Finance Bill

House of Lords

Session 2013 - 14
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Finance Bill

Finance Bill
Part 3 — Annual tax on enveloped dwellings
75

127
Demolition without replacement
(1)
Subsection (2) applies if a person entitled to a single-dwelling interest in the old
dwelling notifies an officer of Revenue and Customs that to the best of the
person’s knowledge there is no proposal to construct any dwelling or
dwellings on the site of the old dwelling.
5
(2)
Any question as to whether a person has a single-dwelling interest in the old
dwelling is determined on the assumption that the old dwelling ceases (or
ceased) to exist with effect from the end of the day mentioned in subsection (3).
(3)
That day is the first day on which—
(a)
the demolition has begun, and
10
(b)
as a result, the building in question is no longer suitable for use as a
dwelling.
(4)
A notification under subsection (1) must be given—
(a)
in an annual tax on enveloped dwellings return, or
(b)
by amending such a return.
15
(5)
In this section—
(a)
“building” includes part of a building;
(b)
“the site of the old dwelling” means the land on which the dwelling
stood and that counted as part of the dwelling;
(c)
the reference to the construction of a dwelling or dwellings on that site
20
is to the construction of a dwelling or dwellings wholly or partly on the
site.
128
Demolition and replacement: new dwellings
(1)
Subsection (2) applies if one or more dwellings (referred to below as “new
dwellings”) are constructed on the site of the old dwelling after the demolition.
25
(2)
Any question as to whether or not a person has a single-dwelling interest at
any time either in the old dwelling or in a new dwelling is determined on the
assumption that the old dwelling ceases to exist, and the new dwellings come
into existence, only when the rebuilding is completed.
(3)
The day after the rebuilding is completed is a valuation date in the case of any
30
single-dwelling interest in a new dwelling.
(4)
In subsection (1)—
(a)
“the site of the old dwelling” means the land on which the dwelling
stood and that counted as part of the dwelling;
(b)
the reference to the construction of a dwelling on that site is to the
35
construction of a dwelling wholly or partly on the site.
(5)
References to when the rebuilding is completed are to the end of whichever of
the following days is earlier—
(a)
the completion day;
(b)
the day on which the last of the new dwellings to be occupied is first
40
occupied.
(6)
The reference in subsection (5) to the “completion day” is to the day on which
the new dwelling is treated as having come into existence (or the first day on

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which all the new dwellings are treated as having come into existence) for the
purposes of—
(a)
Part 1 of the Local Government Finance Act 1992 (council tax: England
and Wales) (see section 17 of that Act), or
(b)
Part 2 of that Act (council tax: Scotland) (see section 83 of that Act), or
5
(c)
the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I. 28)) (see
Article 25B of that Order).
129
Demolition and replacement: other cases
(1)
This section applies if—
(a)
a building is constructed on the site of the old dwelling after the
10
demolition, and
(b)
section 128 does not apply.
(2)
Any question as to whether a person has a single-dwelling interest in the old
dwelling is determined on the assumption that the old dwelling ceases to exist
on the day after—
15
(a)
the day on which the change of use is approved, or
(b)
if later, the day on which the old dwelling ceased to be occupied.
(3)
In subsection (1)—
(a)
“the site of the old dwelling” means the land on which the dwelling
stood and that counted as part of the dwelling;
20
(b)
the reference to the construction of a dwelling on that site is to the
construction of a dwelling wholly or partly on the site.
130
Conversion of dwelling for non-residential use
(1)
This section applies where a building or part of a building—
(a)
has been suitable for use as a dwelling, and
25
(b)
is altered for the purpose of making it suitable for use otherwise than
as a dwelling.
(2)
The question whether or not the alterations make the building or part
unsuitable for use as a dwelling is one of fact (but see subsection (3)).
(3)
The building or part will not be regarded as having become unsuitable for use
30
as a dwelling as a result of the alterations at any time unless by that time any
planning permission or development consent required for the alterations has
been granted (and the alterations have been made in accordance with any such
permission or consent).
(4)
In this section “planning permission” has the meaning given by the relevant
35
planning enactment.
(5)
“The relevant planning enactment” means—
(a)
in relation to land in England and Wales, section 336(1) of the Town and
Country Planning Act 1990;
(b)
in relation to land in Scotland, section 277(1) of the Town and Country
40
Planning (Scotland) Act 1997;
(c)
in relation to land in Northern Ireland, Article 2(2) of the Planning
(Northern Ireland) Order 1991 (S.I. 1991/1220 (N.I. 11)).

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(6)
In this section “development consent” means development consent under the
Planning Act 2008.
131
Damage to a dwelling
(1)
This section applies where a dwelling is damaged so as to be temporarily
unsuitable for use as a dwelling.
5
(2)
The unsuitability for use as a dwelling is taken into account in applying the
definition of “dwelling” for the purposes of this Part (see section 112) only if the
first and second conditions are met.
(3)
The first condition is that the damage is—
(a)
accidental, or
10
(b)
otherwise caused by events beyond the control of the person entitled to
the single-dwelling interest.
(4)
The second condition is that, as a result of the damage, the building concerned
is unsuitable for use as a dwelling for at least 90 consecutive days.
(5)
Where the first and second conditions are met—
15
(a)
the entire period of unsuitability for use as a dwelling (including the
first 90 days) is taken into account in applying the definition of
“dwelling”, and
(b)
work done in that period to restore the building to suitability for use as
a dwelling does not count, for the purposes of section 112 or 113, as
20
construction or adaptation of the building for use as a dwelling.
(6)
The first condition is regarded as not being met if the damage occurs in the
course of work that—
(a)
is done for the purpose of altering the dwelling (or a building of which
it forms part), and
25
(b)
itself involves, or could be expected to involve, making the building
unsuitable for use as a dwelling for 30 days or more.
(7)
In this section—
(a)
references to alteration include partial demolition;
(b)
references to a building include a part of a building.
30
(8)
In this section references to damage include damage done before 1 April 2013;
and days before 1 April 2013 may be taken into account for the purposes of
subsection (4).
Reliefs
132
Effect of reliefs under sections 133 to 150
35
(1)
Subsection (2) applies where tax is charged, in respect of a single-dwelling
interest, for a chargeable period that includes one or more days that are
relievable as a result of any of the provisions listed in subsection (3) (or for
more than one such period).
(2)
For any such period, the adjusted chargeable amount is to be calculated on the
40
basis that the chargeable person is not within the charge with respect to the
interest on any relievable day.

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(3)
The provisions are—
section 133 (property rental businesses);
section 134 (rental property: preparation for sale etc);
section 137 (dwellings opened to the public);
section 138 (property developers);
5
section 139 (property developers: exchange of dwellings);
section 141 (property traders);
section 143 (financial institutions acquiring dwellings in the course of
lending);
section 145 (occupation by certain employees or partners);
10
section 148 (farmhouses);
section 150 (providers of social housing).
(4)
See also section 106 (adjustment of amount chargeable and claim for relief).
133
Property rental businesses
(1)
A day in a chargeable period is relievable in relation to a single-dwelling
15
interest if on that day the interest—
(a)
is being exploited as a source of rents or other receipts (other than
excluded rents) in the course of a qualifying property rental business
carried on by a person entitled to the interest, or
(b)
steps are being taken to secure that the interest will, without undue
20
delay, be so exploited in the course of a qualifying property rental
business that is being carried on, or is to be carried on, by a person
entitled to the interest.
(2)
A day is not relievable by virtue of subsection (1) or section 134 in the case of a
single-dwelling interest if on that day a non-qualifying individual is permitted
25
to occupy the dwelling.
(3)
In this Part “qualifying property rental business” means a property rental
business that is run on a commercial basis and with a view to profit.
(4)
A business is a “property rental business” for the purposes of subsection (3) if
it is a property business as defined in Chapter 2 of Part 4 of CTA 2009, but—
30
(a)
the question whether or not a business is a property rental business for
the purposes of subsection (3) is determined without reference to
whether or not any profits of the business are chargeable to corporation
tax (and section 204(2) of CTA 2009 is therefore disregarded), and
(b)
for the purposes of this subsection the “rents or other receipts” referred
35
to in section 207(1) of CTA 2009 are taken not to include excluded rents
(5)
In subsection (1)(b) “without undue delay” means without delay except so far
as delay is justified by commercial considerations or cannot be avoided.
(6)
In this Part “excluded rents” means rents within any of classes 2 to 6 in the table
in section 605(2) of CTA 2010.
40
134
Rental property: preparation for sale, demolition etc
(1)
A day (“day X”) on which a person (“P”) is entitled to a single-dwelling interest
is relievable in relation to that interest if—

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(a)
on day X the dwelling is unoccupied and any of the first to fourth
conditions is met (see below),
(b)
day X is preceded by one or more days (“qualifying days”) that are
relievable under section 133 in relation to the interest and on which P,
or a relevant partner, was entitled to the interest, and
5
(c)
the days (if any) between day X and the last of the qualifying days to
precede day X are all relievable under this section.
First condition

The first condition is that steps are being taken to secure that the interest will
be sold without undue delay.
10
Second condition

The second condition is that—
(a)
steps are being taken to secure that the dwelling will be demolished
without undue delay, and
(b)
if it is intended that a new dwelling will be constructed on the site of
15
the existing dwelling, the intention is that it will be used in a relievable
way.
Third condition

The third condition is that—
(a)
steps are being taken to secure that the dwelling will be converted into
20
a different dwelling without undue delay, and
(b)
it is intended that the new dwelling will be used in a relievable way.
Fourth condition

The fourth condition is that steps are being taken to secure that the dwelling
will be converted into a building other than a dwelling without undue delay.
25
(2)
A dwelling is “used in a relievable way” for the purposes of subsection (1) if
the single-dwelling interest in question is exploited in such a way, or held in
such a way and for such purposes, (or, as the case requires, the dwelling itself
is exploited or used in such a way) that a day of such exploitation, ownership
or use would be relievable under any of sections 133, 137, 145 and 148.
30
(3)
In this section—
“relevant partner”, where P is (on day X) entitled to the interest as a
member of a partnership, means a person who was at the time in
question carrying on the qualifying rental property business concerned
as a member of that partnership;
35
“without undue delay” means without delay, except so far as delay is
justified by commercial considerations or cannot be avoided.
135
Non-qualifying occupation: look-forward and look-back
(1)
Subsection (2) applies if on a day in a chargeable period (“the day of non-
qualifying occupation”)—
40
(a)
a single-dwelling interest to which a person (“the landlord”) is entitled
is being exploited as mentioned in section 133(1)(a), or steps are being
taken to secure that the interest will be so exploited, as mentioned in
section 133(1)(b), and
(b)
a non-qualifying individual is permitted to occupy the dwelling.
45

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(2)
No subsequent day in that chargeable period, or in any of the subsequent 3
chargeable periods, that meets the continuity of ownership condition and
would (in the absence of this subsection) be relievable by virtue of section
133(1)(b) is treated as relievable by virtue of that provision unless a day of
qualifying use falls between that day and the day of non-qualifying
5
occupation.
(3)
A day meets the continuity of ownership condition if on that day—
(a)
the landlord is entitled to the single-dwelling interest, or
(b)
if the landlord carried on or (as the case requires) intended to carry on
the property rental business in partnership, another member of the
10
partnership is entitled to the interest.
(4)
Subsection (5) applies if a person who is a non-qualifying individual in relation
to a single-dwelling interest occupies the dwelling on a day in a chargeable
period (“the day of non-qualifying occupation”).
(5)
An earlier day in that or the preceding chargeable period (“the earlier day”) is
15
not relievable by virtue of section 133(1)(b) or 134 if a relevant person is entitled
to the single-dwelling interest on that day.
(6)
In subsection (5) “relevant person” means—
(a)
a person who is entitled to the single-dwelling interest on the day of
non-qualifying occupation, or
20
(b)
if a person falling within paragraph (a) is or has been a member of a
partnership whose members have at any time exploited the single-
dwelling interest as a source of rents and receipts in a property rental
business, any other member of that partnership.
(7)
Subsection (5) does not apply in relation to the earlier day if a day that is
25
relievable by virtue of section 133(1)(a) falls between that earlier day and the
day of non-qualifying occupation.
(8)
For the purposes of this section—
(a)
“day of qualifying use”, in relation to a single-dwelling interest, means
a day that is relievable in the case of the interest by virtue of section
30
133(1)(a);
(b)
occupation of any part of a dwelling is regarded as occupation of the
dwelling.
136
Meaning of “non-qualifying individual”
(1)
In sections 133 and 135 “non-qualifying individual”, in relation to a single-
35
dwelling interest, means any of the following—
(a)
an individual who is entitled to the interest (otherwise than as a
member of a partnership),
(b)
an individual (“a connected person”) who is connected with a person
entitled to the interest,
40
(c)
if a person is entitled to the interest as a member of a partnership, an
individual who is, or is connected with, a qualifying member of that
partnership,
(d)
an individual (“a relevant settlor”) who is the settlor in relation to a
settlement of which a trustee is (in the capacity of trustee) connected
45
with a person who is entitled to the interest,
(e)
the spouse or civil partner of a connected person or of a relevant settlor,

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(f)
a relative of a connected person or of a relevant settlor, or 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 paragraph (g), or
5
(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)
In subsection (1)(c) “qualifying member”, in relation to a partnership, means a
member of the partnership who is entitled to a 50% or greater share—
10
(a)
in the income profits of the partnership, or
(b)
in the partnership’s assets.
(3)
In subsection (1)(i) “relevant collective investment scheme”, in relation to a
single-dwelling interest, means a collective investment scheme that meets the
ownership condition with respect to the interest.
15
(4)
A person who participates in a collective investment scheme is a “major
participant” in the scheme if the person—
(a)
is entitled to a share of at least 50% either of all the profits or income
arising from the scheme or of any profits or income arising from the
scheme that may be distributed to participants, or
20
(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 would then be available for
distribution among the participants.
(5)
The reference in subsection (4)(a) to profits or income arising from the scheme
is to profits or income arising from the acquisition, holding, management or
25
disposal of the property subject to the scheme.
(6)
For the purposes of subsection (1), section 1122 of CTA 2010 (as applied by
section 172) has effect as if subsections (7) and (8) of that section (application of
rules about connected persons to partnerships) were omitted.
(7)
In this section—
30
“relative” means brother, sister, ancestor or lineal descendant;
“settlement” and “settlor” have the same meaning as in Chapter 5 of Part
5 of ITTOIA 2005 (see section 620 of that Act).
(8)
In subsection (1)(d) “trustee” is to be read in accordance with section 1123(3) of
CTA 2010 (“connected persons”: supplementary).
35
137
Dwellings opened to the public
(1)
A day in a chargeable period is relievable in relation to a single-dwelling
interest if the first or second condition is met on that day.
(2)
The first condition is that the dwelling is being exploited as a source of income
in the course of a qualifying trade in the normal course of which the public are
40
offered the opportunity to make use of, stay in or otherwise enjoy the dwelling
as customers of the trade on least 28 days in any year.
(3)
The second condition is that steps are being taken to secure—