Finance Bill

House of Lords

Session 2013 - 14
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Finance Bill

Finance Bill
Part 3 — Annual tax on enveloped dwellings
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(4)
The chargeable consideration for the acquisition mentioned in subsection (1)(a)
is taken to include the chargeable consideration for any linked acquisition of a
chargeable interest in or over the same dwelling.
(5)
The chargeable consideration for the transaction mentioned in subsection
(1)(b) is taken to include the chargeable consideration for any linked disposal
5
of part (but not the whole) of the single-dwelling interest concerned.
(6)
For the purposes of subsection (2) the market value of the chargeable interest
acquired is taken to be the sum of the market values of that chargeable interest
and any chargeable interest in or over the same dwelling that is acquired in a
linked transaction.
10
(7)
For the purposes of subsection (3) the market value of the part of the single-
dwelling interest disposed of is taken to be the sum of the market values of that
chargeable interest and any chargeable interest in or over the same dwelling
that is disposed of in a linked transaction.
(8)
For the purposes of this section two or more transactions are “linked” if they
15
form part of a single scheme, arrangement or series of transactions between the
same vendor and purchaser or, in either case, persons connected with them.
(9)
In this section “chargeable consideration”, “purchaser” and “vendor” have the
same meaning as in Part 4 of FA 2003.
(10)
In this section references to a disposal of part of a single-dwelling interest
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include the grant of a chargeable interest out of the single-dwelling interest.
104
No double charge
Tax in respect of a given single-dwelling interest is charged only once for any
chargeable day even if more than one person is “the chargeable person” with
respect to the tax charged.
25
Adjustment of amount charged
105
“Adjusted chargeable amount”
(1)
In relation to a person on whom tax is charged for a chargeable period with
respect to a single-dwelling interest, the “adjusted chargeable amount” is the
total of the daily amounts for all the days in the period on which the chargeable
30
person is within the charge with respect to the interest.
(2)
The daily amount for any such day (“the actual day”) is—

where—

“Y” is the number of days in the chargeable period;

“A” is the annual chargeable amount for the single-dwelling interest,
35
determined (under section 99(4)) on the basis that the actual day is the relevant
day.

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Part 3 — Annual tax on enveloped dwellings
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106
Adjustment of amount chargeable
(1)
Where tax is charged for a chargeable period with respect to a single-dwelling
interest and the adjusted chargeable amount is greater than the initial charged
amount, the amount of tax charged is taken to be increased to the adjusted
chargeable amount.
5
(2)
In this section “the initial charged amount” means the amount of tax charged
under section 99 for the period in respect of the interest.
(3)
Subsection (4) applies where—
(a)
tax is charged for a chargeable period with respect to a single-dwelling
interest,
10
(b)
the adjusted chargeable amount is less than the initial charged amount,
and
(c)
a claim for relief is made under this subsection.
(4)
The amount of tax charged for the period with respect to the interest is taken
to be reduced (at the end of the chargeable period) to the adjusted chargeable
15
amount.
(5)
Relief under subsection (3) must be claimed—
(a)
in an annual tax on enveloped dwellings return, or
(b)
by amending an annual tax on enveloped dwellings return.
(6)
The claim must be delivered by the end of the chargeable period following the
20
one to which the claim relates.
(7)
Relief under subsection (3) may be given by repayment of tax or otherwise.
(8)
See also section 160 (return of adjusted amount chargeable); and see section
163(2) for provision about payment of additional tax by reference to the
adjusted chargeable amount.
25
Chargeable interests and “single-dwelling interest”
107
Chargeable interests
(1)
In this Part “chargeable interest” means—
(a)
an estate, interest, right or power in or over land in the United
Kingdom, or
30
(b)
the benefit of an obligation, restriction or condition affecting the value
of any such estate, interest, right or power.
(2)
Where two or more persons are jointly entitled to a chargeable interest the
chargeable interest is not regarded, for the purposes of this Part, as consisting
of separate interests corresponding to the shares (if any) that those persons
35
have by virtue of their joint entitlement.
(3)
An exempt interest is not a chargeable interest for the purposes of this Part.
(4)
The following are exempt interests—
(a)
any security interest;
(b)
a licence to use or occupy land;
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(c)
in England and Wales or Northern Ireland, a tenancy at will.

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(5)
In subsection (4) “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.
(6)
In the application of this Part in Scotland the reference in subsection (5) to a
rentcharge is to be read as a reference to a feu duty or a payment mentioned in
5
section 56(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000 (asp 5).
(7)
The Treasury may by regulations provide that any other description of interest
or right in or over a dwelling is an exempt interest.
108
Meaning of “single-dwelling interest”
(1)
References in this Part to a “single-dwelling interest” are to be read in
10
accordance with this section.
(2)
A chargeable interest that is exclusively in or over land consisting (on any day)
of a single dwelling is a single-dwelling interest (on that day).
(3)
Where a person is entitled to a chargeable interest that is exclusively in or over
land consisting (on any day) of two or more single dwellings—
15
(a)
provisions referring to a “single-dwelling interest” operate as if the
person had (on that day) a separate chargeable interest in or over each
dwelling, and
(b)
the chargeable interest in or over each dwelling is therefore a single-
dwelling interest.
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(4)
Where a person is entitled to a chargeable interest in or over land that on any
day consists of one or more single dwellings and non-residential land—
(a)
provisions referring to a “single-dwelling interest” operate as if the
person had (on that day) a separate chargeable interest in or over each
dwelling and a further separate chargeable interest in or over the non-
25
residential land, and
(b)
the chargeable interest in or over each dwelling is therefore a single-
dwelling interest.
(5)
A single-dwelling interest is referred to as a single-dwelling interest “in” the
dwelling concerned.
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(6)
A single-dwelling interest in one dwelling is distinct from any single-dwelling
interest in another dwelling, even if the dwellings stand successively on the
same land.
(7)
In this section—
(a)
“non-residential land” means land that is not a dwelling or part of a
35
dwelling;
(b)
references to a dwelling include a part of a dwelling.
109
Different interests held in the same dwelling
(1)
Subsection (2) applies if on one or more days in a chargeable period—
(a)
a company is entitled to two or more single-dwelling interests in the
40
same dwelling, or
(b)
two or more single-dwelling interests in the same dwelling are held for
the purposes of the same collective investment scheme.

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(2)
This Part has effect with respect to that chargeable period as if those separate
interests constituted just one single-dwelling interest, the taxable value of
which on any day is the sum of the taxable values of the separate interests.
(3)
In calculating the taxable values of the separate interests for the purposes of
subsection (2), the market value of each interest is determined, under the
5
provisions of TCGA 1992 applied by section 98(8), on the assumption that the
other interest or interests are placed on the open market with that interest (on
the valuation date appropriate to that interest).
110
Interests held by connected persons
(1)
If on any day a company (“C”) is entitled to a single-dwelling interest in a
10
dwelling and another person (“P”) who is connected with C is entitled to a
different single-dwelling interest in the same dwelling, this Part has effect—
(a)
in relation to C as if C were on that day entitled to P’s single-dwelling
interest as well as C’s single-dwelling interest, and
(b)
(if P is a company) in relation to P as if P were on that day entitled to
15
C’s single-dwelling interest as well as P’s single-dwelling interest.
(2)
This subsection provides for an exception to subsection (1).

Where P is an individual, C is not treated on the day in question as entitled to
P’s single-dwelling interest unless on that day C is entitled to a single-dwelling
interest in the dwelling that is a freehold or leasehold interest with a taxable
20
value of more than £500,000.
(3)
If on any day a single-dwelling interest (“the scheme interest”) is held for the
purposes of a collective investment scheme and a person (“P”) who is
connected with the scheme is entitled to a different single-dwelling interest in
the same dwelling, this Part has effect—
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(a)
in relation to the scheme, as if both those separate interests were on that
day held for the purposes of the scheme, and
(b)
(if P is a company) in relation to P as if P were on that day entitled to
the scheme interest as well as P’s single-dwelling interest.
(4)
If on any day a single-dwelling interest in a dwelling is held for the purposes
30
of a collective investment scheme (“the first scheme”) and another interest in
the same dwelling is held for the purposes of another collective investment
scheme (“the second scheme”) that is connected with the first scheme, this Part
has effect—
(a)
in relation to the first scheme, as if both the interests were held on that
35
day for the purposes of that scheme, and
(b)
in relation to the second scheme, as if both interests were held on that
day for the purposes of that scheme.
(5)
See also—
(a)
section 97, for provision about the liability to tax of persons treated
40
under this section (read with section 104) as jointly entitled to a single-
dwelling interest;
(b)
paragraph 55 of Schedule 33, for provision about returns in cases
involving joint entitlement.
(6)
The provisions mentioned in subsection (5) are to be read as including
45
corresponding provision for cases where the same single-dwelling interest is
treated under this section as held—

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Part 3 — Annual tax on enveloped dwellings
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(a)
for the purposes of different collective investment schemes, or
(b)
by a company and for the purposes of a collective investment scheme.
(7)
In the application of this section to Scotland—
(a)
the reference to a freehold interest is to the interest of the owner;
(b)
the reference to a leasehold interest is to a tenant’s right over or interest
5
in property subject to a lease.
111
Different interests held in the same dwelling: effect of reliefs etc
(1)
References in section 110 to a person do not include—
(a)
a public body, as defined in section 153,
(b)
a body listed in section 154(2) (bodies established for national
10
purposes).
(2)
Subsections (1) to (4) of section 110 do not apply in relation to a single-dwelling
interest if—
(a)
the day in question is relievable with respect to that interest by virtue
of section 150 (providers of social housing),
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(b)
by virtue of section 151 (charitable companies) the ownership condition
is regarded as not met with respect to the interest on that day, or
(c)
the taxable value of the interest on that day is taken to be zero by virtue
of section 155 (dwelling conditionally exempt from inheritance tax).
(3)
Subsection (4) applies where the separate interests (the “relevant interests”)
20
that under section 110 (or that section and section 109) are treated as
constituting, on a day, just one single-dwelling interest (“the combined
interest”) include—
(a)
a freehold or leasehold interest, and
(b)
a leasehold interest (“the inferior interest”) granted out of that interest.
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(4)
If the inferior interest is the most inferior relevant interest, the combined
interest, and the dwelling itself (where relevant), are regarded for the purposes
of the relevant relieving provisions as being exploited, on the day mentioned
in subsection (3), in the way the inferior interest is exploited on that day.
(5)
If the inferior interest is an interest in part only (“the sub-let part”) of the land
30
that is the subject-matter of the combined interest, subsection (4) has effect in
relation to the combined interest only so far as that interest relates to the sub-
let part.
(6)
In this section “the relevant relieving provisions” means sections 132 to 150.
(7)
The inferior interest counts as “the most inferior relevant interest” if no
35
relevant interest (see subsection (3)) is a leasehold interest granted out of it.
(8)
In this section the reference to a leasehold interest includes the interest of a
lessee under an agreement for a lease.
(9)
In the application of this section to Scotland—
(a)
the reference to a freehold interest is to the interest of the owner;
40
(b)
the reference to a leasehold interest is to a tenant’s right over or interest
in property subject to a lease;
(c)
the reference to an agreement for lease includes missives of let.