Finance Bill

House of Lords

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 40 — Stamp duty land tax: relief from 15% rate
461

(b)
after paragraph (d) insert, “or
(e)
a notional or additional land transaction under
paragraph 5 of Schedule 2A.”
6
In section 79(2) (registration of land transactions etc)—
(a)
omit paragraph (a)(i) and the “or” after it, and
5
(b)
after paragraph (b) insert—
“(ba)
under paragraph 5 of Schedule 2A (transactions
entered into before completion of contract),”.
7
In section 119 (meaning of “effective date” of a transaction), in subsection (2),
at the appropriate place insert—
10
“paragraph 5 of Schedule 2A,”.
8
In section 121 (index of defined expressions), in the entry for “vendor”, in the
second column, for “sections 45(5A) and 45A(9)” substitute “section 45A(9)
and paragraphs 8, 10 and 11 of Schedule 2A”.
9
In Schedule 6B (transfers involving multiple dwellings), in paragraph 7(6),
15
in the definition of “relevant deeming provision”, after “45A” insert “or
paragraph 5(1) or (2) of Schedule 2A”.
10
In paragraph 12B of Schedule 17A (assignment of agreement for lease), in
sub-paragraph (1) for “section 45 (contract and conveyance: effect of transfer
of rights)” substitute “Schedule 2A (transactions entered into before
20
completion of contract)”.
11
The amendments made by this Schedule have effect in relation to transfers
of rights (see section 45 of FA 2003) and pre-completion transactions (see
paragraph 3) entered into on or after the day on which this Act is passed.
Schedule 40
25
Section 196

Stamp duty land tax: relief from 15% rate
1
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
Amendments of FA 2003
2     (1)
Schedule 4A (higher rate for certain transactions) is amended as follows.
      (2)
In paragraph 2(6) (treatment of certain transactions as two separate
30
chargeable transactions) for “and 5” substitute “, 5 to 5K and 6A to 6H”.
      (3)
For paragraph 5 (property developers) and the cross-heading preceding it
substitute—
“Businesses of letting, trading in or redeveloping properties
5     (1)
Paragraph 3 does not apply to a chargeable transaction so far as its
35
subject-matter consists of a higher threshold interest that is
acquired exclusively for one or more of the following purposes—
(a)
exploitation as a source of rents or other receipts (other
than excluded rents) in the course of a qualifying property
rental business;
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Finance Bill
Schedule 40 — Stamp duty land tax: relief from 15% rate
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(b)
development or redevelopment and resale in the course of
a property development trade;
(c)
resale in the course of a property development trade (in a
case where the chargeable transaction is part of a
qualifying exchange);
5
(d)
resale (as stock of the business) in the course of a property
trading business.
      (2)
A chargeable interest does not count as being acquired exclusively
for one or more of those purposes if it is intended that a non-
qualifying individual will be permitted to occupy the dwelling.
10
      (3)
In this paragraph—
“excluded rents” has the same meaning as in section 133 of
the Finance Act 2013;
“property development trade” means a trade that—
(a)
consists of or includes buying and developing or
15
redeveloping for resale residential or non-residential
property, and
(b)
is run on a commercial basis and with a view to profit;
“part of a qualifying exchange” is to be construed in
accordance with section 139(4) of the Finance Act 2013;
20
“property trading business” means a business that—
(a)
consists of or includes activities in the nature of a
trade of buying and selling dwellings, and
(b)
is run on a commercial basis and with a view to profit;
“qualifying property rental business” has the same meaning
25
as in section 133 of the Finance Act 2013.”
      (4)
After paragraph 5 insert—
“Meaning of “non-qualifying individual”
5A    (1)
In paragraph 5 “non-qualifying individual”, in relation to a
chargeable transaction, means any of the following—
30
(a)
the purchaser (other than a purchaser entering into the
transaction as a member of a partnership);
(b)
a purchaser who enters into the transaction as a member of
a partnership and has a major share in the partnership,
(c)
an individual (a “connected person”) who is connected
35
with the purchaser;
(d)
a relevant settlor;
(e)
the spouse or civil partner of a connected person or of a
relevant settlor;
(f)
a relative of a connected person or of a relevant settlor, or
40
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
45
paragraph (g);

Finance Bill
Schedule 40 — Stamp duty land tax: relief from 15% rate
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(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)
A member of a partnership has a “major share” in the partnership
if the member is entitled to a 50% or greater share—
5
(a)
in the income profits of the partnership, or
(b)
in the partnership’s assets.
      (3)
A collective investment scheme is a “relevant collective
investment scheme” for the purposes of sub-paragraph (1)(i) if the
purchaser under the chargeable transaction referred to in that sub-
10
paragraph acquires the subject-matter of the transaction for the
purposes of that scheme.
      (4)
An individual who participates in a collective investment scheme
is a “major participant” in the scheme if the individual—
(a)
is entitled to a share of at least 50% either of all the profits
15
or income arising from the scheme or of any profits or
income arising from the scheme that may be distributed to
participants, or
(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
20
would then be available for distribution among the
participants.
      (5)
The reference in sub-paragraph (4)(a) to profits or income arising
from a collective investment scheme is to profits or income arising
from the acquisition, holding, management or disposal of the
25
property subject to the scheme.
      (6)
In this paragraph—
“participant”, in relation to a collective investment scheme, is
to be read in accordance with section 235 of the Financial
Services and Markets Act 2000;
30
“relative” means brother, sister, ancestor or lineal
descendant;
“relevant settlor”, in relation to a chargeable transaction,
means an individual who is a settlor in relation to a
relevant settlement (as defined in sub-paragraph (7));
35
“settlement” has the same meaning as in Chapter 5 of Part 5
of ITTOIA 2005 (see section 620 of that Act).
      (7)
Where a person, in the capacity of trustee of a settlement, is
connected with a person who is the purchaser under a chargeable
transaction, that settlement is a “relevant settlement” in relation to
40
the chargeable transaction.
      (8)
In sub-paragraph (7) “trustee” is to be read in accordance with
section 1123(3) of CTA 2010 (“connected persons”:
supplementary).
      (9)
In this paragraph “the purchaser”, in relation to a chargeable
45
transaction, is to be read as a reference to any of the purchasers (if
there are more than one).

Finance Bill
Schedule 40 — Stamp duty land tax: relief from 15% rate
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     (10)
Section 1122 of the Corporation Tax Act 2010 (connected persons)
has effect for the purposes of this paragraph, but for those
purposes—
(a)
subsections (7) and (8) of that section (application of rules
about connected persons to partnerships) are to be
5
disregarded, and
(b)
subsections (2) to (7) of section 172 of the Finance Act 2013
apply as they apply for the purposes of Part 3 of that Act.
Trades involving making a dwelling available to the public
5B    (1)
Paragraph 3 does not apply to a chargeable transaction so far as its
10
subject-matter consists of a higher threshold interest in relation to
which the conditions in sub-paragraph (2) are met.
      (2)
The conditions are that—
(a)
the higher threshold interest is acquired with the intention
that it will be exploited as a source of income in the course
15
of a qualifying trade, and
(b)
reasonable commercial plans have been formulated to
carry out that intention without delay (except so far as
delay may be justified by commercial considerations or
cannot be avoided).
20
      (3)
“Qualifying trade”, in relation to a higher threshold interest,
means a trade that—
(a)
is carried on on a commercial basis and with a view to
profit, and
(b)
involves, in its normal course, offering the public the
25
opportunity to make use of, stay in or otherwise enjoy the
dwelling as customers of the trade on at least 28 days in
any calendar year.
      (4)
For the purposes of sub-paragraph (3), persons are not considered
to have the opportunity to make use of, stay in or otherwise enjoy
30
a dwelling unless the areas that they have the opportunity to make
use of, stay in or otherwise enjoy include a significant part of the
interior of the dwelling.
      (5)
The size (relative to the size of the whole dwelling), nature and
function of any relevant area or areas in a dwelling are taken into
35
account in determining whether they form a significant part of the
interior of the dwelling.
Financial institutions acquiring dwellings in the course of lending
5C    (1)
Sub-paragraph (2) applies to a chargeable transaction if the
purchaser is a financial institution carrying on a business that
40
involves the lending of money.
      (2)
Paragraph 3 does not apply to the chargeable transaction so far as
its subject-matter consists of a higher threshold interest that is
acquired in the course of that business—
(a)
for the purpose of resale in the course of the business and,
45
(b)
in connection with those lending activities.

Finance Bill
Schedule 40 — Stamp duty land tax: relief from 15% rate
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Dwellings for occupation by certain employees etc
5D    (1)
Paragraph 3 does not apply to a chargeable transaction so far as its
subject-matter consists of a higher threshold interest in relation to
which the conditions in sub-paragraph (2) are met.

Those conditions can only be met if the purchaser, or a relevant
5
group member, carries on or is to carry on a relievable trade.
      (2)
The conditions are that—
(a)
the interest is acquired for the purpose of making the
dwelling available to one or more qualifying employees or
qualifying partners for use as living accommodation, and
10
(b)
the dwelling is to be made available as mentioned in
paragraph (a) for purposes that are solely or mainly
purposes of the relievable trade.
      (3)
For the purposes of the relief under this paragraph it does not
matter whether or not the individuals mentioned in sub-
15
paragraph (2)(a) are identified at the time of the chargeable
transaction.
      (4)
“Relievable trade” means a trade that is carried on on a
commercial basis and with a view to profit.
      (5)
In this paragraph references to making a dwelling available to a
20
qualifying employee or qualifying partner include making it
available to persons who are to share the accommodation with a
qualifying employee or qualifying partner as that individual’s
family.
      (6)
Where the purchaser is a company, “relevant group member”
25
means a company which is a member of the same group of
companies as the purchaser for the purposes mentioned in
paragraph 1(2) of Schedule 7 (group relief).
More about the condition in paragraph 5D(2)(a)
5E    (1)
In a case where the person carrying on the relievable trade
30
mentioned in paragraph 5D(1) carries it on in partnership with
one or more other persons, “qualifying partner” means any
individual who is a member of the partnership.
      (2)
“Qualifying employee” means an individual employed for the
purposes of the qualifying trade.
35
      (3)
In a case falling within sub-paragraph (1), the condition in
paragraph 5D(2)(a) is taken not to be met if the individuals, or a
class of individuals, to whom it is proposed to make the dwelling
available for use as living accommodation include, or are likely to
include, a member of the partnership who is (or will at the relevant
40
time be) entitled to a 10% or greater share—
(a)
in the income profits of the partnership, or
(b)
in any company beneficially entitled to the higher
threshold interest mentioned in paragraph 5D(1), or
(c)
in that higher threshold interest.
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Schedule 40 — Stamp duty land tax: relief from 15% rate
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      (4)
In addition, the condition in paragraph 5D(2)(a) is taken not to be
met if the individuals, or a class of individuals, to whom it is
proposed to make the dwelling available for use as living
accommodation include, or are likely to include, an individual
employed for the purposes of the trade in question who is (or will
5
at the relevant time be)—
(a)
entitled to a 10% or greater share—
(i)
in the income profits of the trade, or
(ii)
in any company that is beneficially entitled to the
higher threshold interest, or
10
(iii)
in that higher threshold interest, or
(b)
employed to provide excluded domestic services.
      (5)
The reference in sub-paragraph (4)(b) to an individual employed
to provide excluded domestic services is to an individual the
duties of whose employment include the provision of services in
15
connection with the (actual or intended) occupation, by an
individual to whom sub-paragraph (6) applies, of the dwelling
mentioned in paragraph 5D(2)(a) (“the relevant dwelling”), or a
linked dwelling.
      (6)
This sub-paragraph applies to any individual who is connected
20
with a person who is or is to be beneficially entitled to the higher
threshold interest.
      (7)
The following are “linked” dwellings for the purposes of sub-
paragraph (5)—
(a)
if the conditions in section 116(2) of the Finance Act 2013
25
are met in relation to the relevant dwelling and another
dwelling, that other dwelling;
(b)
a dwelling that is linked to the relevant dwelling, as
described in section 117(1) of the Finance Act 2013.
      (8)
For the purposes of sub-paragraphs (3)(c) and (4)(a) persons who
30
are entitled to a chargeable interest as beneficial joint tenants (or,
in Scotland, as joint owners) are taken to be entitled to the
chargeable interest as beneficial tenants in common (or, in
Scotland, as owners in common) in equal shares.
      (9)
Section 147 of the Finance Act 2013 (meaning of “10% or greater
35
share in a company”) applies for the purposes of this paragraph as
for the purposes of section 146 of that Act.
     (10)
In this paragraph references to employment include the holding of
an office.
Farmhouses
40
5F    (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
dwelling—
(a)
that is, or is to be, a farmhouse, and
(b)
in relation to which the conditions in sub-paragraph (3) are
45
met.

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Schedule 40 — Stamp duty land tax: relief from 15% rate
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      (2)
The reference in sub-paragraph (1) to a dwelling that “is or is to be
a farmhouse” is to a dwelling that forms part of land that is to be
occupied, or to continue to be occupied, for the purposes of a
qualifying trade of farming.
      (3)
The conditions are that—
5
(a)
the dwelling is to be occupied for the purposes of that
trade by a qualifying farm worker,
(b)
reasonable commercial plans have been formulated under
which such occupation is either to continue from the
effective date of the chargeable transaction or to begin
10
without delay (except so far as delay may be justified by
commercial considerations or cannot be avoided), and
(c)
occupation of the farmhouse by a qualifying farm worker
is then expected to continue as part of the normal way in
which the trade is, or is to be, carried on.
15
      (4)
In sub-paragraph (3) “qualifying farm worker” means an
individual who occupies the dwelling for the purposes of the trade
mentioned in that sub-paragraph and has a substantial
involvement—
(a)
in the day-to-day work of the trade, or
20
(b)
in the direction and control of the conduct of the trade.
      (5)
“Qualifying trade of farming” means a trade of farming that is
carried on—
(a)
on a commercial basis, and
(b)
with a view to profit.
25
      (6)
A person occupying part of a dwelling is regarded as occupying
the dwelling for the purposes of this paragraph.
      (7)
In this paragraph—
(a)
“farming” has the same meaning as in the Corporation Tax
Acts (see section 1125 of CTA 2010), except that in this
30
paragraph “farming” includes market gardening;
(b)
“market gardening” has the same meaning as in the
Corporation Tax Acts (see section 1125(5) of CTA 2010).
Withdrawal of relief
5G    (1)
Sub-paragraph (2) applies where relief under paragraph 5 has
35
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 control period”) a requirement in sub-paragraph (3) is not
40
met.
      (3)
The requirements are that—
(a)
the higher threshold interest (if still held by the purchaser)
is held exclusively for one or more of the purposes
mentioned in paragraph 5(1),
45