Finance (No. 2) Bill (HC Bill 155)

(b) if the trustee of the settlement or bare trust disposes of the
interest, the beneficiary is to be treated for the purposes of
this Schedule as having disposed of it.

12 (1) This paragraph applies where, by reason of paragraph 10 or 11 or
5paragraph 3(1) of Schedule 16, the child of a person (“P”) would (but
for this paragraph) be treated for the purposes of this Schedule as—

(a) being the purchaser in relation to a land transaction,

(b) holding an interest in a dwelling, or

(c) having disposed of an interest in a dwelling.

(2) 10Where this paragraph applies—

(a) P and any spouse or civil partner of P are to be treated for the
purposes of this Schedule as being the purchaser, holding the
interest or (as the case may be) having disposed of the
interest, and

(b) 15the child is not to be so treated.

(3) But sub-paragraph (2)(a) does not apply in relation to a spouse or
civil partner of P if the two of them are not living together.

(4) Sub-paragraph (3) of paragraph 9 applies for the purposes of this
paragraph as it applies for the purposes of that paragraph.

(5) 20“Child” means a person under the age of 18.

13 (1) This paragraph applies in relation to a land transaction if—

(a) the main subject-matter of the transaction consists of a major
interest in one or more dwellings,

(b) the purchaser (or one of them) is acting as trustee of a
25settlement,

(c) that purchaser is an individual, and

(d) under the terms of the settlement a beneficiary is not entitled
to—

(i) occupy the dwelling or dwellings for life, or

(ii) 30income earned in respect of the dwelling or
dwellings.

(2) In determining whether the transaction falls within paragraph 4 or
paragraph 7—

(a) if the purchaser mentioned in sub-paragraph (1) is the only
35purchaser, ignore paragraph (a) of those paragraphs, and

(b) if that purchaser is not the only purchaser, ignore paragraph
(a) of those paragraphs when having regard to that
purchaser.

Partnerships

14 (1) 40Sub-paragraph (2) applies in relation to a chargeable transaction
whose subject-matter consists of a major interest in one or more
dwellings if—

(a) the purchaser (or one of them) is a partner in a partnership,
but

(b) 45the purchaser does not enter into the transaction for the
purposes of the partnership.

(2) For the purposes of determining whether the transaction falls within
paragraph 3 or 6 any major interest in any other dwelling that is held
by or on behalf of the partnership for the purposes of a trade carried
on by the partnership is not to be treated as held by or on behalf of
5the purchaser.

(3) Paragraph 2(1)(a) of Schedule 15 (chargeable interests held by
partnerships treated as held by the partners) has effect subject to sub-
paragraph (2).

Major interests in dwellings inherited jointly

15 (1) 10This paragraph applies where by virtue of an inheritance—

(a) a person (“P”) becomes jointly entitled with one or more
other persons to a major interest in a dwelling, and

(b) P’s beneficial share in the interest does not exceed 50% (see
sub-paragraph (4)).

(2) 15P is not to be treated for the purposes of paragraph 3(4)(a) or 6(1)(e)
as having the major interest at any time during the period of three
years beginning with the date of the inheritance.

(3)
But if at any time during that period of three years P becomes the
only person beneficially entitled to the whole of the interest or P’s
20beneficial share in the interest exceeds 50% P is, from that time, to be
treated as having the major interest for the purposes of paragraph
3(4)(a) and 6(1)(e) (subject to any disposal by P).

(4) P’s share in the interest exceeds 50% if—

(a) P is beneficially entitled as a tenant in common or coparcener
25to more than half the interest,

(b) P and P’s spouse or civil partner taken together are
beneficially entitled as tenants in common or coparceners to
more than half the interest, or

(c) P and P’s spouse or civil partner are beneficially entitled as
30joint tenants to the interest and there is no more than one
other joint tenant who is so entitled.

(5) In this section “inheritance” means the acquisition of an interest in or
towards satisfaction of an entitlement under or in relation to the will
of a deceased person, or on the intestacy of a deceased person.

35Dwellings outside England, Wales and Northern Ireland

16 (1) In the provisions of this Schedule specified in sub-paragraph (3),
references to a “dwelling” include references to a dwelling situated
in a country or territory outside England, Wales and Northern
Ireland.

(2) 40In the application of those provision in relation to a dwelling situated
in a country or territory outside England, Wales and Northern
Ireland—

(a) references to a “major interest” in the dwelling are to an
equivalent interest in the dwelling under the law of that
45country or territory,

(b) references to persons being beneficially entitled as joint
tenants, tenants in common or coparceners to an interest in
the dwelling are to persons having an equivalent entitlement
to the interest in the dwelling under the law of that country
5or territory,

(c) references to a “land transaction” in relation to the dwelling
are to the acquisition of an interest in the dwelling under the
law of that country or territory,

(d) references to the “effective date” of a land transaction in
10relation to the dwelling are to the date on which the interest
in the dwelling is acquired under the law of that country or
territory,

(e) references to “inheritance” are to the acquisition of an interest
from a deceased person’s estate in accordance with the laws
15of that country or territory concerning the inheritance of
property.

(3) The provisions of this Schedule referred to in sub-paragraphs (1) and
(2) are—

(a) paragraph 3(4), (6)(b), (c) and (d) and (7)(b) and (c),

(b) 20paragraph 6(1)(e),

(c) paragraph 11,

(d) paragraph 14(2), and

(e) paragraph 15.

(4) Where the child of a person (“P”) has an interest in a dwelling which
25is situated in a country or territory outside England, Wales and
Northern Ireland, P and any spouse or civil partner of P are to be
treated for the purposes of this Schedule as having that interest.

(5) But sub-paragraph (4) does not apply in relation to a spouse or civil
partner of P if the two of them are not living together.

(6) 30Sub-paragraph (3) of paragraph 9 applies for the purposes of sub-
paragraph (5) of this paragraph as it applies for the purposes of that
paragraph.

What counts as a dwelling

17 (1) This paragraph sets out rules for determining what counts as a
35dwelling for the purposes of this Schedule.

(2) A building or part of a building counts as a dwelling if—

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

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

(3) 40Land that is, or is to be, occupied or enjoyed with a dwelling as a
garden or grounds (including any building or structure on that land)
is taken to be part of that dwelling.

(4) Land that subsists, or is to subsist, for the benefit of a dwelling is
taken to be part of that dwelling.

(5) 45The main subject-matter of a transaction is also taken to consist of or
include an interest in a dwelling if—

(a) substantial performance of a contract constitutes the effective
date of that transaction by virtue of a relevant deeming
provision,

(b) the main subject-matter of the transaction consists of or
5includes an interest in a building, or a part of a building, that
is to be constructed or adapted under the contract for use as
a single dwelling, and

(c) construction or adaptation of the building, or part of a
building, has not begun by the time the contract is
10substantially performed.

(6) In sub-paragraph (5)—

• “contract” includes any agreement;

• “relevant deeming provision” means any of sections 44 to 45A
  or paragraph 5(1) or (2) of Schedule 2A or paragraph 12A of
  15Schedule 17A;

• “substantially performed” has the same meaning as in section
  44.

(7) A building or part of a building used for a purpose specified in
section 116(2) or (3) is not used as a dwelling for the purposes of sub-
20paragraph (2) or (5).

(8) Where a building or part of a building is used for a purpose
mentioned in sub-paragraph (7), no account is to be taken for the
purposes of sub-paragraph (2) of its suitability for any other use.”

(4) In paragraph 5 of Schedule 6B (relief for transfers involving multiple
25dwellings) after sub-paragraph (6) insert—

“(6A) In the application of sub-paragraph (1), account is to be taken of
paragraph 1 of Schedule 4ZA if the relevant transaction is a higher
rates transaction for the purposes of that paragraph.”

(5) The amendments made by this section have effect in relation to any land
30transaction of which the effective date is, or is after, 1 April 2016.

(6) But those amendments do not have effect in relation to a transaction—

(a) effected in pursuance of a contract entered into and substantially
performed before 26 November 2015, or

(b) effected in pursuance of a contract entered into before that date and not
35excluded by subsection (7).

(7) A transaction effected in pursuance of a contract entered into before 26
November 2015 is excluded by this subsection if—

(a) there is any variation of the contract, or assignment of rights under the
contract, on or after 26 November 2015,

(b) 40the 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, subsale or other transaction
relating to the whole or part of the subject-matter of the contract as a
result of which a person other than the purchaser under the contract
45becomes entitled to call for a conveyance.

(8) Subsection (9) applies in relation to a land transaction of which the effective
date is or is before 26 November 2018.

(9) In its application for the purpose of determining whether a land transaction to
which this subsection applies is a higher rates transaction, paragraph 3(6) of
Schedule 4ZA to FA 2003 has effect with the following modifications—

(a) in paragraph (b) for “during the period of three years ending with”
5substitute “the same as or before”,

(b) in paragraph (c) for “during that period of three years” substitute
“before the effective date of the transaction concerned”.

118 SDLT higher rate: land purchased for commercial use

(1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended
10in accordance with subsections (2) to (4).

(2) In paragraph 5—

(a) in sub-paragraph (1)—

(i) after paragraph (a) insert—

“(aa) use as business premises for the purposes of a
15qualifying property rental business (other
than one which gives rise to income consisting
wholly or mainly of excluded rents);

(ab) use for the purposes of a relievable trade;”;

(ii) for paragraph (b) substitute—

“(b) 20development or redevelopment and—

(i) resale in the course of a property
development trade, or

(ii) exploitation falling within paragraph
(a) or use falling within paragraph (aa)
25or (ab);”;

(b) in sub-paragraph (2), for “the dwelling” substitute “a dwelling on the
land”;

(c) in sub-paragraph (3), at the appropriate place insert—

• “““relievable trade” means a trade that is run on a
  30commercial basis and with a view to profit.”

(3) In paragraph 5G, in sub-paragraph (3)(c) for “the dwelling” substitute “any
dwelling on the land”.

(4) In paragraph 6D(3)(b), for “the dwelling” substitute “any dwelling on the land
concerned”.

(5) 35The amendments made by this section have effect in relation to any land
transaction of which the effective date is on or after 1 April 2016.

119 SDLT higher rate: acquisition under regulated home reversion plan

(1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended
as follows.

(2) 40After paragraph 5C insert—

““Acquisition under a regulated home reversion plan

5CA (1) Paragraph 3 does not apply to a chargeable transaction if (and so far
as) the purchaser—

(a) is an authorised plan provider, and

(b) acquires the subject-matter of the chargeable transaction as a
plan provider.

(2) For the purposes of this paragraph the purchaser acquires the
5subject-matter of the chargeable transaction “as a plan provider” so
far as the purchaser acquires it under a regulated home reversion
plan which the purchaser enters into as plan provider.

(3) In this paragraph—

• “authorised plan provider” means a person authorised under
  10the Financial Services and Markets Act 2000 to carry on in the
  United Kingdom the regulated activity specified in article
  63B(1) of the Regulated Activities Order (entering into
  regulated home reversion plan as plan provider);

• “the Regulated Activities Order” means the Financial Services
  15and Markets (Regulated Activities) Order 2001 (S.I. 2001/
  544);

• “regulated home reversion plan” means an arrangement which
  is a regulated home reversion plan for the purposes of
  Chapter 15A of Part 2 of the Regulated Activities Order.

(4) 20In this section references to entering into a regulated home reversion
plan “as plan provider” are to be interpreted as if the references were
in the Regulated Activities Order.”

(3) After paragraph 5I insert—

“5IA (1) This paragraph applies where relief under paragraph 5CA
25(acquisition under a regulated home reversion plan) 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 at any time in the period of three years
beginning with the effective date of the chargeable transaction the
30purchaser holds the higher threshold interest otherwise than for the
purposes of the regulated home reversion plan (as defined in
paragraph 5CA).

(3) But sub-paragraph (2) does not apply if—

(a) after ceasing to hold the higher threshold interest for the
35purposes of the regulated home reversion plan, the purchaser
sells the higher threshold interest without delay (except so far
as delay is justified by commercial considerations or cannot
be avoided), and

(b) at no time when the higher threshold interest is held by the
40purchaser as mentioned in sub-paragraph (2) is the dwelling
(or any part of the dwelling) occupied by a non-qualifying
individual.

(4) In this paragraph—

• “the dwelling” means the dwelling to which the relief under
  45paragraph 5CA relates;

• “non-qualifying individual” is to be interpreted in accordance
  with paragraph 5A.”

(4) The amendments made by this section have effect in relation to any land
transaction of which the effective date is on or after 1 April 2016.

120 SDLT higher rate: properties occupied by certain employees etc

(1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended
5as follows.

(2) In paragraph 5D (dwellings for occupation by certain employees etc)—

(a) in sub-paragraph (1), for “trade” substitute “business”;

(b) in sub-paragraph (2)(b) for “trade” substitute “business”;

(c) for sub-paragraph (4) substitute—

“(4) 10“Relievable business” means a trade or property rental
business that is run on a commercial basis and with a view to
profit.”

(3) The heading before paragraph 5D becomes “Dwellings for occupation by certain
employees etc of a relievable business”.

(4) 15After paragraph 5E insert—

““Acquisition by management company of flat for occupation by caretaker

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

(a) 20is one of at least three flats contained in the same premises,
and

(b) is acquired by a tenants’ management company for the
purpose of making the flat available for use as caretaker
accommodation.

(2) 25For the purposes of this paragraph a tenants’ management company
makes a flat available for use “as caretaker accommodation” if it
makes it available to an individual for use as living accommodation
in connection with the individual’s employment as caretaker of the
premises.

(3) 30In relation to the acquisition of a flat, a company is a “tenants’
management company” if—

(a) the tenants of two or more other flats contained in the
premises are members of the company, and

(b) the company owns, or it is intended that the company will
35acquire, the freehold of the premises;

but a company which carries on a relievable business is not a tenants’
management company.

(4) In this paragraph “premises” means premises constituting the whole
or part of a building.”

(5) 40After paragraph 5J insert—

“5JA (1) This paragraph applies where relief under paragraph 5EA
(acquisition by management company of flat for occupation by
caretaker) 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 at any time in the period of three years
beginning with the effective date of the chargeable transaction the
5purchaser holds the higher threshold interest otherwise than for the
purpose of making the flat available for use as caretaker
accommodation.

(3) For the purposes of this paragraph a tenants’ management company
makes a flat available for use “as caretaker accommodation” if it
10makes it available to an individual for use as living accommodation
in connection with the individual’s employment as caretaker of the
premises.”

(6) In paragraph 5E (meaning of “qualifying partner”, “qualifying employee”
etc)—

(a) 15in sub-paragraph (1) for “trade” substitute “business”;

(b) in sub-paragraph (2) for “qualifying trade” substitute “relievable
business”;

(c) in sub-paragraph (4)—

(i) in the words before paragraph (a), for “trade” substitute
20“relievable business”;

(ii) in paragraph (a)(i), for “trade” substitute “relievable business”.

(7) In paragraph 5J (withdrawal of relief under paragraph 5D), in sub-paragraph
(3)—

(a) in paragraph (a), for the words from “trade” to the end substitute
25“relievable business”;

(b) in paragraph (c), for the words from “trade” to the end substitute
“relievable business”.

(8) In paragraph 6G (withdrawal of relief under paragraph 5D in cases involving
alternative finance arrangements), in sub-paragraph (4)—

(a) 30in paragraph (a), for “qualifying trade” substitute “relievable business”;

(b) in paragraph (c) for “trade” substitute “relievable business”.

(9) In paragraph 9 (interpretation), at the appropriate place insert—

• “““relievable business” has the meaning given by paragraph
  5D(4).”

(10) 35The amendments made by this section have effect in relation to any land
transaction of which the effective date is on or after 1 April 2016.

121 SDLT: minor amendments of section 55 of FA 2003

In section 55 of FA 2003 (general rules on calculating the amount of stamp duty
land tax chargeable), in subsection (5)—

(a) 40for “74(2) and (3)” substitute “74(1B)”, and

(b) for “rate” substitute “amount”.

122 SDLT: property authorised investment funds and co-ownership authorised
contractual schemes

Schedule 16 contains provision about—

(a) the stamp duty land tax treatment of co-ownership authorised
5contractual schemes, and

(b) relief from stamp duty land tax for certain acquisitions by such schemes
and by property authorised investment funds.

Annual tax on enveloped dwellings

123 ATED: regulated home reversion plans

(1) 10Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows.

(2) After section 144 insert—

“144A Regulated home reversion plans

(1) A day in a chargeable period is relievable in relation to a single
dwelling interest held by a person (“P”) who is an authorised plan
15provider if—

(a) P has, as plan provider, entered into a regulated home reversion
plan relating to the single dwelling interest, and

(b) the occupation condition is met on that day.

(2) If no qualifying termination event has occurred, the “occupation
20condition” is that a person who was originally entitled to occupy the
dwelling (or any part of it) under the regulated home reversion plan is
still entitled to do so.

(3) If a qualifying termination event has occurred, the “occupation
condition” is that—

(a) 25the single dwelling interest is being held with the intention that
it will be sold without delay (except so far as delay is justified
by commercial considerations or cannot be avoided), and

(b) no non-qualifying individual is permitted to occupy the
dwelling (or any part of it).

(4) 30In this section—

• “authorised plan provider” means a person authorised under the
  Financial Services and Markets Act 2000 to carry on in the
  United Kingdom the regulated activity specified in article
  63B(1) of the Regulated Activities Order (entering into
  35regulated home reversion plan as plan provider);

• “qualifying termination event” is to be interpreted in accordance
  with article 63B of the Regulated Activities Order;

• “the Regulated Activities Order” means the Financial Services and
  Markets (Regulated Activities) Order 2001 (S.I. 2001/544S.I. 2001/544);

• 40“regulated home reversion plan” means an arrangement which is
  a regulated home reversion plan for the purposes of Chapter
  15A of Part 2 of the Regulated Activities Order (but see also
  subsection (6)).

(5) In this section references to entering into a regulated home reversion
plan “as plan provider” are to be interpreted as if the references were in
the Regulated Activities Order (but see also subsection (6)).

(6) For the purposes of this section—

(a) 5an arrangement which P entered into before 6 April 2007 is
treated for the purposes of this section as a regulated home
reversion plan entered into by P as plan provider if that
arrangement would have been so treated for the purposes of
article 63B(1) of the Regulated Activities Order had P entered
10into that arrangement on the day mentioned in subsection (1);

(b) an arrangement in relation to which P acquired rights or
obligations before 6 April 2007 is treated for the purposes of this
section as a regulated home reversion plan entered into by P as
plan provider if that arrangement would have been so treated
15for the purposes of article 63B(1) of the Regulated Activities
Order had P acquired those rights or obligations on the day
mentioned in subsection (1).

(7) Section 136 (meaning of “non-qualifying individual”) applies in
relation to this section as in relation to sections 133 and 135.”

(3) 20In section 116 (dwelling in grounds of another dwelling), in the list in
subsection (6), at the appropriate place insert—

• ““section 144A (regulated home reversion plans);”.

(4) In section 117 (dwellings in the same building), in the list in subsection (5), at
the appropriate place insert—

• 25““section 144A (regulated home reversion plans);”.

(5) In section 132 (effect of reliefs under sections 133 to 150), in the list in subsection
(3), at the appropriate place insert—

• ““section 144A (regulated home reversion plans);”.

(6) In section 159A (relief declaration returns), in the table in subsection (9), at the
30appropriate place insert—

(7) The amendments made by this section have effect for chargeable periods
beginning on or after 1 April 2016.

124 ATED: properties occupied by certain employees etc

(1) Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows.

(2) 40Section 145 (occupation by certain employees or partners) is amended in
accordance with subsections (3) to (5).

(3) In subsection (1)—