Stamp Duty Land Tax Bill (HC Bill 132)

A

BILL

TO

Make provision about stamp duty land tax on residential property
transactions; and for connected purposes.

Most Gracious Sovereign

WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the
United Kingdom in Parliament assembled, towards raising the necessary
supplies to defray Your Majesty’s public expenses, have freely and voluntarily
resolved to make the provision hereinafter mentioned; and do therefore most humbly
beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most
Excellent Majesty, by and with the advice and consent of the Lords Spiritual and
Temporal, and Commons, in this present Parliament assembled, and by the authority
of the same, as follows:—

1 Change in method of calculating tax on residential property transactions

(1) Section 55 of the Finance Act 2003 (general rules on calculating the amount of
stamp duty land tax chargeable) is amended as follows.

(2) In subsection (1) for “a percentage of the chargeable consideration for the
5transaction” substitute “determined in accordance with subsections (1B), (1C)
and (2)”.

(3) After subsection (1A) insert—

(1B) If the relevant land consists entirely of residential property and the
transaction is not one of a number of linked transactions, the amount of
10tax chargeable is determined as follows—

Step 1

Apply the rates specified in the second column of Table A below to the
parts of the relevant consideration specified in the first column of that
Table.

15Step 2

Add together the amounts calculated at Step 1 (if there are two or more
such amounts).

TABLE A: RESIDENTIAL

Part of relevant consideration Rate
So much as does not exceed £125,000 0%
So much as exceeds £125,000 but does
not exceed £250,000
202%
So much as exceeds £250,000 but does
not exceed £925,000
5%
So much as exceeds £925,000 but does
not exceed £1,500,000
10%
25
The remainder (if any) 12%

(1C) If the relevant land consists entirely of residential property and the
transaction is one of a number of linked transactions, the amount of tax
chargeable in respect of the particular transaction under consideration
30is determined as follows—

Step 1

Apply the rates specified in the second column of Table A in subsection
(1B) to the parts of the relevant consideration specified in the first
column of that Table.

35Step 2

Add together the amounts calculated at Step 1 (if there are two or more
such amounts).

Step 3

Multiply the amount given by Step 1 or Step 2, as the case may be, by—


40

where—

  • C is the chargeable consideration for the transaction, and

  • R is the relevant consideration.

where—

  • 45C is the chargeable consideration for the transaction, and

  • R is the relevant consideration.

(4) In subsection (2) for the words from the beginning of that subsection to the end
of Table A substitute—

(NONENONE) If the relevant land consists of or includes land that is not residential
50property, the amount of tax chargeable is the percentage of the
chargeable consideration for the transaction determined in accordance
with Table B below by reference to the amount of the relevant
consideration.

(5) In subsection (3) for “subsection (2)” substitute “subsections (1B) and (2)”.

(6) 55In subsection (4) at the beginning insert “For the purposes of subsections (1C)
and (2),”.

(7) Omit subsection (7).

(8) The Schedule, which makes amendments consequential on the amendments
made by this section, has effect.

Stamp Duty Land Tax BillPage 2

2 Citation, commencement and transitional provision etc

(1) This Act may be cited as the Stamp Duty Land Tax Act 2014.

(2) The amendments made by this Act have effect in relation to any land
transaction of which the effective date is, or is after, 4 December 2014.

(3) 5But those amendments do not have effect in relation to a transaction if the
purchaser so elects and either—

(a) the transaction is effected in pursuance of a contract entered into and
substantially performed before 4 December 2014, or

(b) the transaction is effected in pursuance of a contract entered into before
10that date and is not excluded by subsection (5).

(4) An election under subsection (3)—

(a) must be included in the land transaction return made in respect of the
transaction or in an amendment of that return, and

(b) must comply with any requirements specified by the Commissioners
15for Her Majesty’s Revenue and Customs as to its form or the manner of
its inclusion.

(5) A transaction effected in pursuance of a contract entered into before 4
December 2014 is excluded by this subsection if—

(a) there is any variation of the contract, or assignment (or assignation) of
20rights under the contract, on or after 4 December 2014,

(b) the transaction is effected in consequence of the exercise on or after that
date of any option, right of pre-emption or similar right, or

(c) on or after that date there is an assignment (or assignation), subsale or
other transaction relating to the whole or part of the subject-matter of
25the contract as a result of which a person other than the purchaser
under the contract becomes entitled to call for a conveyance.

(6) In subsections (3) to (5)—

  • “land transaction return”, in relation to a transaction, means the return
    under section 76 of the Finance Act 2003 in respect of that transaction;

  • 30“purchaser” has the same meaning as in Part 4 of that Act (see section
    43(4) of that Act);

  • “substantially performed”, in relation to a contract, has the same meaning
    as in that Part (see section 44(5) of that Act).

Stamp Duty Land Tax BillPage 3

Section 1

Schedule Consequential amendments

Introductory

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

5Reliefs

2 (1) Section 74 (exercise of collective rights by tenants of flats) is amended as
follows.

(2) In subsection (1A)—

(a) in the opening words, for “rate” substitute “amount”,

(b) 10in Step 2—

(i) for “rate of tax and the” substitute “amount of”, and

(ii) for “subsections (2) and (3)” substitute “subsection (1B)”,

(c) in Step 3—

(i) for “rate of tax and the” substitute “amount of”, and

(ii) 15for “subsections (2) and (3)” substitute “subsection (1B)”, and

(d) in Step 4 for “subsections (2) and (3) do” substitute “subsection (1B)
does”.

(3) For subsections (2) and (3) substitute—

(1B) Where step 2 or 3 of subsection (1A) requires the amount of tax
20chargeable to be determined in accordance with this subsection, it is
determined as follows.

Step 1

Determine the amount of tax chargeable under section 55 as if the
relevant consideration for the chargeable transaction were the
25fraction of the relevant consideration calculated under step 1 of
subsection (1A).

Step 2

Multiply the amount determined at step 1 by the number of
qualifying flats contained in the premises.

3 30In section 75 (crofting community right to buy) for subsections (2) and (3)
substitute—

(1A) In that case, the amount of tax is determined as follows—

Step 1

Determine the amount of tax chargeable under section 55 as if the
35relevant consideration for the chargeable transaction were the
fraction of the relevant consideration produced by dividing the total
amount of that consideration by the number of crofts being bought.

Step 2

Multiply the amount determined at step 1 by the number of crofts
40being bought under that transaction.

4 (1) In section 80(2) (requirement to make return where contingency ceases, or
consideration is ascertained, and tax or additional tax is payable etc)—

(a) in the opening words, after “before” insert “(calculated in either case
according to the effective date of the transaction)”, and

(b) 45omit paragraph (c), but not the “and” at the end.

(2) In section 80(4) (cases where less tax payable) after “in respect of a
transaction” insert “(calculated according to its effective date)”.

5 In section 81ZA(1)(c) (alternative finance arrangements: additional tax
where reliefs withdrawn to be calculated by reference to effective date) for
50“by reference to the rates in force at” substitute “according to”.

6 In section 81A(1) (requirement to make return in consequence of later linked
transactions where tax or additional tax is payable etc)—

(a) in the opening words, after “before” insert “(calculated in either case
according to the effective date of the earlier transaction)”, and

(b) 55omit paragraph (c), but not the “and” at the end.

7 (1) Schedule 6B (transfers involving multiple dwellings) is amended as follows.

(2) For paragraph 4(1) substitute—

(1) If relief under this Schedule is claimed for a relevant transaction,
the amount of tax chargeable in respect of the transaction is the
60sum of—

(a) the tax related to the consideration attributable to
dwellings (see paragraph 5(1) and (2)), and

(b) the tax related to the remaining consideration (if any) (see
paragraph 5(7)).

(3) 65Omit paragraph 4(4).

(4) For the italic heading before paragraph 5 substitute “The amount of tax
chargeable”.

(5) For paragraph 5(1) and (2) substitute—

(1) For the purposes of paragraph 4(1)(a), “the tax related to the
70consideration attributable to dwellings” is determined as
follows—

Step 1

Determine the amount of tax that would be chargeable under
section 55 on the assumption that—

  • (a)

    75the relevant land consisted entirely of residential
    property, and

    (b)

    the relevant consideration were the fraction
    produced by dividing total dwellings
    consideration by total dwellings.

80Step 2

Multiply the amount determined at Step 1 by total dwellings.

Step 3

Stamp Duty Land Tax BillPage 4

If the relevant transaction is one of a number of linked
transactions, go to Step 4.

Otherwise, the amount found at Step 2 is the tax related to the
5consideration attributable to dwellings.

Step 4

Multiply the amount found at Step 2 by—


where—

  • 10CD” is the consideration attributable to dwellings for the
    relevant transaction, and

  • “TDC” is total dwellings consideration.

(2) But if the amount found at Step 2 of sub-paragraph (1) is less than
1% of total dwellings consideration, for the purposes of paragraph
154(1)(a) “the tax related to the consideration attributable to
dwellings” is an amount equal to 1% of the consideration
attributable to dwellings.

(6) For paragraph 5(7) substitute—

(7) For the purposes of paragraph 4(1)(b), “the tax related to the
20remaining consideration” is the appropriate fraction of the
amount of tax which (but for this Schedule) would be due in
respect of the relevant transaction.

(8) In subsection (7) “the appropriate fraction” means—


25where—

  • “RC” is the remaining consideration for the relevant
    transaction,

  • “TDC” is total dwellings consideration, and

  • “TRC” is total remaining consideration.

(9) 30For a transaction that is not one of a number of linked transactions,
“total remaining consideration” is the remaining consideration for
that transaction (see paragraph 4(3)).

(10) For one of a number of linked transactions, “total remaining
consideration” is—

(a) 35the total of the chargeable consideration for all those
transactions, less

(b) total dwellings consideration.

(7) In paragraph 6(1) (change of circumstances after relief given) for paragraph
(c) substitute—

(c) 40had the event occurred immediately before the effective
date of the transaction, more tax (calculated according to
the effective date of the transaction) would have been
payable, whether because the transaction would not have
been a relevant transaction or otherwise.

(8) 45In paragraph 6(3) (requirement to make return where more tax payable than
was paid) omit paragraph (c), but not the “and” at the end.

Stamp Duty Land Tax BillPage 5

8 In paragraph 8(1) of Schedule 7 (acquisition relief)—

(a) for “rate” substitute “amount”, and

(b) for “0.5%” substitute “an amount equal to 0.5% of the chargeable
consideration for the transaction”.

5Further consequential amendments

9 In section 77(1)(b) (notifiable transactions) for “which tax is chargeable at a
rate of 1% or higher” substitute “any part of which tax is chargeable at a rate
of more than 0%”.

10 In section 77A(2)(a) (notifiable transactions: exception of certain acquisitions
10of major interests in land: interpretation) for “1% or higher” substitute “more
than 0%”.

11 In section 109(2)(b) (general power to vary Part 4 of the 2003 Act: power to
alter descriptions of transaction chargeable at any existing rate or amount)
after “amount” insert “, or in respect of which tax is calculated in accordance
15with any particular provision”.

12 In section 122 omit the entry for “rate of tax”.

13 In paragraph 3(1)(b) of Schedule 4A (certain high-value transactions not
linked to other transactions for purposes of section 55(4)) for “55(4)”
substitute “55(1B), (1C) and (4)”.

14 20In paragraph 4B(1) of Schedule 9 (shared ownership transactions) for “rate”
substitute “amount”.

15 In paragraph 12 of Schedule 9 (shared ownership trusts) for “rate” substitute
“amount”.

16 In paragraph 30(2) of Schedule 15 (partnerships) in paragraph (a) for “rate of
25tax chargeable under that section is 1% or higher” substitute “amount of tax
chargeable under that section is not zero”.

17 In paragraph 3(3) of Schedule 17A (leases that continue after a fixed term:
additional tax to be calculated by reference to effective date)—

(a) in the opening words, after “before” insert “(calculated in either case
30according to the effective date of the transaction)”, and

(b) omit paragraph (c), but not the “and” at the end.

18 In paragraph 4(3) of Schedule 17A (treatment of leases for indefinite term:
additional tax to be calculated by reference to effective date)—

(a) in the opening words, after “before” insert “(calculated in either case
35according to the effective date of the transaction)”, and

(b) omit paragraph (c), but not the “and” at the end.

19 In paragraph 7(1) of Schedule 19 (old linked transactions relevant to rate of
tax) for “rate” substitute “amount”.

20 In paragraph 9(4) of Schedule 19 (exercise of option or right of pre-emption
40acquired before implementation date) for “rate” substitute “amount”.

Consequential amendments of amending enactments

21 In consequence of amendments made by preceding provisions of this Act—

(a) in the Finance Act 2006, omit section 162(1),

Stamp Duty Land Tax BillPage 6

(b) in the Finance Act 2010, omit section 7(1), and

(c) in the Finance Act 2012—

(i) omit section 213(1), and

(ii) in Schedule 35, omit paragraphs 2(4) and (6) and 5(3).