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Finance (No. 2) BillPage 200

(3) Subsection (4) applies if, throughout a period of 12 months, a
company—

(a) holds a UK residential asset, and

(b) is eligible to become a member of an NRCGT group.

(4) 5If the company has not elected to become a member of the NRCGT
group by the end of that period of 12 months, the company is not
eligible to become a member of the NRCGT group at any time after
the end of that period of 12 months.

(5) The effect of subsection (4) in relation to a company expires if at any
10time the company—

(a) no longer holds the whole or part of any UK residential asset
that was held by the company at any time in the 12 month
period referred to in subsection (3), but

(b) holds another UK residential asset.

(6) 15For the purposes of this section a person holds a “UK residential
asset” at any time when the person holds an interest in UK land the
disposal of which would be a disposal of a UK residential property
interest.

188G Company ceasing to be a member of an NRCGT group

(1) 20A company ceases to be a member of an NRCGT group if it ceases—

(a) to be a member of the potential pooling group, or

(b) to meet the any of the conditions in paragraphs (a) to (d) of
section 188A(3).

(2) Where a company ceases to be a member of an NRCGT group, the
25company is treated for the purposes of this Act and the Management
Act as having—

(a) disposed of the relevant assets immediately before the
company ceased to be a member of the NRCGT group, and

(b) immediately re-acquired them,

30at their market value at that time.

(3) References in subsection (2) to a company ceasing to be a member of
an NRCGT group do not apply to cases where a company ceases to
be a member of the potential pooling group in consequence of
another member of that group ceasing to exist.

(4) 35Subsection (2) does not apply in a case where all the companies
which are members of an NRCGT group cease to be members of that
NRCGT group by reason only of an event which causes—

(a) the principal company of the potential pooling group to cease
to be a closely-held company, or

(b) 40the head of a sub-group of which they are members, to cease
to be a closely-held company or to become a member of
another group (as defined in section 170).

(5) Subsection (2) does not apply where a company which is a member
of an NRCGT group ceases to be a member of the potential pooling
45group by reason only of the fact that the principal company of the
potential pooling group becomes a member of another group (as
defined in section 170).

Finance (No. 2) BillPage 201

(6) In subsection (2) “the relevant assets” means any assets the company
holds immediately before it ceases to be a member of the NRCGT
group the disposal of which would be a disposal of a UK residential
property interest (see Schedule B1).

(7) 5For the purposes this section—

188H The responsible members of an NRCGT group

(1) Anything required or authorised to be done under this Act or the
15Management Act by or in relation to the relevant body of an NRCGT
group is required or authorised to be done by or in relation to all the
responsible members of that NRCGT group for that tax year.

(2) The “responsible members” of an NRCGT group for a tax year are—

(a) all the companies which are members of the NRCGT group
20at any time in that tax year, and

(b) any companies which have subsequently become members
of the NRCGT group.

(3) This section is subject to section 188J (representative company).

188I Joint and several liability of responsible members

25Where the responsible members of an NRCGT group are liable, in
connection with their responsibility under section 188H to make a
payment of tax or interest on unpaid tax, or pay any other amount,
that liability is a joint and several liability of those responsible
members.

188J 30The representative company of an NRCGT group

(1) Anything required or authorised to be done under this Act or the
Management Act by or in relation to the relevant body of an NRCGT
group may instead be done by or in relation to the company which is
for the time being the representative company of the group.

(2) 35This includes the making of the declaration required by section 9(2)
or 12ZB(3)(b) of the Management Act (declaration that return is
correct and complete).

(3) The “representative company” means a member of the NRCGT
group nominated by all the members of that group for the purposes
40of this section.

(4) A nomination under subsection (3), or the revocation of such a
nomination, has effect only after written notice of the nomination or
revocation has been given to an officer of Revenue and Customs.

188K Interpretation of sections 188A to 188J

(1) 45In sections 188A to 188J—

Finance (No. 2) BillPage 202

(a) references to the “relevant body” of an NRCGT group are to
be interpreted in accordance with section 188D(4);

(b) references to an NRCGT gain or loss accruing to a member of
an NRCGT group are to such a gain or loss accruing to a
5company at a time when the company is a member of the
NRCGT group.

(2) In sections 188A to 188J and this section—

31 (1) Section 260 (gifts on which inheritance tax is chargeable etc) is amended as
follows.

(2) In subsection (1), for “and 261” substitute “, 261 and 261ZA”.

(3) After subsection (6) insert—

(6ZA) 20Subsections (6ZB) and (6ZC) apply in any case where—

(a) the disposal is a non-resident CGT disposal, and

(b) the transferee is resident in the United Kingdom.

(6ZB) Subsections (3) and (4) have effect in relation to the disposal as if the
reference to “chargeable gain” were a reference to “chargeable
25NRCGT gain”.

(6ZC) Subsection (5) has effect in relation to the disposal as if the reference
to “the excess referred to in paragraph (b) above” were a reference to
“the chargeable NRCGT gain which, ignoring this section and
section 17(1), would accrue to the transferor on the disposal”.

32 30In section 261 (section 260 relief: gifts to non-residents), in subsection (1), for
“Section 260(3)” substitute “Subject to section 261ZA, section 260(3)”.

33 After section 261 insert—

261ZA Gifts of UK residential property interests to non-residents

(1) This section applies where the disposal in relation to which a claim
35could be made under section 260 is a disposal of a UK residential
property interest to a transferee who is not resident in the United
Kingdom and, ignoring section 260—

(a) a gain would accrue to the transferor on the disposal, and

(b) on the assumption that the disposal is a non-resident CGT
40disposal (whether or not that is the case), that gain would be
a chargeable NRCGT gain (see section 57B and Schedule
4ZZB).

(2) Section 260(3) has effect in relation to the disposal as if it read—

(3) Where this subsection applies in relation to a disposal, the
45amount of any chargeable gain which, apart from this

Finance (No. 2) BillPage 203

section, would accrue to the transferor on the disposal, shall
be reduced by an amount equal to the held-over gain on the
disposal.

(3) Where the disposal is a non-resident CGT disposal—

(a) 5section 260(3), as modified by subsection (2) of this section,
and section 260(4) have effect in relation to the disposal as if
the references to “chargeable gain” were references to
“chargeable NRCGT gain”, and

(b) section 260(5) has effect in relation to the disposal as if the
10reference to “the excess referred to in paragraph (b) above”
were a reference to “the chargeable NRCGT gain which,
ignoring this section and section 17(1), would accrue to the
transferor on the disposal”.

(4) Where a claim for relief is made under section 260 in relation to the
15disposal mentioned in subsection (1), on a subsequent disposal by
the transferee of the whole or part of the interest in UK land which is
the subject of the disposal mentioned in subsection (1), the whole or
a corresponding part of the held-over gain (see section 260(4))—

(a) is deemed to accrue to the transferee (in addition to any gain
20or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as a
chargeable NRCGT gain accruing on a non-resident CGT
disposal.

(5) Where the subsequent disposal mentioned in subsection (4) is a
25disposal within section 260(2)(a), subsection (7) of that section has
effect in relation to the disposal as if—

(a) the reference to “the chargeable gain accruing to the
transferee on the disposal of the asset” were a reference to the
chargeable gain accruing on the disposal as computed apart
30from subsection (4), and

(b) the reference in section 260(7)(b) to “the chargeable gain”
were a reference to—

(i) the chargeable gain (or, where the disposal is a non-
resident CGT disposal, the chargeable NRCGT gain)
35accruing on the disposal, and

(ii) the held-over gain deemed to accrue under
subsection (4).

(6) In this section, “interest in UK land” has the meaning given by
paragraph 2 of Schedule B1.

34 40In section 288 (interpretation), in subsection (1), at the appropriate place
insert—

35 (1) 5Schedule 1 (application of exempt amount etc in cases involving settled
property) is amended as follows.

(2) In paragraph 1(1), for “(5C)” substitute “(5D)”.

(3) In paragraph 2(1), for “(5C)” substitute “(5D)”.

36 After Schedule A1, insert—

Schedule B1 10Disposals of UK residential property interests

Meaning of “disposal of a UK residential property interest”

1 (1) For the purposes of this Act, the disposal by a person (“P”) of an
interest in UK land (whether made before or after this Schedule
comes into force) is a “disposal of a UK residential property
15interest” if the first or second condition is met.

(2) The first condition is that—

(a) the land has at any time in the relevant ownership period
consisted of or included a dwelling, or

(b) the interest in UK land subsists for the benefit of land that
20has at any time in the relevant ownership period consisted
of or included a dwelling.

(3) The second condition is that the interest in UK land subsists under
a contract for an off-plan purchase.

(4) In sub-paragraph (2) “relevant ownership period” means the
25period—

(a) beginning with the day on which P acquired the interest in
UK land or 6 April 2015 (whichever is later), and

(b) ending with the day before the day on which the disposal
occurs.

(5) 30If the interest in UK land disposed of by P as mentioned in sub-
paragraph (1) results from interests in UK land which P has
acquired at different times (“the acquired interests”), P is regarded
for the purposes of sub-paragraph (4)(a) as having acquired the
interest when P first acquired any of the acquired interests.

(6) 35In this paragraph—

(7) Paragraph 10 and 21 of Schedule 4ZZB contains further provision
about interests under contracts for off-plan purchases.

Finance (No. 2) BillPage 205

“Interest in UK land”

2 (1) In this Schedule, “interest in UK land” means—

(a) an estate, interest, right or power in or over land in the
United Kingdom, or

(b) 5the benefit of an obligation, restriction or condition
affecting the value of any such estate, interest, right or
power,

other than an excluded interest.

(2) The following are excluded interests—

(a) 10any security interest;

(b) a licence to use or occupy land;

(c) in England and Wales or Northern Ireland—

(i) a tenancy at will;

(ii) a manor.

(3) 15In sub-paragraph (2) “security interest” means an interest or right
(other than a rentcharge) held for the purpose of securing the
payment of money or the performance of any other obligation.

(4) In relation to land in Scotland the reference in sub-paragraph (3)
to a rentcharge is to be read as a reference to a feu duty or a
20payment mentioned in section 56(1) of the Abolition of Feudal
Tenure etc (Scotland) Act 2000 (asp 5)2000 (asp 5).

(5) The Treasury may by regulations provide that any other
description of interest or right in relation to land in the United
Kingdom is an excluded interest.

(6) 25Regulations under sub-paragraph (5) may make incidental,
consequential, supplementary or transitional provision or
savings.

Grants of options

3 (1) Sub-paragraph (2) applies where—

(a) 30a person (“P”) grants at any time an option binding P to sell
an interest in UK land, and

(b) a disposal by P of that interest in UK land at that time
would be a disposal of a UK residential property interest
by virtue of paragraph 1.

(2) 35The grant of the option is regarded for the purposes of this
Schedule as the disposal of an interest in the land in question (if it
would not be so regarded apart from this paragraph).

(3) Nothing in this paragraph affects the operation of section 144 in
relation to the grant of the option (or otherwise).

(4) 40Subsection (6) of section 144 (interpretation of references to “sale”
etc) applies for the purposes of this paragraph as it applies for the
purposes of that section.

Finance (No. 2) BillPage 206

Meaning of “dwelling”

4 (1) For the purposes of this Schedule, a building counts as a dwelling
at any time when—

(a) it is used or suitable for use as a dwelling, or

(b) 5it is in the process of being constructed or adapted for such
use.

(2) Land that at any time is, or is intended 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 at that
10time.

(3) For the purposes of sub-paragraph (1) a building is not used (or
suitable for use) as a dwelling if it is used as—

(a) residential accommodation for school pupils;

(b) residential accommodation for members of the armed
15forces;

(c) a home or other institution providing residential
accommodation for children;

(d) a home or other institution providing residential
accommodation with personal care for persons in need of
20personal care by reason of old age, disability, past or
present dependence on alcohol or drugs or past or present
mental disorder;

(e) a hospital or hospice;

(f) a prison or similar establishment;

(g) 25a hotel or inn or similar establishment.

(4) For the purposes of sub-paragraph (1) a building is not used (or
suitable for use) as a dwelling if it is used, or suitable for use, as an
institution (not falling within any of paragraphs (c) to (f) of sub-
paragraph (3)) that is the sole or main residence of its residents.

(5) 30For the purposes of sub-paragraph (1) a building is not used (or
suitable for use) as a dwelling if it falls within—

(a) paragraph 4 of Schedule 14 to the Housing Act 2004
(certain buildings occupied by students and managed or
controlled by their educational establishment etc),

(b) 35any corresponding provision having effect in Scotland, or

(c) any corresponding provision having effect in Northern
Ireland.

(6) In sub-paragraph (5) “corresponding provision” means provision
designated by regulations made by the Treasury as corresponding
40to the provision mentioned in sub-paragraph (5)(a).

(7) If the accommodation provided by a building meets the
conditions in sub-paragraph (8) in a tax year, the building is not to
be regarded for the purposes of sub-paragraph (1) as used or
suitable for use as a dwelling at any time in that tax year.

(8) 45The conditions are that the accommodation—

(a) includes at least 15 bedrooms,

(b) is purpose-built for occupation by students, and

Finance (No. 2) BillPage 207

(c) is occupied by students on at least 165 days in the tax year.

In the expression “purpose-built” the reference to building
includes conversion.

(9) For the purposes of sub-paragraph (8), accommodation is
5occupied by students if it is occupied exclusively or mainly by
persons who occupy it for the purpose of undertaking a course of
education (otherwise than as school pupils).

(10) A building which (for any reason) becomes temporarily
unsuitable for use as a dwelling is treated for the purposes of sub-
10paragraph (1) as continuing to be suitable for use as a dwelling;
but see also the special rules in—

(a) paragraph 6 (damage to a dwelling), and

(b) paragraph 8(7) (periods before or during certain works).

(11) In this paragraph “building” includes a part of a building.

15Power to modify meaning of “use as a dwelling”

5 (1) The Treasury may by regulations amend paragraph 4 for the
purpose of clarifying or changing the cases where a building is or
is not to be regarded as being used as a dwelling (or suitable for
use as a dwelling).

(2) 20The provision that may be made under sub-paragraph (1)
includes, in particular, provision omitting or adding cases where
a building is or is not to be regarded as being used (or as suitable
for use) as a dwelling.

(3) Regulations under this paragraph may make incidental,
25consequential, supplementary or transitional provision or
savings.

(4) In this paragraph “building” includes a part of a building.

Damage to a dwelling

6 (1) Sub-paragraph (2) applies where a person disposes of an interest
30in UK land and a building that forms, or has formed, part of the
land has at any time in the relevant ownership period been
temporarily unsuitable for use as a dwelling.

(2) Paragraph 4(10) (disregard of temporary unsuitability) does not
apply in relation to the building’s temporary unsuitability for use
35as a dwelling if—

(a) the temporary unsuitability resulted from damage to the
building, and

(b) the first and second conditions are met.

(3) The first condition is that the damage was—

(a) 40accidental, or

(b) otherwise caused by events beyond the control of the
person disposing of the interest in UK land.

Finance (No. 2) BillPage 208

(4) The second condition is that, as a result of the damage, the
building was unsuitable for use as a dwelling for a period of at
least 90 consecutive days.

(5) Where the first and second conditions are met, work done in the
590-day period to restore the building to suitability for use as a
dwelling does not count, for the purposes of paragraph 4(1), as
construction or adaptation of the building for use as a dwelling.

(6) The first condition is regarded as not being met if the damage
occurred in the course of work that—

(a) 10was being done for the purpose of altering the building,
and

(b) itself involved, or could be expected to involve, making the
building unsuitable for use as a dwelling for 30 days or
more.

(7) 15The 90-day period mentioned in sub-paragraph (4) must end at or
before the end of the relevant ownership period but may begin at
any time (whether or not within the ownership period).

(8) In this paragraph—

(a) references to alteration include partial demolition;

(b) 20“building” includes a part of a building;

(c) “relevant ownership period” has the meaning given by
paragraph 1(4).

Demolition of a building

7 A building is regarded as ceasing to exist from the time when it
25has either—

(a) been demolished completely to ground level, or

(b) been demolished to ground level except for a single facade
(or, in the case of a building on a corner site, a double
facade) the retention of which is a condition or
30requirement of planning permission or development
consent.

Disposal of a building that has undergone works

8 (1) This paragraph applies where a person disposes of an interest in
UK land, and a building which is (or was formerly) on the land
35and has at any time in the relevant ownership period been suitable
for use as a dwelling—

(a) has undergone complete or partial demolition or any other
works during the relevant ownership period, and

(b) as a result of the works, has, at or at any time before the
40completion of the disposal, either ceased to exist or become
unsuitable for use as a dwelling.

(2) If the conditions in sub-paragraph (4) are met at, or at any time
before, the completion of the disposal, the building is taken to
have been unsuitable for use as a dwelling throughout the part of
45the relevant ownership period when the works were in progress.

Finance (No. 2) BillPage 209

(3) If the conditions in sub-paragraph (4) are met at, or at any time
before, the completion of the disposal, the building is also taken to
have been unsuitable for use as a dwelling throughout any period
which—

(a) 5ends immediately before the commencement of the works,
and

(b) is a period throughout which the building was, for reasons
connected with the works, not used as a dwelling.

(4) The conditions are that—

(a) 10as a result of the works the building has (at any time before
the completion of the disposal) either ceased to exist or
become suitable for use otherwise than as a dwelling,

(b) any planning permission or development consent required
for the works, or for any change of use with which they are
15associated, has been granted, and

(c) the works have been carried out in accordance with any
such permission or consent.

(5) If at the completion of the disposal the conditions in sub-
paragraph (4) have not been met, the works are taken not to have
20affected the building’s suitability for use as a dwelling (at any time
before the disposal).

(6) Sub-paragraph (2) does not apply in relation to any time when—

(a) the building was undergoing any work, or put to a use, in
relation to which planning permission or development
25consent was required but had not been granted, or

(b) anything was being done in contravention of a condition
or requirement attached to a planning permission or
development consent relating to the building.

(7) Where a building is treated under sub-paragraph (2) or (3) as
30unsuitable for use as a dwelling, the unsuitability is not regarded
as temporary for the purposes of paragraph 4(10).

(8) In this paragraph—

Retrospective planning permission or development consent

9 (1) The condition in paragraph 8(4)(b) is taken to have been met at the
time of the completion of the disposal if the required planning
permission or development consent is given subsequently.

(2) 40For the purposes of paragraph 8(6)(a), the fact that planning
permission or development consent had not been given at any
time in relation to any work or use of a building is ignored if the
required planning permission or development consent is given
subsequently.

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