Finance Bill (HC Bill 47)

(4) Condition C is that at the end of the day that is the effective date of
the transaction—

(a) the purchaser has a major interest in a dwelling other than the
purchased dwelling,

(b) 5that interest has a market value of £40,000 or more, and

(c) that interest is not reversionary on a lease which has an
unexpired term of more than 21 years.

(5) Condition D is that the purchased dwelling is not a replacement for
the purchaser’s only or main residence.

(6) 10For the purposes of sub-paragraph (5) the purchased dwelling is a
replacement for the purchaser’s only or main residence if—

(a) on the effective date of the transaction (“the transaction
concerned”) the purchaser intends the purchased dwelling to
be the purchaser’s only or main residence,

(b) 15in another land transaction (“the previous transaction”)
whose effective date was during the period of three years
ending with the effective date of the transaction concerned,
the purchaser or the purchaser’s spouse or civil partner at the
time disposed of a major interest in another dwelling (“the
20sold dwelling”),

(c) at any time during that period of three years the sold
dwelling was the purchaser’s only or main residence, and

(d) at no time during the period beginning with the effective date
of the previous transaction and ending with the effective date
25of the transaction concerned has the purchaser or the
purchaser’s spouse or civil partner acquired a major interest
in any other dwelling with the intention of it being the
purchaser’s only or main residence.

(7) For the purposes of sub-paragraph (5) the purchased dwelling may
30become a replacement for the purchaser’s only or main residence
if—

(a) on the effective date of the transaction (“the transaction
concerned”) the purchaser intended the purchased dwelling
to be the purchaser’s only or main residence,

(b) 35in another land transaction whose effective date is during the
period of three years beginning with the day after the
effective date of the transaction concerned, the purchaser or
the purchaser’s spouse or civil partner disposes of a major
interest in another dwelling (“the sold dwelling”), and

(c) 40at any time during the period of three years ending with the
effective date of the transaction concerned the sold dwelling
was the purchaser’s only or main residence.

4 A chargeable transaction falls within this paragraph if—

(a) the purchaser is not an individual,

(b) 45the main subject-matter of the transaction consists of a major
interest in a single dwelling, and

(c) Conditions A and B in paragraph 3 are met.

Multiple dwelling transactions

5 (1) A chargeable transaction falls within this paragraph if—

(a) the purchaser is an individual,

(b) the main subject-matter of the transaction consists of a major
5interest in two or more dwellings (“the purchased
dwellings”), and

(c) at least two of the purchased dwellings meet conditions A, B
and C.

(2) A purchased dwelling meets condition A if the amount of the
10chargeable consideration for the transaction which is attributable on
a just and reasonable basis to the purchased dwelling is £40,000 or
more.

(3) A purchased dwelling meets condition B if on the effective date of
the transaction the purchased dwelling—

(a) 15is not subject to a lease upon which the main subject-matter
of the transaction is reversionary, or

(b) is subject to such a lease but the lease has an unexpired term
of no more than 21 years.

(4) A purchased dwelling meets condition C if it is not subsidiary to any
20of the other purchased dwellings.

(5) One of the purchased dwellings (“dwelling A”) is subsidiary to
another of the purchased dwellings (“dwelling B”) if—

(a) dwelling A is situated within the grounds of, or within the
same building as, dwelling B, and

(b) 25the amount of the chargeable consideration for the
transaction which is attributable on a just and reasonable
basis to dwelling B is equal to, or greater than, two thirds of
the amount of the chargeable consideration for the
transaction which is attributable on a just and reasonable
30basis to the following combined—

(i) dwelling A,

(ii) dwelling B, and

(iii) each of the other purchased dwellings (if any) which
are situated within the grounds of, or within the same
35building as, dwelling B.

6 (1) A chargeable transaction falls within this paragraph if—

(a) the purchaser is an individual,

(b) the main subject-matter of the transaction consists of a major
interest in two or more dwellings (“the purchased
40dwellings”),

(c) only one of the purchased dwellings meets conditions A, B
and C,

(d) the purchased dwelling which meets those conditions is not
a replacement for the purchaser’s only or main residence,
45and

(e) at the end of the day that is the effective date of the
transaction—

(i) the purchaser has a major interest in a dwelling other
than one of the purchased dwellings,

(ii) that interest has a market value of £40,000 or more,
and

(iii) 5that interest is not reversionary on a lease which has
an unexpired term of more than 21 years.

(2) Sub-paragraphs (2) to (5) of paragraph 5 apply for the purposes of
sub-paragraph (1)(c) of this paragraph as they apply for the purposes
of sub-paragraph (1)(c) of that paragraph.

(3) 10Sub-paragraphs (6) and (7) of paragraph 3 apply for the purposes of
sub-paragraph (1)(d) of this paragraph as they apply for the
purposes of sub-paragraph (5) of that paragraph.

7 (1) A chargeable transaction falls within this paragraph if—

(a) the purchaser is not an individual,

(b) 15the main subject-matter of the transaction consists of a major
interest in two or more dwellings (“the purchased
dwellings”), and

(c) at least one of the purchased dwellings meets conditions A
and B.

(2) 20Sub-paragraphs (2) and (3) of paragraph 5 apply for the purposes of
sub-paragraph (1)(c) of this paragraph as they apply for the purposes
of sub-paragraph (1)(c) of that paragraph.

Part 3 Supplementary provisions

25Further provision in connection with paragraph 3(6) and (7)

8 (1) This paragraph applies where by reason of paragraph 3(7) a
chargeable transaction (“the transaction concerned”) ceases to be a
higher rates transaction for the purposes of paragraph 1.

(2) The land transaction (“the subsequent transaction”) by reference to
30which the condition in paragraph 3(7)(b) was met may not be taken
into account for the purposes of paragraph 3(6)(b) in determining
whether any other chargeable transaction is a higher rates
transaction.

(3) A land transaction return in respect of the transaction concerned may
35be amended, to take account of its ceasing to be a higher rates
transaction, at any time within whichever of the following periods
expires later—

(a) the period of 3 months beginning within the effective date of
the subsequent transaction, and

(b) 40the period of 12 months beginning with the filing date for the
return.

(4) Where a land transaction return in respect of the transaction
concerned is amended to take account of its ceasing to be a higher
rates transaction (and not for any other reason), paragraph 6(2A) of
45Schedule 10 (notice of amendment of return to be accompanied by

the contract for the transaction etc) does not apply in relation to the
amendment.

Spouses and civil partners purchasing alone

9 (1) Sub-paragraph (2) applies in relation to a chargeable transaction if—

(a) 5the purchaser (or one of them) is married or in a civil
partnership on the effective date,

(b) the purchaser and the purchaser’s spouse or civil partner are
living together on that date, and

(c) the purchaser’s spouse or civil partner is not a purchaser in
10relation to the transaction.

(2) The transaction is to be treated as being a higher rates transaction for
the purposes of paragraph 1 if it would have been a higher rates
transaction had the purchaser’s spouse or civil partner been a
purchaser.

(3) 15Persons who are married to, or are civil partners of, each other are
treated as living together for the purposes of this paragraph if they
are so treated for the purposes of the Income Tax Acts (see section
1011 of the Income Tax Act 2007).

Settlements and bare trusts

10 (1) 20Sub-paragraph (3) 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
settlement, and

(c) 25under the terms of the settlement a beneficiary will be
entitled to—

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

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

(2) 30Sub-paragraph (3) also applies in relation to a land transaction if—

(a) the main subject-matter of the transaction consists of a term
of years absolute in a dwelling, and

(b) the purchaser (or one of them) is acting as a trustee of a bare
trust.

(3) 35Where this sub-paragraph applies in relation to a land transaction
the beneficiary of the settlement or bare trust (rather than the trustee)
is to be treated for the purposes of this Schedule as the purchaser (or
as one of them).

(4) Paragraphs 3(3) and 4 of Schedule 16 (trustees to be treated as the
40purchaser) have effect subject to sub-paragraph (3).

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

(a) a person is a beneficiary under a settlement,

(b) a major interest in a dwelling forms part of the trust property,
and

(c) under the terms of the settlement, the beneficiary is entitled
to—

(i) occupy the dwelling for life, or

(ii) income earned in respect of the dwelling.

(2) 5Sub-paragraph (3) also applies where—

(a) a person is a beneficiary under a bare trust, and

(b) a term of years absolute in a dwelling forms part of the trust
property.

(3) Where this sub-paragraph applies—

(a) 10the beneficiary is to be treated for the purposes of this
Schedule as holding the interest in the dwelling, and

(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) 15This paragraph applies where, by reason of paragraph 10 or 11 or
paragraph 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) 20having disposed of an interest in a dwelling.

(2) Where 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
25interest, and

(b) the 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
30paragraph as it applies for the purposes of that paragraph.

(5) “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) 35the purchaser (or one of them) is acting as trustee of a
settlement,

(c) that purchaser is an individual, and

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

(i) 40occupy the dwelling or dwellings for life, or

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

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

(a) 45if the purchaser mentioned in sub-paragraph (1) is the only
purchaser, 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) 5Sub-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) 10the 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
15on by the partnership is not to be treated as held by or on behalf of
the 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).

20Alternative finance arrangements

15 (1) This paragraph applies in relation to a chargeable transaction which
is the first transaction under an alternative finance arrangement
entered into between a person and a financial institution.

(2) The person (rather than the institution) is to be treated for the
25purposes of this Schedule as the purchaser in relation to the
transaction.

(3) In this paragraph—

• “alternative finance arrangement” means an arrangement of a
  kind mentioned in section 71A(1) or 73(1);

• 30“financial institution” has the meaning it has in those sections
  (see section 73BA);

• “first transaction”, in relation to an alternative finance
  arrangement, has the meaning given by section 71A(1)(a) or
  (as the case may be) section 73(1)(a)(i).

35Major interests in dwellings inherited jointly

16 (1) This 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
40sub-paragraph (4)).

(2) P 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
beneficial share in the interest exceeds 50% P is, from that time, to be
treated as having the major interest for the purposes of paragraph
53(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
to more than half the interest,

(b) P and P’s spouse or civil partner taken together are
10beneficially 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
joint tenants to the interest and there is no more than one
other joint tenant who is so entitled.

(5) 15In 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.

Dwellings outside England, Wales and Northern Ireland

17 (1) In the provisions of this Schedule specified in sub-paragraph (3),
20references to a “dwelling” include references to a dwelling situated
in a country or territory outside England, Wales and Northern
Ireland.

(2) In the application of those provisions in relation to a dwelling
situated in a country or territory outside England, Wales and
25Northern Ireland—

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

(b) references to persons being beneficially entitled as joint
30tenants, 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
or territory,

(c) references to a “land transaction” in relation to the dwelling
35are 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
relation to the dwelling are to the date on which the interest
in the dwelling is acquired under the law of that country or
40territory,

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

(3) 45The 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) paragraph 6(1)(e),

(c) paragraph 11,

(d) paragraph 14(2), and

(e) paragraph 16.

(4) Where the child of a person (“P”) has an interest in a dwelling which
is situated in a country or territory outside England, Wales and
5Northern 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) Sub-paragraph (3) of paragraph 9 applies for the purposes of sub-
10paragraph (5) of this paragraph as it applies for the purposes of that
paragraph.

What counts as a dwelling

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

(2) 15A 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) Land that is, or is to be, occupied or enjoyed with a dwelling as a
20garden 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) The main subject-matter of a transaction is also taken to consist of or
25include 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
30includes 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
35substantially 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
  40Schedule 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-
45paragraph (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.

Power to modify this Schedule

19 (1) 5The Treasury may by regulations amend or otherwise modify this
Schedule for the purpose of preventing certain chargeable
transactions from being higher rates transactions for the purposes of
paragraph 1.

(2) The provision which may be included in regulations under this
10paragraph by reason of section 114(6)(c) includes incidental or
consequential provision which may cause a chargeable transaction to
be a higher rates transaction for the purposes of paragraph 1.””

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

“(6A) 15In 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
transaction of which the effective date is, or is after, 1 April 2016.

(6) 20But 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
excluded by subsection (7).

(7) 25A 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) the transaction is effected in consequence of the exercise on or after that
30date 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
becomes entitled to call for a conveyance.

(8) 35Subsection (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) 40in paragraph (b) for “during the period of three years ending with”
substitute “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”.

(10) Paragraph 15 of Schedule 4ZA to FA 2003 does not apply in relation to a land
45transaction of which the effective date is, or is before, the date on which this Act

is passed if the effect of its application would be that the transaction is a higher
rates transaction for the purposes of paragraph 1 of that Schedule.

128 SDLT higher rate: land purchased for commercial use

(1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended
5in 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
10qualifying 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) 15development 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)
20or (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
  25commercial 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) 30The 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.

129 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) 35After 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) 40acquires the subject-matter of the chargeable transaction as a
plan provider.

(2) For the purposes of this paragraph the purchaser acquires the
subject-matter of the chargeable transaction “as a plan provider” so