction for which the whole or part of the
chargeable consideration is rent, this paragraph has effect subject
to section 56 and Schedule 5 (amount of tax chargeable: rent).
15
     (10)
The Treasury may by order amend this paragraph for the purpose
of limiting the circumstances in which the condition in sub-
paragraph (3) is to be treated as met.
Acquisitions of interests in the same dwelling through different transactions
4     (1)
Sub-paragraphs (2) and (3) apply if—
20
(a)
the subject-matter of a chargeable transaction includes a
chargeable interest in or over a dwelling,
(b)
one or more land transactions, the subject-matter of each of
which includes a chargeable interest in or over the
dwelling, are linked to that chargeable transaction, and
25
(c)
the total consideration attributable to the interests
mentioned in paragraphs (a) and (b) (and to any
appurtenant rights, but disregarding any rent) is more
than £2,000,000.
      (2)
Each of those chargeable interests is treated as a higher threshold
30
interest for the purposes of this Schedule.
      (3)
If the condition in paragraph 3(3) is met in the case of the
transaction mentioned in sub-paragraph (1)(a), it is also treated as
met in the case of each transaction mentioned in sub-paragraph
(1)(b) that is a chargeable transaction.
35
      (4)
The transactions referred to in this paragraph do not include any
transaction to which section 74 (exercise of collective rights by
tenants of flats) or section 75 (crofting community right to buy)
applies.
Property developers
40
5     (1)
A company is treated as not being a company for the purposes of
paragraph 3(3)(a) if—
(a)
the company acquires the subject-matter of the chargeable
transaction in the course of a bona fide property

Finance (No. 4) Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions
619

development business and for the sole purpose of
developing and reselling the land, and
(b)
the company has carried on that business for at least two
years before the effective date of the transaction.
      (2)
Where the subject-matter of a chargeable transaction is acquired
5
by or on behalf of the members of a partnership, those members
are taken not to include a company for the purposes of paragraph
3(3)(b) if—
(a)
that subject-matter is acquired in the course of a bona fide
property development business and for the sole purpose of
10
developing and reselling the land, and
(b)
the partnership has carried on that business for at least two
years before the effective date of the transaction.
      (3)
In relation to a transfer of an interest in a partnership that is a
chargeable transaction by virtue of paragraph 17(2) of Schedule 15
15
(“the partnership transfer”) the purchasers are treated as not
including a company for the purposes of paragraph 3(3)(b) (as
modified by paragraph 3(6)) if—
(a)
the acquisition effected by the land transfer referred to in
paragraph 17(1)(a) of that Schedule was made in the course
20
of a bona fide property development business, and for the
sole purpose of developing and reselling the land, and
(b)
the partnership is continuing to carry on that business at
the effective date of the partnership transfer, and has
carried it on for at least two years before that date.
25
      (4)
In relation to an event that is a chargeable transaction by virtue of
paragraph 17A(4) of Schedule 15 (“the qualifying event”) the
purchasers are treated as not including a company for the
purposes of paragraph 3(3)(b) (as modified by paragraph 3(7)) if—
(a)
the acquisition effected by the land transfer referred to in
30
paragraph 17A(1)(a) of that Schedule was made in the
course of a bona fide property development business, and
for the sole purpose of developing and reselling the land,
and
(b)
the partnership is continuing to carry on that business at
35
the effective date of the qualifying event, and has carried it
on for at least two years before that date.
      (5)
A property development business is a business that consists of or
includes buying, and redeveloping for resale, residential property.
      (6)
For the purposes of sub-paragraph (1)(b) a property development
40
business is treated as having been carried on by the company at
any time when it was carried on by a company which is a member
of the same group as the company.
      (7)
Companies are members of the same group for the purposes of
this paragraph if they are members of the same group for the
45
purposes of group relief (see paragraph 1 of Schedule 7).

Finance (No. 4) Bill
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Partnerships: application of paragraph 2 to certain transactions
6     (1)
Sub-paragraphs (2) and (3) apply where the subject-matter of a
transaction to which Part 3 of Schedule 15 applies consists of or
includes a higher threshold interest.
      (2)
The transaction is not to be treated as a high-value residential
5
transaction by virtue of paragraph 2(2) unless the chargeable
consideration for the transaction is more than £2,000,000.
      (3)
Paragraph 2(3) to (8) does not apply to the transaction if—
(a)
the subject-matter of the transaction includes a chargeable
interest other than a higher threshold interest, and
10
(b)
the result of applying paragraph 2(3) and (4) would be that
chargeable consideration of £2,000,000 or less would be
attributable to the separate transaction mentioned in
paragraph 2(3)(a).
      (4)
For the purposes of sub-paragraph (1) and paragraph 2, the
15
subject-matter (and the main subject-matter) of a transfer of an
interest in a partnership that is a chargeable transaction by virtue
of sub-paragraph (2) of paragraph 14 of Schedule 15 is—
(a)
if the transfer is a Type A transfer, the relevant partnership
property as defined in sub-paragraph (5) of that
20
paragraph, or
(b)
if the transfer is a Type B transfer, the relevant partnership
property as defined in sub-paragraph (5A) of that
paragraph.
      (5)
For the purposes of sub-paragraph (1) and paragraph 2, the
25
subject-matter (and the main subject-matter) of a transfer of an
interest in a partnership that is a chargeable transaction by virtue
of sub-paragraph (2) of paragraph 17 of Schedule 15 is the subject-
matter of the land transfer referred to in sub-paragraph (1)(a) of
that paragraph.
30
      (6)
For the purposes of sub-paragraph (1) and paragraph 2, the
subject-matter (and the main subject-matter) of a chargeable
transaction that is treated as occurring by virtue of sub-paragraph
(4) of paragraph 17A of Schedule 15 is the subject-matter of the
land transfer referred to in sub-paragraph (1)(a) of that paragraph.
35
Meaning of “dwelling”
7     (1)
This paragraph sets out rules for determining what counts as a
dwelling for the purposes of this Schedule.
      (2)
A building or part of a building counts as a dwelling if—
(a)
it is used or suitable for use as a single dwelling, or
40
(b)
it is in the process of being constructed or adapted for such
use.
      (3)
Land that is, or is to be, occupied or enjoyed with a dwelling as a
garden or grounds (including any building or structure on such
land) is taken to be part of that dwelling.
45

Finance (No. 4) Bill
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      (4)
Land that subsists, or is to subsist, for the benefit of a dwelling is
taken to be part of the dwelling.
      (5)
The subject-matter of a transaction is also taken to include an
interest in a dwelling if—
(a)
substantial performance of a contract constitutes the
5
effective date of that transaction by virtue of a relevant
deeming provision,
(b)
the main subject-matter of the transaction consists of or
includes an interest in a building, or a part of a building,
that is to be constructed or adapted under the contract for
10
use as a single dwelling, and
(c)
construction or adaptation of the building, or part of the
building, has not begun by the time the contract is
substantially performed.
      (6)
In sub-paragraph (5) “contract”, “relevant deeming provision”
15
and “substantially performed” have the same meaning as in
paragraph 7(5) of Schedule 6B.
      (7)
A building or part of a building used for a purpose specified in
section 116(2) or (3) is not used as a dwelling for the purposes of
sub-paragraph (2) or (5).
20
      (8)
Where a building or part of a building is used for a purpose
mentioned in sub-paragraph (7), no account is to be taken for the
purposes of sub-paragraph (2) of its suitability for any other use.
8     (1)
The Treasury may by order amend paragraph 7 so as to specify
cases where use of a building is to be use of a building as a
25
dwelling for the purposes of sub-paragraph (2) or (5) of that
paragraph.
      (2)
The reference in section 116(8)(a) (power to amend section 116(2)
and (3)) to “the purposes of subsection (1)” includes a reference to
the purposes of paragraph 7(2) and (5).
30
Interpretation
9
In this Schedule—
“appurtenant rights”, in relation to a chargeable interest that
is, or is part of, the subject-matter of a transaction, means
any rights or interests appurtenant or pertaining to the
35
chargeable interest that are acquired with it;
“attributable” means attributable on a just and reasonable
basis;
“collective investment scheme” has the same meaning as in
Part 17 of the Financial Services and Markets Act 2000 (see
40
section 235 of that Act);
“company” means a body corporate other than a
partnership.”
Higher rate of tax: exercise of collective rights by tenants of flats
5     (1)
Section 74 (exercise of collective rights by tenants of flats) is amended as
45
follows.