Finance (No. 2) Bill (HC Bill 154)

(2) If the property developer holds an interest for the purpose mentioned in
subsection (1)(b), any additional purpose the property developer may have of
exploiting the interest as a source of rents or other receipts in the course of a
qualifying property rental business (after developing the land and before
5reselling it) is treated as not being a separate purpose in applying the test in
subsection (1)(b).

(3) A day is not relievable by virtue of subsection (1) if on the day a non-qualifying
individual is permitted to occupy the dwelling.

(4) In this Part “property development trade” means a trade that—

(a) 10consists of or includes buying and developing for resale residential or
non-residential property, and

(b) is run on a commercial basis and with a view to profit.

(5) In this section references to development include redevelopment.

137 Property developers: exchange of dwellings

(1) 15A day in a chargeable period is relievable in relation to a single-dwelling
interest if—

(a) a person (“the property developer”) is on that day entitled to a single-
dwelling interest (“the returned interest”) that was acquired (by the
relevant person) in the course of a property development trade, and

(b) 20that acquisition (“the reverse acquisition”) was part of a qualifying
exchange.

(2) A day is not relievable by virtue of this section if on that day a non-qualifying
individual is permitted to occupy the dwelling.

(3) In this section “the relevant person” means—

(a) 25if the property developer is entitled to the returned interest as a
member of a partnership, the persons who acquired the interest as
members of the partnership, or

(b) otherwise, the property developer (and any person who acquired the
returned interest jointly with the property developer).

(4) 30The reverse acquisition is “part of a qualifying exchange” only if—

(a) it was made by way of transfer,

(b) the person from whom the acquisition was made itself acquired (by
way of grant or transfer) a chargeable interest in or over a new dwelling
from the relevant person, and

(c) 35each of those acquisitions was entered into in consideration of the
other.

(5) A building or part of a building is a “new dwelling” if—

(a) it has been constructed for use as a single dwelling and has not
previously been occupied, or

(b) 40it has been adapted for use as a single dwelling and has not been
occupied since its adaptation.

138 Property developers: supplementary

(1) Subsection (2) applies if on a day in a chargeable period—

(a) a person carrying on a property development trade (“the property
developer”) is entitled to a single-dwelling interest that has been
acquired in the course of that trade (whether or not the acquisition was
part of a qualifying exchange for the purposes of section 137), and

(b) 5a non-qualifying individual is permitted to occupy the dwelling.

(2) No subsequent day is relievable in the case of the single-dwelling interest by
virtue of section 136(1) or 137(1) if—

(a) the day falls within that chargeable period, or any of the subsequent 3
chargeable periods, and

(b) 10there is continuity of ownership on that day.

(3) There is “continuity of ownership” on any day on which—

(a) the property developer is entitled to the single-dwelling interest, or

(b) if the property developer carried on the property development trade in
partnership, another member of the partnership is entitled to the
15interest.

(4) Subsection (5) applies if—

(a) on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and

(b) 20on an earlier day in that, or the preceding, chargeable period (“the
earlier day”) the conditions in section 136(1)(a) and (b) are met in
relation to the same single-dwelling interest.

(5) The earlier day is not relievable by virtue of section 136(1) in the case of the
single-dwelling interest if—

(a) 25a person who is entitled to the interest on the earlier day is also entitled
to it on the day of non-qualifying occupation, or

(b) if the trade mentioned in section 136(1) is carried on in partnership, a
person who has at any time carried that business on in partnership is
entitled to the interest on the day of non-qualifying ownership.

(6) 30Subsection (7) applies if—

(a) on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and

(b) on an earlier day in that, or the preceding, chargeable period (“the
35earlier day”) the conditions in section 137(1)(a) and (b) are met in
relation to the same single-dwelling interest.

(7) The earlier day is not relievable by virtue of section 137(1) in the case of the
single-dwelling interest if—

(a) a person who is entitled to the interest on the earlier day is also entitled
40to it on the day of non-qualifying occupation, or

(b) where the trade mentioned in section 137(1) is carried on in
partnership, a person who has at any time carried that business on in
partnership is entitled to the interest on the day of non-qualifying
ownership.

(8) 45If a day that is relievable by virtue of section 131(1)(a) falls between the earlier
day mentioned in subsection (5) or (as the case may be) (7) and the day of non-
qualifying occupation, that subsection does not apply in relation to that earlier
day.

(9) For the purposes of sections 136 and 137 and this section—

(a) “non-qualifying individual” has the meaning given by section 134(1);

(b) occupation of any part of a dwelling is regarded as occupation of the
dwelling.

139 5Property traders

(1) A day in a chargeable period is relievable in relation to a single-dwelling
interest if on that day—

(a) a person carrying on a property trading business is entitled to the
interest, and

(b) 10the interest is held as stock of the business and for the sole purpose of
resale in the course of the business.

(2) A single-dwelling interest in a dwelling is taken not to be held for the sole
purpose of resale in the course of a property trading business at any time when
a non-qualifying individual is permitted to occupy the dwelling.

(3) 15In this Part “property trading business” means a business that—

(a) consists of or includes activities in the nature of a trade of buying and
selling dwellings, and

(b) is carried on on a commercial basis and with a view to profit.

140 Property traders: supplementary

(1) 20Subsection (2) applies if on a day in a chargeable period (“the day of non-
qualifying occupation”)—

(a) a person carrying on a property trading business (“the property
trader”) is entitled to a single-dwelling interest that is held as
mentioned in section 139(1)(b), and

(b) 25a non-qualifying individual is permitted to occupy the dwelling.

(2) No subsequent day is relievable in the case of the single-dwelling interest by
virtue of section 139(1) if—

(a) the day falls within that chargeable period, or any of the subsequent 3
chargeable periods, and

(b) 30the property trader or a relevant partner was entitled to the interest on
that day.

(3) If on the day of non-qualifying occupation mentioned in subsection (1) the
property trader carries on the property trading business in partnership,
“relevant partner” means any other person who is, at any time, a member of
35that partnership.

(4) Subsection (5) applies if—

(a) on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and

(b) 40on an earlier day in that, or the preceding, chargeable period (“the
earlier day”) the conditions in section 139(1)(a) and (b) are met in
relation to the same single-dwelling interest.

(5) The earlier day is not relievable by virtue of section 139(1) in the case of the
single-dwelling interest if—

(a) a person who is entitled to the interest on the earlier day is also entitled
to it on the day of non-qualifying occupation, or

(b) if the business mentioned in section 139(1) is carried on in partnership,
a person who has at any time carried that business on in partnership is
5entitled to the interest on the day of non-qualifying ownership.

(6) Subsection (5) does not apply in relation to the earlier day if a day that is
relievable by virtue of section 131(1)(a) falls between the earlier day and the
day of non-qualifying occupation.

(7) For the purposes of this section and section 139—

(a) 10“non-qualifying individual” has the meaning given by section 134(1);

(b) occupation of any part of a dwelling is regarded as occupation of the
dwelling.

141 Financial institutions acquiring dwellings in the course of lending

(1) A day in a chargeable period is relievable in relation to a single-dwelling
15interest if matters stand as follows on that day—

(a) a financial institution carrying on a business that involves the lending
of money is entitled to the interest,

(b) the financial institution has acquired the interest in the course of that
business and in connection with those lending activities, and

(c) 20the interest is held with the intention that it will be sold in the course of
that business without delay (except so far as delay is justified by
commercial considerations or cannot be avoided).

(2) A single-dwelling interest in a dwelling is taken not to be held with the
intention mentioned in subsection (1)(c) at any time when a non-qualifying
25individual is permitted to occupy the dwelling.

(3) In this Part (except where otherwise stated) “financial institution” has the
meaning given by section 564B of ITA 2007; but for this purpose section 564B(1)
is to be read as if paragraph (d) of that subsection were omitted.

142 Section 141: supplementary

(1) 30Subsection (2) applies if on a day in a chargeable period—

(a) a financial institution that carries on a business involving the lending of
money is entitled to a single-dwelling interest that has been acquired by
it as mentioned in section 141(1)(b), and

(b) a non-qualifying individual is permitted to occupy the dwelling.

(2) 35No subsequent day is relievable in the case of the single-dwelling interest by
virtue of section 141(1) if—

(a) the day falls within that chargeable period, or any of the subsequent 3
chargeable periods, and

(b) there is continuity of ownership on that day.

(3) 40There is continuity of ownership on a day on which—

(a) the financial institution is entitled to the single-dwelling interest, or

(b) if the financial institution carried on the business mentioned in
subsection (1)(a) in partnership, another member of the partnership is
entitled to the interest.

(4) Subsection (5) applies if—

(a) on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and

(b) 5on an earlier day in that, or the preceding, chargeable period (“the
earlier day”) the conditions in section 141(1)(a) to (c) are met in relation
to the same single-dwelling interest.

(5) The earlier day is not relievable by virtue of section 141(1) in the case of the
single-dwelling interest if—

(a) 10a person who is entitled to the interest on the earlier day is also entitled
to it on the day of non-qualifying occupation, or

(b) if the business mentioned in section 141(1) is carried on in partnership,
a person who has at any time carried that business on in partnership is
entitled to the interest on the day of non-qualifying ownership.

(6) 15Subsection (5) does not apply in relation to the earlier day if a day that is
relievable by virtue of section 131(1)(a) falls between the earlier day and the
day of non-qualifying occupation.

(7) For the purposes of this section and section 141—

(a) “non-qualifying individual” has the meaning given by section 134(1);

(b) 20occupation of any part of a dwelling is regarded as occupation of the
dwelling.

143 Occupation by certain employees or partners

(1) A day in a chargeable period is a relievable if matters stand as follows on that
day—

(a) 25a person (“P”) is entitled to a single-dwelling interest,

(b) P, or a relevant group member, carries on a qualifying trade,

(c) the interest is held for the purpose of making the dwelling available to
one or more qualifying employees or qualifying partners for use as
living accommodation, and

(d) 30the dwelling is, or is to be, made available as mentioned in paragraph
(c) for purposes that are solely or mainly purposes of the trade.

(2) “Qualifying trade” means a trade that is carried on on a commercial basis and
with a view to profit.

(3) In this section references to making a dwelling available to a qualifying
35employee or qualifying partner include making it available to persons who are
to share the accommodation with such an individual as their family.

(4) Where P is a company, “a relevant group member” means a company which is
a member of the same group as P for the purposes mentioned in paragraph 1(2)
of Schedule 7 to FA 2003 (stamp duty land tax: group relief).

144 40Meaning of “qualifying employee” and “qualifying partner” in section 143

(1) In a case where the person carrying on the trade mentioned in section 143(1)(b)
carries it on in partnership with one or more other persons, “qualifying
partner” means any individual who is a member of the partnership, except one
who is entitled to a 10% or greater share—

(a) 45in the income profits of the partnership, or

(b) in any company that is entitled to the single-dwelling interest
mentioned in section 143(1)(a), or

(c) in the partnership’s assets.

(2) “Qualifying employee” means any individual employed for the purposes of
5the qualifying trade, except one who—

(a) is entitled to a 10% or greater share—

(i) in the income profits of the trade, or

(ii) in any company that is entitled to the single-dwelling interest
mentioned in section 143(1)(a), or

(iii) 10in that single-dwelling interest, or

(b) provides excluded domestic services.

(3) The reference in subsection (2)(b) to an individual who provides excluded
domestic services is to an individual the duties of whose employment include
the provision of services in connection with the (actual or intended)
15occupation, by a non-qualifying individual, of the dwelling mentioned in
section 143(1)(b) (“the relevant dwelling”), or a linked dwelling.

(4) In subsection (3) “non-qualifying individual” means an individual connected
with a person who is entitled to the single-dwelling interest.

(5) The following are “linked” dwellings for the purposes of subsection (3)—

(a) 20if the conditions in section 114(2) are met in relation to the relevant
dwelling and another dwelling, that other dwelling;

(b) a dwelling that is linked to the relevant dwelling, as described in
section 115(1).

(6) In this section references to employment include the holding of an office.

(7) 25For the purposes of subsections (1)(c) and (2)(a)(iii) persons who are entitled to
a chargeable interest as beneficial joint tenants (or, in Scotland, as joint owners)
are taken to be entitled to the chargeable interest as beneficial tenants in
common (or, in Scotland, as owners in common) in equal shares.

145 Meaning of “10% or greater share in a company”

(1) 30This section applies for the purposes of section 144.

(2) An individual (“P”) is taken to be entitled to a 10% or greater share in a
company (“C”) if P possesses (directly or indirectly) or is entitled to acquire—

(a) 10% or more of the share capital of C,

(b) 10% or more of the issued share capital of C,

(c) 3510% or more of the voting power in C,

(d) so much of the issued share capital of C as would, on the assumption
that the whole of the income of C were distributed among the
participators, entitle P to receive 10% or more of the amount so
distributed, or

(e) 40such rights as would entitle P, in the event of the winding up of C or in
any other circumstances, to receive 10% or more of the assets of C
which would then be available for distribution among the
participators.

(3) Any rights that P or any other person has as a loan creditor are to be
45disregarded for the purposes of the assumption in subsection (2)(d).

(4) For the purposes of subsection (2) a person is treated as entitled to acquire
anything which the person—

(a) is entitled to acquire at a future date, or

(b) will at a future date be entitled to acquire.

(5) 5If a person—

(a) possesses any rights or powers on behalf of another person (“A”), or

(b) may be required to exercise any rights or powers on A’s direction or
behalf,

those rights or powers are to be attributed to A.

(6) 10The following are also to be attributed to a person—

(a) the rights and powers of any company of which the person has, or the
person and associates of the person have, control;

(b) the rights and powers of any two or more companies within paragraph
(a);

(c) 15the rights and powers of any associate of the person (or of any two or
more associates of the person).

(7) The rights and powers which are to be attributed under subsection (6)—

(a) include those attributed to a company or associate under subsection (5),
but

(b) 20do not include those attributed to an associate under subsection (6).

(8) A person who does not meet the conditions in subsection (2) is nevertheless
treated as having a 10% or greater share in a company if the person exercises,
is able to exercise or is entitled to acquire, direct or indirect control over the
company’s affairs.

(9) 25In this section—

• “associate” has the same meaning as in Part 10 of CTA 2010 (see section
  448 of that Act); but for this purpose section 448 is to be read as if the
  words “or partner” were omitted in subsection (1)(a);

• “control” has the same meaning as in that Part (see section 450 of that Act);

• 30“loan creditor” has the same meaning as in that Part (see section 453 of
  that Act);

• “participator” has the same meaning as in that Part (see section 454 of that
  Act).

146 Farmhouses

(1) 35This section applies where on a day in a chargeable period—

(a) a dwelling (“the farmhouse”) forms part of land occupied for the
purposes of a qualifying trade of farming, and

(b) a person carrying on the trade is entitled to, or connected with a person
who is entitled to, a single-dwelling interest in the farmhouse.

(2) 40That day is relievable in relation to the single-dwelling interest if on that day
the farmhouse is occupied—

(a) by a farm worker who occupies it for the purposes of the trade, or

(b) by a former long-serving farm worker, or the surviving spouse or civil
partner of a former farm worker.

(3) 45A trade of farming is a “qualifying trade of farming” only if it is carried on—

(a) on a commercial basis, and

(b) with a view to profit.

(4) In this section—

• “farming” has the same meaning as in the Corporation Tax Acts (see
  5section 1125 of CTA 2010), except that in this section “farming” includes
  market gardening;

• “market gardening” has the same meaning as in the Corporation Tax Acts
  (see section 1125(5) of CTA 2010).

147 “Farm worker” and “former long-serving farm worker”

(1) 10An individual is a “farm worker” in relation to the qualifying trade of farming
mentioned in section 146(1) at any time when the individual has a substantial
involvement in—

(a) the day-to-day work of the trade, or

(b) the direction and control of the conduct of the trade.

(2) 15Where section 146 applies, an individual occupying the farmhouse on the day
mentioned in section 146(1) is a “former long-serving farm worker” if the
individual had, before that day, been a farm worker in relation to the
qualifying trade of farming for—

(a) a qualifying period of 3 or more years, or

(b) 20qualifying periods together amounting to 3 or more years within a 5
year period.

(3) In subsection (2) “qualifying period” means a period throughout which—

(a) the individual occupied the farmhouse for the purposes of the trade,

(b) the land of which the farmhouse forms part was occupied for the
25purposes of the trade,

(c) the trade was carried on by—

(i) a person who is entitled to the single-dwelling interest in the
farmhouse on the day mentioned in section 146(1), or

(ii) a person connected with such a person, and

(d) 30a person who is entitled to the single-dwelling interest in the farmhouse
on the day mentioned in section 146(1) was entitled to that interest.

(4) A person occupying part of a dwelling is regarded as occupying the dwelling
for the purposes of this section and section 146.

148 Charitable companies

(1) 35A day in a chargeable period is relievable in relation to a single-dwelling
interest if on that day—

(a) a charitable company is entitled to the interest, and

(b) the interest is held by the charitable company for qualifying charitable
purposes.

(2) 40The interest is “held for qualifying charitable purposes” if it is held—

(a) for use in furtherance of the charitable purposes of the charitable
company or of another charity, or

(b) as an investment from which the profits are (or are to be) applied to the
charitable purposes of the charitable company.

(3) A day is not relievable by virtue of subsection (1) if on that day an individual
who is a substantial donor, or the associate of a substantial donor, is permitted
to occupy the dwelling.

(4) Where subsection (3) applies in relation to a day in a chargeable period, this
5section has effect in relation to the charitable company as if the individual had
been permitted to occupy the dwelling throughout—

(a) that chargeable period,

(b) the preceding chargeable period, and

(c) the 3 chargeable periods following the period mentioned in paragraph
10(a).

(5) For the purposes of this section an individual is a substantial donor to a
charitable company for a chargeable period if—

(a) the charitable company receives gifts of at least £50,000 from the
individual in the chargeable period, or

(b) 15the charitable company receives gifts of at least £150,000 from the
individual in a period of 6 years in which the chargeable period wholly
or partly falls.

(6) If an individual is a substantial donor to a charitable company for a chargeable
period (“the affected period”) as a result of subsection (5)(a) or (b), the
20individual is also a substantial donor to the charitable company for—

(a) the chargeable period preceding the affected period, and

(b) each of the 5 chargeable periods following the affected period.

(7) For the purposes of subsection (3) it does not matter whether the conditions as
a result of which the individual is a substantial donor for the chargeable period
25are met before or on or after the day in question.

(8) For the purposes of subsection (5) a charitable company and any other charities
with which it is connected are to be treated as a single charitable company.

(9) For the purposes of subsection (8)—

(a) “connected” means connected in a matter relating to the structure,
30administration or control of the charity, and

(b) section 170 does not apply.

149 Section 148: supplementary

(1) In section 148 “associate”, in relation to a substantial donor to a charitable
company, means any of the following—

(a) 35an individual (“a connected person”) who is connected with the
substantial donor,

(b) an individual who is the settlor in relation to a settlement of which a
trustee is (in the capacity of trustee) connected with the substantial
donor,

(c) 40the spouse or civil partner of a connected person or of a relevant settlor,

(d) a relative of a connected person or of a relevant settlor, or the spouse or
civil partner of a relative of a connected person or of a relevant settlor,

(e) a relative of the spouse or civil partner of a connected person or of a
relevant settlor, or

(f) 45the spouse or civil partner of a person falling within paragraph (e).

(2) In subsection (1) —

Finance (No. 2) BillPage 89

• “relative” means brother, sister, ancestor or lineal descendant;

• “settlement” and “settlor” have the same meaning as in Chapter 5 of Part
  5 of ITTOIA 2005 (see section 620 of that Act).

(3) In subsection (1)(b) “trustee” is to be read in accordance with section 1123(3) of
5CTA 2010 (“connected persons”: supplementary).

(4) In section 148 a reference to a gift of a specified amount includes a reference to
a non-monetary gift of that value.

(5) For the purposes of section 148 occupation of any part of a dwelling is regarded
as occupation of the dwelling.

(6) 10The power of the Treasury under section 510(3) of CTA 2010 to vary by
regulations a sum, or a period of time, specified in section 502(2) of that Act
includes power to vary a sum, or a period of time, specified in section 148(4);
and under section 510(3), as extended by this section, different provision may
be made for the purposes of section 148 and other purposes.

150 15Providers of social housing

(1) A day in a chargeable period is relievable in relation to a single-dwelling
interest if on that day—

(a) a profit-making registered provider of social housing (P) is entitled to
the interest, and

(b) 20P’s acquisition of the interest (or of any part of the interest) was funded
with the assistance of public subsidy.

(2) A day in a chargeable period is relievable in relation to a single-dwelling
interest if on that day—

(a) a relevant housing provider (that is, a non-profit registered provider of
25social housing or a registered social landlord) is entitled to the interest,
and

(b) the condition in subsection (3) is met.

(3) The condition mentioned in subsection (2) is that—

(a) the relevant housing provider is controlled by its tenants,

(b) 30the person from whom the relevant housing provider acquired the
interest (or any part of the interest) is a qualifying body, or

(c) the relevant housing provider’s acquisition of the interest (or of any
part of the interest) was funded with the assistance of a public subsidy.

(4) In this section—

(a) 35the reference to a relevant housing provider “controlled by its tenants”
is to be read in accordance with subsection (2) of section 71 of FA 2003;

(b) “qualifying body” has the meaning given by subsection (3) of that
section;

(c) “public subsidy” has the same meaning as in that section.

40Exemptions

151 Public bodies

(1) A public body is not regarded as a company for the purposes of this Part.