Finance Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
516

that major interest in the dwelling and of that interest so far
as it relates to that area.
Acquisition by property trader from individual acquiring new dwelling
2     (1)
Where a dwelling (“the old dwelling”) is acquired by a property
trader from an individual (whether alone or with other
5
individuals), the acquisition is exempt from charge if the
following conditions are met.
      (2)
The conditions are—
(a)
that the acquisition is made in the course of a business that
consists of or includes acquiring dwellings from
10
individuals who acquire new dwellings from house-
building companies,
(b)
that the individual (whether alone or with other
individuals) acquires a new dwelling from a house-
building company,
15
(c)
that the individual—
(i)
occupied the old dwelling as his only or main
residence at some time in the period of two years
ending with the date of its acquisition, and
(ii)
intends to occupy the new dwelling as his only or
20
main residence,
(d)
that the property trader does not intend—
(i)
to spend more than the permitted amount on
refurbishment of the old dwelling, or
(ii)
to grant a lease or licence of the old dwelling, or
25
(iii)
to permit any of its principals or employees (or any
person connected with any of its principals or
employees) to occupy the old dwelling, and
(e)
that the area of land acquired by the property trader does
not exceed the permitted area.
30

Paragraph (d)(ii) does not apply to the grant of lease or licence to
the individual for a period of no more than six months.
      (3)
Where the conditions in sub-paragraph (2)(a) to (d) are met, but
the area of land acquired by the property trader exceeds the
permitted area, the chargeable consideration for the acquisition is
35
taken to be the amount calculated by deducting the market value
of the permitted area from the market value of the old dwelling.
      (4)
The provisions of paragraph 1(4) (meaning of “house-building
company” etc) also have effect for the purposes of this paragraph.
      (5)
In this paragraph—
40
(a)
references to the acquisition of a new dwelling are to the
acquisition, by way of grant or transfer, of a major interest
in the dwelling;
(b)
references to the acquisition of the old dwelling are to the
acquisition, by way of transfer, of a major interest in the
45
dwelling; and
(c)
references to the market value of the old dwelling and of
the permitted area are, respectively, to the market value of

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
517

that major interest in the dwelling and of that interest so far
as it relates to that area.
Acquisition by property trader from personal representatives
3     (1)
Where a dwelling is acquired by a property trader from the
personal representatives of a deceased individual, the acquisition
5
is exempt from charge if the following conditions are met.
      (2)
The conditions are—
(a)
that the acquisition is made in the course of a business that
consists of or includes acquiring dwellings from personal
representatives of deceased individuals,
10
(b)
that the deceased individual occupied the dwelling as his
only or main residence at some time in the period of two
years ending with the date of his death,
(c)
that the property trader does not intend—
(i)
to spend more than the permitted amount on
15
refurbishment of the dwelling, or
(ii)
to grant a lease or licence of the dwelling, or
(iii)
to permit any of its principals or employees (or any
person connected with any of its principals or
employees) to occupy the dwelling, and
20
(d)
that the area of land acquired does not exceed the
permitted area.
      (3)
Where the conditions in sub-paragraph (2)(a) to (c) are met, but the
area of land acquired exceeds the permitted area, the chargeable
consideration for the acquisition is taken to be the amount
25
calculated by deducting the market value of the permitted area
from the market value of the dwelling.
      (4)
In this paragraph—
(a)
references to the acquisition of the dwelling are to the
acquisition, by way of transfer, of a major interest in the
30
dwelling; and
(b)
references to the market value of the dwelling and of the
permitted area are, respectively, to the market value of that
major interest in the dwelling and of that interest so far as
it relates to that area.
35
Acquisition by property trader from individual where chain of transactions breaks
down
4     (1)
Where a dwelling (“the old dwelling”) is acquired by a property
trader from an individual (whether alone or with other
individuals), the acquisition is exempt from charge if—
40
(a)
the individual has made arrangements to sell a dwelling
(“the old dwelling”) and acquire another dwelling (“the
second dwelling”),
(b)
the arrangements to sell the old dwelling fail, and
(c)
the acquisition of the old dwelling is made for the purpose
45
of enabling the individual’s acquisition of the second
dwelling to proceed,

and the following conditions are met.

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
518

      (2)
The conditions are—
(a)
that the acquisition is made in the course of a business that
consists of or includes acquiring dwellings from
individuals in those circumstances,
(b)
that the individual—
5
(i)
occupied the old dwelling as his only or main
residence at some time in the period of two years
ending with the date of its acquisition, and
(ii)
intends to occupy the second dwelling as his only
or main residence,
10
(c)
that the property trader does not intend—
(i)
to spend more than the permitted amount on
refurbishment of the old dwelling, or
(ii)
to grant a lease or licence of the old dwelling, or
(iii)
to permit any of its principals or employees (or any
15
person connected with any of its principals or
employees) to occupy the old dwelling, and
(d)
that the area of land acquired does not exceed the
permitted area.

Paragraph (c)(ii) does not apply to the grant of a lease or licence to
20
the individual for a period of no more than six months.
      (3)
Where the conditions in sub-paragraph (2)(a) to (c) are met, but the
area of land acquired exceeds the permitted area, the chargeable
consideration for the acquisition is taken to be the amount
calculated by deducting the market value of the permitted area
25
from the market value of the old dwelling.
      (4)
In this paragraph—
(a)
references to the acquisition of the second dwelling are to
the acquisition, by way of grant or transfer, of a major
interest in the dwelling;
30
(b)
references to the acquisition of the old dwelling are to the
acquisition, by way of transfer, of a major interest in the
dwelling; and
(c)
references to the market value of the old dwelling and of
the permitted area are, respectively, to the market value of
35
that major interest in the dwelling and of that interest so far
as it relates to that area.
Acquisition by employer in case of relocation of employment
5     (1)
Where a dwelling is acquired from an individual (whether alone
or with other individuals) by his employer, the acquisition is
40
exempt from charge if the following conditions are met.
      (2)
The conditions are—
(a)
that the individual occupied the dwelling as his only or
main residence at some time in the period of two years
ending with the date of the acquisition,
45
(b)
that the acquisition is made in connection with a change of
residence by the individual resulting from relocation of
employment,

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
519

(c)
that the consideration for the acquisition does not exceed
the market value of the dwelling, and
(d)
that the area of land acquired does not exceed the
permitted area.
      (3)
Where the conditions in sub-paragraph (2)(a) to (c) are met but the
5
area of land acquired exceeds the permitted area, the chargeable
consideration for the acquisition is taken to be the amount
calculated by deducting the market value of the permitted area
from the market value of the dwelling.
      (4)
In this paragraph “relocation of employment” means a change of
10
the individual’s place of employment due to—
(a)
his becoming an employee of the employer,
(b)
an alteration of the duties of his employment with the
employer, or
(c)
an alteration of the place where he normally performs
15
those duties.
      (5)
For the purposes of this paragraph a change of residence is one
“resulting from” relocation of employment if—
(a)
the change is made wholly or mainly to allow the
individual to have his residence within a reasonable daily
20
travelling distance of his new place of employment, and
(b)
his former residence is not within a reasonable daily
travelling distance of that place.

The individual’s “new place of employment” means the place
where he normally performs, or is normally to perform, the duties
25
of his employment after the relocation.
      (6)
In this paragraph—
(a)
references to the acquisition of the dwelling are to the
acquisition, by way of transfer, of a major interest in the
dwelling;
30
(b)
references to the market value of the dwelling and of the
permitted area are, respectively, to the market value of that
major interest in the dwelling and of that interest so far as
it relates to that area; and
(c)
references to an individual’s employer include a
35
prospective employer.
Acquisition by property trader in case of relocation of employment
6     (1)
Where a dwelling is acquired by a property trader from an
individual (whether alone or with other individuals), the
acquisition is exempt from charge if the following conditions are
40
met.
      (2)
The conditions are—
(a)
that the acquisition is made in the course of a business that
consists of or includes acquiring dwellings from
individuals in connection with a change of residence
45
resulting from relocation of employment,
(b)
that the individual occupied the dwelling as his only or
main residence at some time in the period of two years
ending with the date of the acquisition,

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
520

(c)
that the acquisition is made in connection with a change of
residence by the individual resulting from relocation of
employment,
(d)
that the consideration for the acquisition does not exceed
the market value of the dwelling,
5
(e)
that the property trader does not intend—
(i)
to spend more than the permitted amount on
refurbishment of the dwelling, or
(ii)
to grant a lease or licence of the dwelling, or
(iii)
to permit any of its principals or employees (or any
10
person connected with any of its principals or
employees) to occupy the dwelling, and
(f)
that the area of land acquired does not exceed the
permitted area.

Paragraph (e)(ii) does not apply to the grant of a lease or licence to
15
the individual for a period of no more than six months.
      (3)
Where the conditions in sub-paragraph (2)(a) to (e) are met but the
area of land acquired exceeds the permitted area, the chargeable
consideration for the acquisition is taken to be the amount
calculated by deducting the market value of the permitted area
20
from the market value of the dwelling.
      (4)
In this paragraph “relocation of employment” means a change of
the individual’s place of employment due to—
(a)
his becoming employed by a new employer,
(b)
an alteration of the duties of his employment, or
25
(c)
an alteration of the place where he normally performs
those duties.
      (5)
For the purposes of this paragraph a change of residence is one
“resulting from” relocation of employment if—
(a)
the change is made wholly or mainly to allow the
30
individual to have his residence within a reasonable daily
travelling distance of his new place of employment, and
(b)
his former residence is not within a reasonable daily
travelling distance of that place.

An individual’s “new place of employment” means the place
35
where he normally performs, or is normally to perform, the duties
of his employment after the relocation.
      (6)
In this paragraph—
(a)
references to the acquisition of the dwelling are to the
acquisition, by way of transfer, of a major interest in the
40
dwelling; and
(b)
references to the market value of the dwelling and of the
permitted area are, respectively, to the market value of that
major interest in the dwelling and of that interest so far as
it relates to that area.
45
Meaning of “dwelling”, “new dwelling” and “the permitted area”
7     (1)
“Dwelling” includes land occupied and enjoyed with the dwelling
as its garden or grounds.

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
521

      (2)
A building or part of a building is a “new dwelling” if—
(a)
it has been constructed for use as a single dwelling and has
not previously been occupied, or
(b)
it has been adapted for use as a single dwelling and has not
been occupied since its adaptation.
5
      (3)
“The permitted area”, in relation to a dwelling, means land
occupied and enjoyed with the dwelling as its garden or grounds
that does not exceed—
(a)
an area (inclusive of the site of the dwelling) of 0.5 of a
hectare, or
10
(b)
such larger area as is required for the reasonable
enjoyment of the dwelling as a dwelling having regard to
its size and character.
      (4)
Where sub-paragraph (3)(b) applies, the permitted area is taken to
consist of that part of the land that would be the most suitable for
15
occupation and enjoyment with the dwelling as its garden or
grounds if the rest of the land were separately occupied.
Meaning of “property trader” and “principal”
8     (1)
A “property trader” means—
(a)
a company,
20
(b)
a limited liability partnership, or
(c)
a partnership whose members are all either companies or
limited liability partnerships,

that carries on the business of buying and selling dwellings.
      (2)
In relation to a property trader a “principal” means—
25
(a)
in the case of a company, a director;
(b)
in the case of a limited liability partnership, a member;
(c)
in the case of a partnership whose members are all either
companies or limited liability partnerships, a member or a
person who is a principal of a member.
30
      (3)
For the purposes of this Schedule—
(a)
anything done by or in relation to a company connected
with a property trader is treated as done by or in relation
to that property trader, and
(b)
references to the principals or employees of a property
35
trader include the principals or employees of any such
company.
Meaning of “refurbishment” and “the permitted amount”
9     (1)
“Refurbishment” of a dwelling means the carrying out of works
that enhance or are intended to enhance the value of the dwelling,
40
but does not include—
(a)
cleaning the dwelling, or
(b)
works required solely for the purpose of ensuring that the
dwelling meets minimum safety standards.
      (2)
The “permitted amount”, in relation to the refurbishment of a
45
dwelling, is—

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
522

(a)
£10,000, or
(b)
5% of the consideration for the acquisition of the dwelling,

whichever is the greater, but subject to a maximum of £20,000.
Connected companies etc
10
Section 839 of the Taxes Act 1988 (connected persons) has effect for
5
the purposes of this Schedule.
Withdrawal of relief under this Schedule
11    (1)
Relief under this Schedule is withdrawn in the following
circumstances.
      (2)
Relief under paragraph 2 (acquisition by property trader from
10
individual acquiring new dwelling) is withdrawn if the property
trader—
(a)
spends more than the permitted amount on refurbishment
of the old dwelling, or
(b)
grants a lease or licence of the old dwelling, or
15
(c)
permits any of its principals or employees (or any person
connected with any of its principals or employees) to
occupy the old dwelling.

Paragraph (b) does not apply to the grant of lease or licence to the
individual for a period of no more than six months.
20
      (3)
Relief under paragraph 3 (acquisition by property trader from
personal representatives) is withdrawn if the property trader—
(a)
spends more than the permitted amount on refurbishment
of the dwelling, or
(b)
grants a lease or licence of the dwelling, or
25
(c)
permits any of its principals or employees (or any person
connected with any of its principals or employees) to
occupy the dwelling.
      (4)
Relief under paragraph 4 (acquisition by property trader from
individual where chain of transactions breaks down) is
30
withdrawn if the property trader—
(a)
spends more than the permitted amount on refurbishment
of the old dwelling, or
(b)
grants a lease or licence of the old dwelling, or
(c)
permits any of its principals or employees (or any person
35
connected with any of its principals or employees) to
occupy the old dwelling.

Paragraph (b) does not apply to the grant of lease or licence to the
individual for a period of no more than six months.
      (5)
Relief under paragraph 6 (acquisition by property trader in case of
40
relocation of employment) is withdrawn if the property trader—
(a)
spends more than the permitted amount on refurbishment
of the dwelling, or
(b)
grants a lease or licence of the dwelling, or
(c)
permits any of its principals or employees (or any person
45
connected with any of its principals or employees) to
occupy the dwelling.