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Finance Bill
Part 3 — Annual tax on enveloped dwellings

75

 

125     

Demolition without replacement

(1)   

Subsection (2) applies if a person entitled to a single-dwelling interest in the old

dwelling notifies an officer of Revenue and Customs that to the best of the

person’s knowledge there is no proposal to construct any dwelling or

dwellings on the site of the old dwelling.

5

(2)   

Any question as to whether a person has a single-dwelling interest in the old

dwelling is determined on the assumption that the old dwelling ceases (or

ceased) to exist with effect from the end of the day mentioned in subsection (3).

(3)   

That day is the first day on which—

(a)   

the demolition has begun, and

10

(b)   

as a result, the building in question is no longer suitable for use as a

dwelling.

(4)   

A notification under subsection (1) must be given—

(a)   

in an annual tax on enveloped dwellings return, or

(b)   

by amending such a return.

15

(5)   

In this section—

(a)   

“building” includes part of a building;

(b)   

“the site of the old dwelling” means the land on which the dwelling

stood and that counted as part of the dwelling;

(c)   

the reference to the construction of a dwelling or dwellings on that site

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is to the construction of a dwelling or dwellings wholly or partly on the

site.

126     

Demolition and replacement: new dwellings

(1)   

Subsection (2) applies if one or more dwellings (referred to below as “new

dwellings”) are constructed on the site of the old dwelling after the demolition.

25

(2)   

Any question as to whether or not a person has a single-dwelling interest at

any time either in the old dwelling or in a new dwelling is determined on the

assumption that the old dwelling ceases to exist, and the new dwellings come

into existence, only when the rebuilding is completed.

(3)   

The day after the rebuilding is completed is a valuation date in the case of any

30

single-dwelling interest in a new dwelling.

(4)   

In subsection (1)—

(a)   

“the site of the old dwelling” means the land on which the dwelling

stood and that counted as part of the dwelling;

(b)   

the reference to the construction of a dwelling on that site is to the

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construction of a dwelling wholly or partly on the site.

(5)   

References to when the rebuilding is completed are to the end of whichever of

the following days is earlier—

(a)   

the completion day;

(b)   

the day on which the last of the new dwellings to be occupied is first

40

occupied.

(6)   

The reference in subsection (5) to the “completion day” is to the day on which

the new dwelling is treated as having come into existence (or the first day on

 
 

Finance Bill
Part 3 — Annual tax on enveloped dwellings

76

 

which all the new dwellings are treated as having come into existence) for the

purposes of—

(a)   

Part 1 of the Local Government Finance Act 1992 (council tax: England

and Wales) (see section 17 of that Act), or

(b)   

Part 2 of that Act (council tax: Scotland) (see section 83 of that Act), or

5

(c)   

the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I. 28)) (see

Article 25B of that Order).

127     

Demolition and replacement: other cases

(1)   

This section applies if—

(a)   

a building is constructed on the site of the old dwelling after the

10

demolition, and

(b)   

section 126 does not apply.

(2)   

Any question as to whether a person has a single-dwelling interest in the old

dwelling is determined on the assumption that the old dwelling ceases to exist

on the day after—

15

(a)   

the day on which the change of use is approved, or

(b)   

if later, the day on which the old dwelling ceased to be occupied.

(3)   

In subsection (1)—

(a)   

“the site of the old dwelling” means the land on which the dwelling

stood and that counted as part of the dwelling;

20

(b)   

the reference to the construction of a dwelling on that site is to the

construction of a dwelling wholly or partly on the site.

128     

Conversion of dwelling for non-residential use

(1)   

This section applies where a building or part of a building—

(a)   

has been suitable for use as a dwelling, and

25

(b)   

is altered for the purpose of making it suitable for use otherwise than

as a dwelling.

(2)   

The question whether or not the alterations make the building or part

unsuitable for use as a dwelling is one of fact (but see subsection (3)).

(3)   

The building or part will not be regarded as having become unsuitable for use

30

as a dwelling as a result of the alterations at any time unless by that time any

planning permission or development consent required for the alterations has

been granted (and the alterations have been made in accordance with any such

permission or consent).

(4)   

In this section “planning permission” has the meaning given by the relevant

35

planning enactment.

(5)   

“The relevant planning enactment” means—

(a)   

in relation to land in England and Wales, section 336(1) of the Town and

Country Planning Act 1990;

(b)   

in relation to land in Scotland, section 277(1) of the Town and Country

40

Planning (Scotland) Act 1997;

(c)   

in relation to land in Northern Ireland, Article 2(2) of the Planning

(Northern Ireland) Order 1991 (S.I. 1991/1220 (N.I. 11)).

 
 

Finance Bill
Part 3 — Annual tax on enveloped dwellings

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(6)   

In this section “development consent” means development consent under the

Planning Act 2008.

129     

Damage to a dwelling

(1)   

This section applies where a dwelling is damaged so as to be temporarily

unsuitable for use as a dwelling.

5

(2)   

The unsuitability for use as a dwelling is taken into account in applying the

definition of “dwelling” for the purposes of this Part (see section 110) only if the

first and second conditions are met.

(3)   

The first condition is that the damage is—

(a)   

accidental, or

10

(b)   

otherwise caused by events beyond the control of the person entitled to

the single-dwelling interest.

(4)   

The second condition is that, as a result of the damage, the building concerned

is unsuitable for use as a dwelling for at least 90 consecutive days.

(5)   

Where the first and second conditions are met—

15

(a)   

the entire period of unsuitability for use as a dwelling (including the

first 90 days) is taken into account in applying the definition of

“dwelling”, and

(b)   

work done in that period to restore the building to suitability for use as

a dwelling does not count, for the purposes of section 110 or 111, as

20

construction or adaptation of the building for use as a dwelling.

(6)   

The first condition is regarded as not being met if the damage occurs in the

course of work that—

(a)   

is done for the purpose of altering the dwelling (or a building of which

it forms part), and

25

(b)   

itself involves, or could be expected to involve, making the building

unsuitable for use as a dwelling for 30 days or more.

(7)   

In this section—

(a)   

references to alteration include partial demolition;

(b)   

references to a building include a part of a building.

30

(8)   

In this section references to damage include damage done before 1 April 2013;

and days before 1 April 2013 may be taken into account for the purposes of

subsection (4).

Reliefs

130     

Effect of reliefs under sections 131 to 148

35

(1)   

Subsection (2) applies where tax is charged, in respect of a single-dwelling

interest, for a chargeable period that includes one or more days that are

relievable as a result of any of the provisions listed in subsection (3) (or for

more than one such period).

(2)   

For any such period, the adjusted chargeable amount is to be calculated on the

40

basis that the chargeable person is not within the charge with respect to the

interest on any relievable day.

 
 

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Part 3 — Annual tax on enveloped dwellings

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(3)   

The provisions are—

section 131 (property rental businesses);

section 132 (rental property: preparation for sale etc);

section 135 (dwellings opened to the public);

section 136 (property developers);

5

section 137 (property developers: exchange of dwellings);

section 139 (property traders);

section 141 (financial institutions acquiring dwellings in the course of

lending);

section 143 (occupation by certain employees or partners);

10

section 146 (farmhouses);

section 148 (providers of social housing).

(4)   

See also section 104 (adjustment of amount chargeable and claim for relief).

131     

Property rental businesses

(1)   

A day in a chargeable period is relievable in relation to a single-dwelling

15

interest if on that day the interest—

(a)   

is being exploited as a source of rents or other receipts (other than

excluded rents) in the course of a qualifying property rental business

carried on by a person entitled to the interest, or

(b)   

steps are being taken to secure that the interest will, without undue

20

delay, be so exploited in the course of a qualifying property rental

business that is being carried on, or is to be carried on, by a person

entitled to the interest.

(2)   

A day is not relievable by virtue of subsection (1) or section 132 in the case of a

single-dwelling interest if on that day a non-qualifying individual is permitted

25

to occupy the dwelling.

(3)   

In this Part “qualifying property rental business” means a property rental

business that is run on a commercial basis and with a view to profit.

(4)   

A business is a “property rental business” for the purposes of subsection (3) if

it is a property business as defined in Chapter 2 of Part 4 of CTA 2009, but—

30

(a)   

the question whether or not a business is a property rental business for

the purposes of subsection (3) is determined without reference to

whether or not any profits of the business are chargeable to corporation

tax (and section 204(2) of CTA 2009 is therefore disregarded), and

(b)   

for the purposes of this subsection the “rents or other receipts” referred

35

to in section 207(1) of CTA 2009 are taken not to include excluded rents

(5)   

In subsection (1)(b) “without undue delay” means without delay except so far

as delay is justified by commercial considerations or cannot be avoided.

(6)   

In this Part “excluded rents” means rents within any of classes 2 to 6 in the table

in section 605(2) of CTA 2010.

40

132     

Rental property: preparation for sale, demolition etc

(1)   

A day (“day X”) on which a person (“P”) is entitled to a single-dwelling interest

is relievable in relation to that interest if—

 
 

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Part 3 — Annual tax on enveloped dwellings

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(a)   

on day X the dwelling is unoccupied and any of the first to fourth

conditions is met (see below),

(b)   

day X is preceded by one or more days (“qualifying days”) that are

relievable under section 131 in relation to the interest and on which P,

or a relevant partner, was entitled to the interest, and

5

(c)   

the days (if any) between day X and the last of the qualifying days to

precede day X are all relievable under this section.

First condition

   

The first condition is that steps are being taken to secure that the interest will

be sold without undue delay.

10

Second condition

   

The second condition is that—

(a)   

steps are being taken to secure that the dwelling will be demolished

without undue delay, and

(b)   

if it is intended that a new dwelling will be constructed on the site of

15

the existing dwelling, the intention is that it will be used in a relievable

way.

Third condition

   

The third condition is that—

(a)   

steps are being taken to secure that the dwelling will be converted into

20

a different dwelling without undue delay, and

(b)   

it is intended that the new dwelling will be used in a relievable way.

Fourth condition

   

The fourth condition is that steps are being taken to secure that the dwelling

will be converted into a building other than a dwelling without undue delay.

25

(2)   

A dwelling is “used in a relievable way” for the purposes of subsection (1) if

the single-dwelling interest in question is exploited in such a way, or held in

such a way and for such purposes, (or, as the case requires, the dwelling itself

is exploited or used in such a way) that a day of such exploitation, ownership

or use would be relievable under any of sections 131, 135, 143 and 146.

30

(3)   

In this section—

“relevant partner”, where P is (on day X) entitled to the interest as a

member of a partnership, means a person who was at the time in

question carrying on the qualifying rental property business concerned

as a member of that partnership;

35

“without undue delay” means without delay, except so far as delay is

justified by commercial considerations or cannot be avoided.

133     

Non-qualifying occupation: look-forward and look-back

(1)   

Subsection (2) applies if on a day in a chargeable period (“the day of non-

qualifying occupation”)—

40

(a)   

a single-dwelling interest to which a person (“the landlord”) is entitled

is being exploited as mentioned in section 131(1)(a), or steps are being

taken to secure that the interest will be so exploited, as mentioned in

section 131(1)(b), and

(b)   

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

45

 
 

Finance Bill
Part 3 — Annual tax on enveloped dwellings

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(2)   

No subsequent day in that chargeable period, or in any of the subsequent 3

chargeable periods, that meets the continuity of ownership condition and

would (in the absence of this subsection) be relievable by virtue of section

131(1)(b) is treated as relievable by virtue of that provision unless a day of

qualifying use falls between that day and the day of non-qualifying

5

occupation.

(3)   

A day meets the continuity of ownership condition if on that day—

(a)   

the landlord is entitled to the single-dwelling interest, or

(b)   

if the landlord carried on or (as the case requires) intended to carry on

the property rental business in partnership, another member of the

10

partnership is entitled to the interest.

(4)   

Subsection (5) applies if a person who is a non-qualifying individual in relation

to a single-dwelling interest occupies the dwelling on a day in a chargeable

period (“the day of non-qualifying occupation”).

(5)   

An earlier day in that or the preceding chargeable period (“the earlier day”) is

15

not relievable by virtue of section 131(1)(b) or 132 if a relevant person is entitled

to the single-dwelling interest on that day.

(6)   

In subsection (5) “relevant person” means—

(a)   

a person who is entitled to the single-dwelling interest on the day of

non-qualifying occupation, or

20

(b)   

if a person falling within paragraph (a) is or has been a member of a

partnership whose members have at any time exploited the single-

dwelling interest as a source of rents and receipts in a property rental

business, any other member of that partnership.

(7)   

Subsection (5) does not apply in relation to the earlier day if a day that is

25

relievable by virtue of section 131(1)(a) falls between that earlier day and the

day of non-qualifying occupation.

(8)   

For the purposes of this section—

(a)   

“day of qualifying use”, in relation to a single-dwelling interest, means

a day that is relievable in the case of the interest by virtue of section

30

131(1)(a);

(b)   

occupation of any part of a dwelling is regarded as occupation of the

dwelling.

134     

Meaning of “non-qualifying individual”

(1)   

In sections 131 and 133 “non-qualifying individual”, in relation to a single-

35

dwelling interest, means any of the following—

(a)   

an individual who is entitled to the interest (otherwise than as a

member of a partnership),

(b)   

an individual (“a connected person”) who is connected with a person

entitled to the interest,

40

(c)   

if a person is entitled to the interest as a member of a partnership, an

individual who is, or is connected with, a qualifying member of that

partnership,

(d)   

an individual (“a relevant settlor”) who is the settlor in relation to a

settlement of which a trustee is (in the capacity of trustee) connected

45

with a person who is entitled to the interest,

(e)   

the spouse or civil partner of a connected person or of a relevant settlor,

 
 

Finance Bill
Part 3 — Annual tax on enveloped dwellings

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(f)   

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,

(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 paragraph (g), or

5

(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)   

In subsection (1)(c) “qualifying member”, in relation to a partnership, means a

member of the partnership who is entitled to a 50% or greater share—

10

(a)   

in the income profits of the partnership, or

(b)   

in the partnership’s assets.

(3)   

In subsection (1)(i) “relevant collective investment scheme”, in relation to a

single-dwelling interest, means a collective investment scheme that meets the

ownership condition with respect to the interest.

15

(4)   

A person who participates in a collective investment scheme is a “major

participant” in the scheme if the person—

(a)   

is 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

20

(b)   

would in the event of the winding up of the scheme be entitled to 50%

or more of the assets of the scheme that would then be available for

distribution among the participants.

(5)   

The reference in subsection (4)(a) to profits or income arising from the scheme

is to profits or income arising from the acquisition, holding, management or

25

disposal of the property subject to the scheme.

(6)   

For the purposes of subsection (1), section 1122 of CTA 2010 (as applied by

section 170) has effect as if subsections (7) and (8) of that section (application of

rules about connected persons to partnerships) were omitted.

(7)   

In this section—

30

“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).

(8)   

In subsection (1)(d) “trustee” is to be read in accordance with section 1123(3) of

CTA 2010 (“connected persons”: supplementary).

35

135     

Dwellings opened to the public

(1)   

A day in a chargeable period is relievable in relation to a single-dwelling

interest if the first or second condition is met on that day.

(2)   

The first condition is that the dwelling is being exploited as a source of income

in the course of a qualifying trade in the normal course of which the public are

40

offered the opportunity to make use of, stay in or otherwise enjoy the dwelling

as customers of the trade on least 28 days in any year.

(3)   

The second condition is that steps are being taken to secure—

 
 

 
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