(d) references to the “subject-matter” of a pre-completion
transaction are to be read in accordance with paragraph
2(4);

(e) references to substantial performance of the original
5contract “by the transferee” (in cases involving an
assignment of rights) are to be read in accordance with
paragraph 4(7).

(3) For any one contract for the acquisition of a chargeable interest
there is only one original purchaser (disregarding cases involving
10joint purchasers).”

4 In section 57A (sale and leaseback arrangements), in subsection (3)(c)—

(a) omit “section 45 (contract and conveyance: effect of transfer of rights)
or”, and

(b) after the second occurrence of “transfer of rights)” insert “or a pre-
15completion transaction within the meaning of Schedule 2A
(transactions entered into before completion of contract)”.

5 In section 77 (notifiable transactions), in subsection (1)—

(a) omit the “or” after paragraph (c), and

(b) after paragraph (d) insert, “or

“(e) 20a notional or additional land transaction under
paragraph 5 of Schedule 2A.”

6 In section 79(2) (registration of land transactions etc)—

(a) omit paragraph (a)(i) and the “or” after it, and

(b) after paragraph (b) insert—

“(ba) 25under paragraph 5 of Schedule 2A (transactions
entered into before completion of contract),”.

7 In section 119 (meaning of “effective date” of a transaction), in subsection (2),
at the appropriate place insert—

• “paragraph 5 of Schedule 2A,”.

8 30In section 121 (index of defined expressions), in the entry for “vendor”, in the
second column, for “sections 45(5A) and 45A(9)” substitute “section 45A(9)
and paragraphs 8, 10 and 11 of Schedule 2A”.

9 In Schedule 6B (transfers involving multiple dwellings), in paragraph 7(6),
in the definition of “relevant deeming provision”, after “45A” insert “or
35paragraph 5(1) or (3) of Schedule 2A”.

10 In paragraph 12B of Schedule 17A (assignment of agreement for lease), in
sub-paragraph (1) for “section 45 (contract and conveyance: effect of transfer
of rights)” substitute “Schedule 2A (transactions entered into before
completion of contract)”.

11 40The amendments made by this Schedule have effect in relation to transfers
of rights (see section 45 of FA 2003) and pre-completion transactions (see
paragraph 3) entered into on or after the day on which this Act is passed.

Section 194

SCHEDULE 38 Stamp duty land tax: relief from 15% rate

1 Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

Amendments of FA 2003

2 (1) 5Schedule 4A (higher rate for certain transactions) is amended as follows.

(2) In paragraph 2(6) (treatment of certain transactions as two separate
chargeable transactions) for “and 5” substitute “, 5 to 5K and 6A to 6H”.

(3) For paragraph 5 (property developers) and the cross-heading preceding it
substitute—

10“Businesses of letting, trading in or redeveloping properties

5 (1) Paragraph 3 does not apply to a chargeable transaction so far as its
subject-matter consists of a higher threshold interest that is
acquired exclusively for one or more of the following purposes—

(a) exploitation as a source of rents or other receipts (other
15than excluded rents) in the course of a qualifying property
rental business;

(b) development or redevelopment and resale in the course of
a property development trade;

(c) resale in the course of a property development trade (in a
20case where the chargeable transaction is part of a
qualifying exchange);

(d) resale (as stock of the business) in the course of a property
trading business.

(2) A chargeable interest does not count as being acquired exclusively
25for one or more of those purposes if it is intended that a non-
qualifying individual will be permitted to occupy the dwelling.

(3) In this paragraph—

• “excluded rents” has the same meaning as in section 131 of
  the Finance Act 2013;

• 30“property development trade” means a trade that—

  (a)

  consists of or includes buying and developing or
  redeveloping for resale residential or non-residential
  property, and

  (b)

  is run on a commercial basis and with a view to profit;

• 35“part of a qualifying exchange” is to be construed in
  accordance with section 137(4) of the Finance Act 2013;

• “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)

  40is run on a commercial basis and with a view to profit;

• “qualifying property rental business” has the same meaning
  as in section 131 of the Finance Act 2013.”

(4) After paragraph 5 insert—

“Meaning of “non-qualifying individual”

5A (1) In paragraph 5 “non-qualifying individual”, in relation to a
chargeable transaction, means any of the following—

(a) 5the purchaser (other than a purchaser entering into the
transaction as a member of a partnership);

(b) a purchaser who enters into the transaction as a member of
a partnership and has a major share in the partnership,

(c) an individual (a “connected person”) who is connected
10with the purchaser;

(d) a relevant settlor;

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

(f) a relative of a connected person or of a relevant settlor, or
15the spouse or civil partner of a relative of a connected
person or of a relevant settlor;

(g) a relative of the spouse or civil partner of a connected
person or of a relevant settlor;

(h) the spouse or civil partner of a person falling within
20paragraph (g);

(i) an individual who is a major participant in a relevant
collective investment scheme or is connected with a major
participant in a relevant collective investment scheme.

(2) A member of a partnership has a “major share” in the partnership
25if the member is entitled to a 50% or greater share—

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

(b) in the partnership’s assets.

(3) A collective investment scheme is a “relevant collective
investment scheme” for the purposes of sub-paragraph (1)(i) if the
30purchaser under the chargeable transaction referred to in that sub-
paragraph acquires the subject-matter of the transaction for the
purposes of that scheme.

(4) An individual who participates in a collective investment scheme
is a “major participant” in the scheme if the individual—

(a) 35is entitled to a share of at least 50% either of all the profits
or income arising from the scheme or of any profits or
income arising from the scheme that may be distributed to
participants, or

(b) would in the event of the winding up of the scheme be
40entitled to 50% or more of the assets of the scheme that
would then be available for distribution among the
participants.

(5) The reference in sub-paragraph (4)(a) to profits or income arising
from a collective investment scheme is to profits or income arising
45from the acquisition, holding, management or disposal of the
property subject to the scheme.

(6) In this paragraph—

Finance (No. 2) BillPage 443

• “participant”, in relation to a collective investment scheme, is
  to be read in accordance with section 235 of the Financial
  Services and Markets Act 2000;

• “relative” means brother, sister, ancestor or lineal
  5descendant;

• “relevant settlor”, in relation to a chargeable transaction,
  means an individual who is a settlor in relation to a
  relevant settlement (as defined in sub-paragraph (6));

• “settlement” has the same meaning as in Chapter 5 of Part 5
  10of ITTOIA 2005 (see section 620 of that Act).

(7) Where a person, in the capacity of trustee of a settlement, is
connected with a person who is the purchaser under a chargeable
transaction, that settlement is a “relevant settlement” in relation to
the chargeable transaction.

(8) 15In sub-paragraph (7) “trustee” is to be read in accordance with
section 1123(3) of CTA 2010 (“connected persons”:
supplementary).

(9) In this paragraph “the purchaser”, in relation to a chargeable
transaction, is to be read as a reference to any of the purchasers (if
20there are more than one).

(10) Section 1122 of the Corporation Tax Act 2010 (connected persons)
has effect for the purposes of this paragraph, but for those
purposes—

(a) subsections (7) and (8) of that section (application of rules
25about connected persons to partnerships) are to be
disregarded, and

(b) subsections (2) to (7) of section 170 of the Finance Act 2013
apply as they apply for the purposes of Part 3 of that Act.

Trades involving making a dwelling available to the public

5B (1) 30Paragraph 3 does not apply to a chargeable transaction so far as its
subject-matter consists of a higher threshold interest in relation to
which the conditions in sub-paragraph (2) are met.

(2) The conditions are that—

(a) the higher threshold interest is acquired with the intention
35that it will be exploited as a source of income in the course
of a qualifying trade, and

(b) reasonable commercial plans have been formulated to
carry out that intention without delay (except so far as
delay may be justified by commercial considerations or
40cannot be avoided).

(3) “Qualifying trade”, in relation to a higher threshold interest,
means a trade that—

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

(b) 45involves, in its normal course, offering the public the
opportunity to make use of, stay in or otherwise enjoy the
dwelling as customers of the trade on at least 28 days in
any calendar year.

(4) For the purposes of sub-paragraph (3), persons are not considered
to have the opportunity to make use of, stay in or otherwise enjoy
a dwelling unless the areas that they have the opportunity to make
use of, stay in or otherwise enjoy include a significant part of the
5interior of the dwelling.

(5) The size (relative to the size of the whole dwelling), nature and
function of any relevant area or areas in a dwelling are taken into
account in determining whether they form a significant part of the
interior of the dwelling.

10Financial institutions acquiring dwellings in the course of lending

5C (1) Sub-paragraph (2) applies to a chargeable transaction if the
purchaser is a financial institution carrying on a business that
involves the lending of money.

(2) Paragraph 3 does not apply to the chargeable transaction so far as
15its subject-matter consists of a higher threshold interest that is
acquired in the course of that business—

(a) for the purpose of resale in the course of the business and,

(b) in connection with those lending activities.

Dwellings for occupation by certain employees etc

5D (1) 20Paragraph 3 does not apply to a chargeable transaction so far as its
subject-matter consists of a higher threshold interest in relation to
which the conditions in sub-paragraph (2) are met.

(2) The conditions are that—

(a) the interest is acquired for the purpose of making the
25dwelling available to one or more qualifying employees or
qualifying partners for use as living accommodation, and

(b) the dwelling is to be made available as mentioned in
paragraph (a) for purposes that are solely or mainly
purposes of the qualifying trade.

(3) 30For the purposes of the relief under this paragraph it does not
matter whether or not the individuals mentioned in sub-
paragraph (2)(a) are identified at the time of the chargeable
transaction.

(4) “Relievable trade” means a trade that is carried on on a
35commercial basis and with a view to profit.

(5) In this paragraph references to making a dwelling available to a
qualifying individual include making it available to persons who
are to share the accommodation with a qualifying individual as
that individual’s family.

(6) 40Where the purchaser is a company, “relevant group member”
means a company which is a member of the same group of
companies as the purchaser for the purposes mentioned in
paragraph 1(2) of Schedule 7 (group relief).

More about the condition in paragraph 5D(2)(a)

5E (1) In a case where the person carrying on the qualifying trade
mentioned in paragraph 5D(1) carries it on in partnership with
one or more other persons, “qualifying partner” means any
5individual who is a member of the partnership.

(2) “Qualifying employee” means an individual employed for the
purposes of the qualifying trade.

(3) In a case falling within sub-paragraph (1), the condition in
paragraph 5D(2)(a) is taken not to be met if the individuals, or a
10class of individuals, to whom it is proposed to make the dwelling
available for use as living accommodation include, or are likely to
include, a member of the partnership who is (or will at the relevant
time be) entitled to a 10% or greater share—

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

(b) 15in any company beneficially entitled to the higher
threshold interest mentioned in paragraph 5D(1), or

(c) in that higher threshold interest.

(4) In addition, the condition in paragraph 5D(2)(a) is taken not to be
met if the individuals, or a class of individuals, to whom it is
20proposed to make the dwelling available for use as living
accommodation include, or are likely to include, an individual
employed for the purposes of the trade in question who is (or will
at the relevant time be)—

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

(i) 25in the income profits of the trade, or

(ii) in any company that is beneficially entitled to the
higher threshold interest, or

(iii) in that higher threshold interest, or

(b) employed to provide excluded domestic services.

(5) 30The reference in sub-paragraph (4)(b) to an individual employed
to provide excluded domestic services is to an individual the
duties of whose employment include the provision of services in
connection with the (actual or intended) occupation, by an
individual to whom sub-paragraph (6) applies, of the dwelling
35mentioned in paragraph 5D(2)(a) (“the relevant dwelling”), or a
linked dwelling.

(6) This sub-paragraph applies to any individual who is connected
with a person who is or is to be beneficially entitled to the higher
threshold interest.

(7) 40The following are “linked” dwellings for the purposes of sub-
paragraph (5)—

(a) if the conditions in section 114(2) of the Finance Act 2013
are met in relation to the relevant dwelling and another
dwelling, that other dwelling;

(b) 45a dwelling that is linked to the relevant dwelling, as
described in section 115(1) of the Finance Act 2013.

(8) For the purposes of sub-paragraphs (3)(c) and (4)(a) 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.

(9) Section 145 of the Finance Act 2013 (meaning of “10% or greater
5share in a company”) applies for the purposes of this paragraph as
for the purposes of section 144 of that Act.

(10) In this paragraph references to employment include the holding of
an office.

Farmhouses

5F (1) 10Paragraph 3 does not apply to a chargeable transaction so far as its
subject-matter consists of a higher threshold interest in or over a
dwelling—

(a) that is, or is to be, a farmhouse, and

(b) in relation to which the conditions in sub-paragraph (3) are
15met.

(2) The reference in sub-paragraph (1) to a dwelling that “is or is to be
a farmhouse” is to a dwelling that forms part of land that is to be
occupied, or to continue to be occupied, for the purposes of a
qualifying trade of farming.

(3) 20The conditions are that—

(a) the dwelling is to be occupied for the purposes of that
trade by a qualifying farm worker,

(b) reasonable commercial plans have been formulated under
which such occupation is either to continue from the
25effective date of the chargeable transaction or to begin
without delay (except so far as delay may be justified by
commercial considerations or cannot be avoided), and

(c) occupation of the farmhouse by a qualifying farm worker
is then expected to continue as part of the normal way in
30which the trade is, or is to be, carried on.

(4) In sub-paragraph (3) “qualifying farm worker” means an
individual who occupies the dwelling for the purposes of the trade
mentioned in that sub-paragraph and has a substantial
involvement—

(a) 35in the day-to-day work of the trade, or

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

(5) “Qualifying trade of farming” means a trade of farming that is
carried on—

(a) on a commercial basis, and

(b) 40with a view to the realisation of profits.

(6) A person occupying part of a dwelling is regarded as occupying
the dwelling for the purposes of this paragraph.

(7) In this paragraph—

(a) “farming” has the same meaning as in the Corporation Tax
45Acts (see section 1125 of CTA 2010), except that in this
paragraph “farming” includes market gardening;

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

Withdrawal of relief

5G (1) Sub-paragraph (2) applies where relief under paragraph 5 has
5been allowed in respect of a higher threshold interest forming the
whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years
beginning with the effective date of the chargeable transaction
(“the control period”) a requirement in sub-paragraph (3) is not
10met.

(3) The requirements are that—

(a) the higher threshold interest (if still held by the purchaser)
is held exclusively for one or more of the purposes
mentioned in paragraph 5(1),

(b) 15any chargeable interest derived from the higher threshold
interest that may be held by the purchaser is held
exclusively for one or more of those purposes, and

(c) (if the higher threshold interest or a chargeable interest
derived from it is held by the purchaser) no non-qualifying
20individual is permitted to occupy the dwelling.

(4) The requirements in sub-paragraph (3)(a) and (b) do not apply in
relation to times when, because of a change of circumstances that
is unforeseen and beyond the purchaser’s control, it is not
reasonable to expect the purposes for which the higher threshold
25interest was acquired to be carried out.

(5) Sub-paragraph (6) applies if a higher threshold interest was
acquired for a purpose mentioned in paragraph 5(1) but at some
time in the control period the activity in question (for instance,
exploitation of the interest as mentioned in paragraph 5(1)(a))—

(a) 30has not yet begun, or

(b) has ceased.

(6) For the purposes of sub-paragraph (3), the interest is taken to be
held for the purpose in question only if reasonable steps are being
taken to ensure that the purpose in question is carried out.

(7) 35In this paragraph “non-qualifying individual” (in relation to the
chargeable transaction mentioned in sub-paragraph (1)) has the
meaning given by paragraph 5A.

5H (1) This paragraph applies where relief under paragraph 5B (trades
involving making a dwelling open to the public) has been allowed
40in respect of a higher threshold interest forming the whole or part
of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years
beginning with the effective date of the chargeable transaction
(“the control period”) a requirement in sub-paragraph (3) is not
45met.

(3) The requirements are that—

(a) the higher threshold interest (if still held by the purchaser),
is being exploited as a source of income in the course of a
qualifying trade, and

(b) any chargeable interest derived from that interest that may
5be held by the purchaser is being exploited as mentioned
in paragraph (a).

(4) The requirements in sub-paragraph (3) do not apply in relation to
times when, because of a change of circumstances that is
unforeseen and beyond the purchaser’s control, it is not
10reasonable to expect the chargeable interest concerned to be
exploited in the manner specified.

(5) Sub-paragraph (6) applies if at some time in the control period the
higher threshold interest, or a chargeable interest derived from
it—

(a) 15has not begun to be exploited as mentioned in sub-
paragraph (3), or

(b) has ceased to be so exploited.

(6) The requirements in sub-paragraph (3) are treated as being met if
reasonable steps are being taken to ensure that the chargeable
20interest in question begins to be exploited as mentioned in that
sub-paragraph, or that such exploitation of the interest is resumed.

5I (1) This paragraph applies where relief under paragraph 5C (financial
institutions acquiring dwellings in the course of lending) has been
allowed in respect of a higher threshold interest forming the
25whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if any requirement in sub-paragraph (3) is
not met at any time in the period of three years beginning with the
effective date of the chargeable transaction (“the control period”)
(but see sub-paragraphs (4) and (5)).

(3) 30The requirements are that—

(a) the purchaser continues to be a financial institution
carrying on a business that involves the lending of money,
and

(b) the interest is held for the purpose of resale in the course of
35the business.

(4) The requirements in sub-paragraph (3) apply only to times in the
control period when the purchaser holds—

(a) the higher threshold interest, or

(b) a chargeable interest that is derived from the higher
40threshold interest.

(5) The requirements in sub-paragraph (3) do not apply in relation to
times when, because of a change of circumstances that is
unforeseen and beyond the purchaser’s control, it is not
reasonable to expect those requirements to be met.

5J (1) 45This paragraph applies where relief under paragraph 5D
(dwellings for occupation by certain employees etc) has been
allowed in respect of a higher threshold interest forming the
whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if any requirement in sub-paragraph (3) is
not met at any time in the period of three years beginning with the
effective date of the chargeable transaction (“the control period”)
(but see sub-paragraphs (4) and (5)).

(3) 5The requirements are that—

(a) the purchaser, or a relevant group member (as defined in
paragraph 5D(6)), carries on a trade on a commercial basis
and with a view to profit,

(b) the dwelling is made available as mentioned in paragraph
105D(2)(a), and

(c) the dwelling is made so available for purposes that are
solely or mainly purposes of the trade mentioned in
paragraph (a) of this sub-paragraph.

(4) The requirements in sub-paragraph (3) apply only to times in the
15control period when the purchaser holds—

(a) the higher threshold interest, or

(b) a chargeable interest that is derived from the higher
threshold interest.

(5) The requirements in sub-paragraph (3) do not apply in relation to
20times when, because of a change of circumstances that is
unforeseen and beyond the purchaser’s control, it is not
reasonable to expect those requirements to be met.

(6) Sub-paragraph (7) applies if at some time in the control period the
dwelling—

(a) 25has not begun to be made available as mentioned in sub-
paragraph (3)(b) and (c), or

(b) has ceased to be so made available.

(7) The requirements in paragraphs (b) and (c) of sub-paragraph (3)
are treated as being met if reasonable steps are being taken to
30ensure that the dwelling will begin to be, or will return to being,
available as mentioned in those paragraphs.

5K (1) This paragraph applies where relief under paragraph 5F
(farmhouses) has been allowed in respect of a higher threshold
interest forming the whole or part of the subject-matter of a
35chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years
beginning with the effective date of the chargeable transaction
(“the control period”) the requirements in sub-paragraph (3) are
not met (but see sub-paragraphs (4) and (5)).

(3) 40The requirements are that—

(a) the land mentioned in paragraph 5F(2)(a) is occupied for
the purposes of a qualifying trade of farming, and

(b) the dwelling is occupied for the purposes of that trade by
a qualifying farm worker.

(4) 45The requirements in sub-paragraph (3) apply only to times in the
control period when the purchaser holds—

(a) the higher threshold interest, or