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Finance Bill
Part 4 — Stamp duty land tax

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           (d)           an institution that is the sole or main residence of at least 90% of its

residents and does not fall within any of paragraphs (a) to (f) of

subsection (3).

     (3)    For the purposes of subsection (1) a building used for any of the following

purposes is not used as a dwelling—

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           (a)           a home or other institution providing residential accommodation for

children;

           (b)           a hall of residence for students in further or higher education;

           (c)           a home or other institution providing residential accommodation with

personal care for persons in need of personal care by reason of old age,

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disablement, past or present dependence on alcohol or drugs or past or

present mental disorder;

           (d)           a hospital or hospice;

           (e)           a prison or similar establishment;

           (f)           a hotel or inn or similar establishment.

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     (4)    Where a building is used for a purpose specified in subsection (3), no account

shall be taken for the purposes of subsection (1)(a) of its suitability for any

other use.

     (5)    Where a building that is not in use is suitable for use for at least one of the

purposes specified in subsection (2) and at least one of those specified in

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subsection (3)—

           (a)           if there is one such use for which it is most suitable, or if the uses for

which it is most suitable are all specified in the same sub-paragraph, no

account shall be taken for the purposes of subsection (1)(a) of its

suitability for any other use,

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           (b)           otherwise, the building shall be treated for those purposes as suitable

for use as a dwelling.

     (6)    In this section “building” includes part of a building.

     (7)    Where six or more separate dwellings are the subject of a single transaction

involving the transfer of a major interest in, or the grant of a lease over, them,

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then, for the purposes of this Part as it applies in relation to that transaction,

those dwellings are treated as not being residential property.

     (8)    The Treasury may by order—

           (a)           amend subsections (2) and (3) so as to change or clarify the cases where

use of a building is, or is not to be, use of a building as a dwelling for

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the purposes of subsection (1);

           (b)           amend or repeal subsection (7) and the reference to that subsection in

subsection (1).

            Any such order may contain such incidental, supplementary, consequential or

transitional provision as appears to the Treasury to be necessary or expedient.

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 117   Meaning of “major interest” in land

     (1)    References in this Part to a “major interest” in land shall be construed as

follows.

     (2)    In relation to land in England or Wales, the references are to—

           (a)           an estate in fee simple absolute, or

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           (b)           a term of years absolute,

 

 

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            whether subsisting at law or in equity.

     (3)    In relation to land in Scotland, the references are to—

           (a)           the interest of an owner or land, or

           (b)           the right of a tenant over property subject to a lease.

     (4)    In relation to land in Northern Ireland, the references are to—

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           (a)           any freehold estate, or

           (b)           any leasehold estate,

            whether subsisting at law or in equity.

 118   Meaning of “market value”

For the purposes of this Part “market value” shall be determined as for the

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purposes of the Taxation of Chargeable Gains Act 1992 (c. 12) (see sections 272

to 274 of that Act).

 119   Meaning of “effective date” of a transaction

     (1)    Except as otherwise provided, the effective date of a land transaction for the

purposes of this Part is the date of completion.

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     (2)    Other provision as to the effective date of certain descriptions of land

transaction is made by—

                    section 44(3) (contract and conveyance: contract substantially performed

without having been completed), and

                    section 46(3) (options and rights of pre-emption).

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 120   Meaning of “lease” and related expressions

     (1)    In the application of this Part to England and Wales or Northern Ireland “lease”

means—

           (a)           an interest or right in or over land for a term of years (whether fixed or

periodic), or

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           (b)           a tenancy at will or other interest or right in or over land terminable by

notice at any time.

     (2)    In this Part—

           (a)           references to a lease for a definite term are to a lease for a fixed term,

and

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           (b)           references to a lease for an indefinite term are to—

                  (i)                 a periodic tenancy or other interest or right terminable by a

period of notice,

                  (ii)                a tenancy at will in England and Wales or Northern Ireland, or

                  (iii)               any other interest or right terminable by notice at any time.

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     (3)    A lease granted for a fixed term and thereafter until determined is treated for

the purposes of this Part as a lease for a definite term equal to the fixed term

together with such further period as must elapse before the earliest date at

which the lease can be determined.

     (4)    In the application of this Part to Scotland references to the reversion on a lease

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shall be read as references to the interest of the landlord in the property subject

to the lease.

 

 

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 121   Minor definitions

In this Part—

                      “assignment”, in Scotland, means assignation;

                      “completion”, in Scotland, means the settlement of the transaction;

                      “employee” includes an office-holder and related expressions have a

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corresponding meaning;

                      “jointly entitled” means—

                  (a)                 in England and Wales, beneficially entitled as joint tenants or

tenants in common,

                  (b)                 in Scotland, entitled as joint owners or owners in common,

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                  (c)                 in Northern Ireland, beneficially entitled as joint tenants,

tenants in common or coparceners;

                      “land” includes—

                  (a)                 buildings and structures, and

                  (b)                 land covered by water;

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                      “registered social landlord” means—

                  (a)                 in relation to England and Wales, a body registered as a social

landlord in a register maintained under section 1(1) of the

Housing Act 1996 (c. 52);

                  (b)                 in relation to Scotland, a body registered in the register

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maintained under section 57 of the Housing (Scotland) Act 2001

(asp 10);

                  (c)                 in relation to Northern Ireland, a housing association registered

in the register maintained under Article 14 of the Housing

(Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I. 15));

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                      “standard security” has the meaning given by the Conveyancing and

Feudal Reform (Scotland) Act 1970 (c. 35);

                      “statutory provision” means any provision made by or under an Act of

Parliament, an Act of the Scottish Parliament or any Northern Ireland

legislation;

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                      “surrender”, in Scotland, means renunciation;

                      “tax”, unless the context otherwise requires, means tax under this Part.

 122   Index of defined expressions

In this Part the expressions listed below are defined or otherwise explained by

the provisions indicated—

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assignment (in Scotland)

section 121

 
 

bare trust

Schedule 16, paragraph 1(2)

 
 

the Board (in relation to the

section 42(3)

 
 

Inland Revenue)

  
 

chargeable consideration

section 50 and Schedule 4

 

40

 

chargeable interest

section 48(1)

 
 

chargeable transaction

section 49

 
 

 

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company

section 100 (except as otherwise

 
  

expressly provided)

 
 

contingent (in relation to

section 51(3)

 
 

consideration)

  
 

delivery (in relation to a land

Schedule 10, paragraph 2(2)

 

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transaction return)

  
 

effective date (in relation to a

section 119

 
 

land transaction)

  
 

employee

section 121

 
 

exempt interest

section 48(2) to (5)

 

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filing date (in relation to a land

Schedule 10, paragraph 2(1)

 
 

transaction return)

  
 

the Inland Revenue

section 113

 
 

jointly entitled

section 121

 
 

land

section 121

 

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land transaction

section 43(1)

 
 

land transaction return

section 76(1)

 
 

lease (and related expressions)

section 120(1)

 
 

linked transactions

section 108

 
 

main subject-matter (in relation

section 43(6)

 

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to a land transaction)

  
 

major interest (in relation to

section 117

 
 

land)

  
 

market value

section 118

 
 

notifiable (in relation to a land

section 77

 

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transaction)

  
 

partnership (and related

Schedule 15, paragraphs 1 to 4

 
 

expressions)

  
 

purchaser

section 43(4)

 
 

rate of tax

section 55(7)

 

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registered social landlord

section 121

 
 

residential property

section 116

 
 

self-assessment

section 76(3)(a)

 
 

self-certificate

section 79(4)(b)

 
 

settlement

Schedule 16, paragraph 1(1)

 

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standard security

section 121

 
 

statutory provision

section 121

 
 

subject-matter (in relation to a

section 43(6)

 
 

land transaction)

  
 

substantial performance (in

section 44(4) to (6)

 

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relation to a contract)

  
 

surrender (in Scotland)

section 121

 
 

tax

section 121

 
 

uncertain (in relation to

section 51(3)

 
 

consideration)

  

10

 

unit holder

section 101(4)

 
 

unit trust scheme

section 101(4)

 
 

vendor

section 43(4)

 
 

Final provisions

 123   Consequential amendments

15

     (1)    Schedule 18 contains certain amendments consequential on the provisions of

this Part.

     (2)    The Treasury may by regulations may such other amendments and repeals as

appear to them appropriate in consequence of the provisions of this Part.

     (3)    The regulations may, in particular, make such provision as the Treasury think

20

fit for reproducing in relation to stamp duty land tax the effect of enactments

providing for exemption from stamp duty.

 124   Commencement and transitional provisions

Schedule 19 makes provision for and in connection with the coming into force

of the provisions of this Part.

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Part 5

Stamp duty

 125   Abolition of stamp duty except on instruments relating to stock or marketable

securities

     (1)    Stamp duty is chargeable under Schedule 13 of the Finance Act 1999 (c. 16) only

30

on instruments relating to stock or marketable securities.

     (2)    Section 12 of the Finance Act 1895 (c. 16) (collection of stamp duty in cases of

property vested by Act or purchased under statutory powers) does not apply

to property other than stock or marketable securities.

     (3)    This section shall be construed as one with the Stamp Act 1891 (c. 39).

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     (4)    Part 1 of Schedule 20 to this Act contains provisions supplementing this section

and Part 2 of that Schedule provides for consequential amendments and

repeals.

     (5)    This section and that Schedule apply—

           (a)           in relation to instruments effecting land transactions that—

5

                  (i)                 are SDLT transactions within the meaning of Schedule 19

(stamp duty land tax: commencement and transitional

provisions), or

                  (ii)                would be such transactions but for an exemption or relief from

stamp duty land tax;

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           (b)           in relation to other instruments, if they are executed on or after the

implementation date for the purposes of stamp duty land tax (see

Schedule 19 to this Act).

     (6)    In subsection (5)(a) “land transaction” has the same meaning as in Part 4 of this

Act.

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     (7)    This section and Schedule 20 have effect subject to paragraph 13(2) and (3) of

Schedule 15 to this Act (continued application of stamp duty in relation to

certain partnership transactions).

 126   Circumstances in which group relief withdrawn

     (1)    Section 111 of the Finance Act 2002 (c. 23) (stamp duty: withdrawal of group

20

relief) is amended as follows.

     (2)    In subsection (1)(b) (circumstances in which relief withdrawn: transferee

company ceasing to be member of group within two years) for “two years”

substitute “three years”.

     (3)    In subsection (1)(c) (circumstances in which relief withdrawn: transferee

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company holding estate or interest when it ceases to be member of group)—

           (a)           in the opening words—

                  (i)                 for “it ceases” substitute “the transferee company ceases”, and

                  (ii)                for “it holds” substitute “it or a relevant associated company

holds”;

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           (b)           in sub-paragraph (i) for “to it” substitute “to the transferee company”;

and

           (c)           for the closing words substitute “and that has not subsequently been

transferred at market value by a duly stamped instrument on which ad

valorem duty was paid and in respect of which group relief was not

35

claimed”.

     (4)    In subsection (3)—

           (a)           after “transferred” insert “to the transferee company”, and

           (b)           for “what the transferee company holds at the time it ceases to be a

member” substitute “what is held by that company or, as the case may

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be, that company and any relevant associated companies, at the time it

or they cease to be members”.

     (5)    After subsection (4) insert—

           “(4A)              In this section “relevant associated company”, in relation to the

transferee company, means a company that—

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                  (a)                 is a member of the same group as the transferee company

immediately before that company ceases to be a member of the

same group as the transferor company, and

                  (b)                 ceases to be a member of the same group as the transferor

company in consequence of the transferee company so

5

ceasing.”.

     (6)    In paragraph 4(3) of Schedule 34 to the Finance Act 2002 (c. 23) (withdrawal of

group relief: supplementary provisions), in paragraph (b)—

           (a)           in the opening words—

                  (i)                 for “it ceases” substitute “the transferee company ceases”, and

10

                  (ii)                for “it holds” substitute “it or a relevant associated company (as

defined in sub-paragraph (4) below) holds”;

           (b)           in sub-paragraph (i) for “to it” substitute “to the transferee company”;

and

           (c)           for the closing words substitute “and that has not subsequently been

15

transferred at market value by a duly stamped instrument on which ad

valorem duty was paid and in respect of which group relief was not

claimed”.

     (7)    In the closing words of that sub-paragraph, for the words from “as if” to the

end substitute “as if the transferee had then ceased to be a member of the same

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group as the transferor company and had then held the estate or interest

referred to in paragraph (b).”.

     (8)    After that sub-paragraph insert—

                       “(4)                In sub-paragraph (3)(b) “relevant associated company”, in relation to

the transferee company, means a company that is in the same group

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as the transferee company immediately before the transferee

company ceases to be a member of the new group and which ceases

to be a member of the new group in consequence of the transferee

company so ceasing.”.

     (9)    This section applies to instruments executed after 14th April 2003.

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     (10)   But this section does not apply to an instrument giving effect to a contract

made on or before 9th April 2003, unless—

           (a)           the instrument is made in consequence of the exercise after that date of

any option, right of pre-emption or similar right, or

           (b)           the instrument transfers the property in question to, or vests it in, a

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person other than the purchaser under the contract because of an

assignment (or, in Scotland, assignation) or further contract made after

that date.

     (11)   This section shall be deemed to have come into force on 15th April 2003.

 127   Circumstances in which relief for company acquisitions withdrawn

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     (1)    Section 113 of the Finance Act 2002 (stamp duty: withdrawal of relief for

company acquisitions) is amended as follows.

     (2)    In subsection (1)(b) (circumstances in which relief withdrawn: change of

control of acquiring company within two years) for “two years” substitute

“three years”.

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