Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 1 — Amendments to Part 4 of the Finance Act 2003: general
539


The effective date of the transaction is when the agreement is
substantially performed.
      (4)
Where sub-paragraph (3) applies and at some later time a lease is
executed—
(a)
the notional lease is treated as if it were surrendered at that
5
time, and
(b)
the lease itself is treated for the purposes of paragraph 9 as
if it were granted in consideration of that surrender.
      (5)
References in sub-paragraphs (2) to (4) to the execution of a lease
are to the execution of a lease that either—
10
(a)
is in conformity with the missives of let, or
(b)
relates to substantially the same property and period as the
missives of let.
      (6)
Where sub-paragraph (3) applies and the agreement is (to any
extent) afterwards rescinded or annulled, or is for any other
15
reason not carried into effect, the tax paid by virtue of that sub-
paragraph shall (to that extent) be repaid by the Inland Revenue.

Repayment must be claimed by amendment of the land
transaction return made in respect of the agreement.”.
Transfer of rights after 10th July 2003 relating to earlier contract: applicability of SDLT regime
20
12
In Schedule 19 (commencement and transitional provisions), in paragraph 3
(contract entered into before first relevant date), for paragraph (c) of sub-
paragraph (3) substitute—
“(c)
if on or after that date there is an assignment, subsale or
other transaction (relating to the whole or part of the
25
subject-matter of the contract) as a result of which a person
other than the purchaser under the contract becomes
entitled to call for a conveyance to him.”.
Commencement
13    (1)
Paragraph 4, and paragraphs 7 and 8 so far as relating to the section 44A
30
inserted by that paragraph, apply in relation to any contract entered into
after 17th March 2004.
      (2)
Paragraph 5, and paragraphs 7 and 8 so far as relating to the section 45A
inserted by that paragraph, apply in relation to any transfer of rights
occurring after that date.
35
      (3)
Subject to sub-paragraphs (4) and (5), the amendments made by the other
provisions of this Part of this Schedule apply in relation to any transaction
of which the effective date is after 17th March 2004.
      (4)
Paragraph 12 does not apply in relation to a contract that was substantially
performed before 17th March 2004.
40
      (5)
Paragraphs 6 and 11 (which contain amendments the effect of which is
reproduced in Part 2 of this Schedule) do not apply in relation to any
transaction of which the effective date is on or after the day on which this Act
is passed.
      (6)
In this paragraph—
45

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
540

“effective date” and “substantially performed” have the same
meaning as in Part 4 of the Finance Act 2003 (as amended by this
Part of this Schedule);
“transfer of rights” has the same meaning as in section 45 of that Act
or, as the case may require, section 45A of that Act (inserted by
5
paragraph 5(5)).
Part 2
Re-enactment, with changes, of amendments made by section 109 regulations
Introduction and revocation
14    (1)
This Part of this Schedule contains amendments to Parts 4 and 5 of the
10
Finance Act 2003 (c. 14) (stamp duty land tax and stamp duty)
corresponding, subject to certain changes, to those made by the Stamp Duty
and Stamp Duty Land Tax (Variation of the Finance Act 2003) (No. 2)
Regulations 2003 (S.I. 2003/2816) (made under section 109 of that Act).
      (2)
Those regulations are revoked.
15
Meaning of taking possession
15    (1)
Section 44 (contract and conveyance) is amended as follows.
      (2)
In subsection (5)(a) (meaning of “substantial performance”: purchaser
taking possession), after “the purchaser” insert “, or a person connected with
the purchaser,”.
20
      (3)
In subsection (6) (meaning of taking possession)—
(a)
for paragraph (a) substitute—
“(a)
possession includes receipt of rents and profits or the
right to receive them, and”; and
(b)
in paragraph (b), for “the purchaser takes possession” substitute
25
“possession is taken”.
      (4)
After subsection (10) add—
“(11)
Section 839 of the Taxes Act 1988 (connected persons) has effect for
the purposes of this section.”.
Relief for sale and leaseback arrangements
30
16
After section 57 (disadvantaged areas relief) insert—
“57A
Sale and leaseback arrangements
(1)
The leaseback element of a sale and leaseback arrangement is exempt
from charge if the qualifying conditions specified below are met.
(2)
A “sale and leaseback” arrangement means an arrangement under
35
which—
(a)
A transfers or grants to B a major interest in land (the “sale”),
and
(b)
out of that interest B grants a lease to A (the “leaseback”).
(3)
The qualifying conditions are—
40

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
541

(a)
that the sale transaction is entered into wholly or partly in
consideration of the leaseback transaction being entered into,
(b)
that the only other consideration (if any) for the sale is the
payment of money or the assumption, satisfaction or release
of a debt (or both),
5
(c)
that the sale is not a transfer of rights within the meaning of
section 45 (contract and conveyance: effect of transfer of
rights) or 45A (contract providing for conveyance to third
party: effect of transfer of rights), and
(d)
where A and B are both bodies corporate at the effective date
10
of the leaseback transaction, that they are not members of the
same group for the purposes of group relief (see paragraph 1
of Schedule 7) at that date.
(4)
In this section—

“debt” means an obligation, whether certain or contingent, to
15
pay a sum of money either immediately or at a future date;
and

“money” means money in sterling or another currency.”.
Relief for certain acquisitions of residential property
17    (1)
For sections 58 and 59 (relief for certain exchanges of residential property
20
and relocation relief) substitute—
“58A
Relief for certain acquisitions of residential property
Schedule 6A provides for relief in the case of certain acquisitions of
residential property.”.
      (2)
After Schedule 6 insert—
25
“Schedule 6A
Section 58A

Relief for certain acquisitions of residential property
Acquisition by house-building company from individual acquiring new dwelling
1     (1)
Where a dwelling (“the old dwelling”) is acquired by a house-
building company from an individual (whether alone or with
30
other individuals), the acquisition is exempt from charge if the
following conditions are met.
      (2)
The conditions are—
(a)
that the individual (whether alone or with other
individuals) acquires from the house-building company a
35
new dwelling,
(b)
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
40
(ii)
intends to occupy the new dwelling as his only or
main residence,
(c)
that each acquisition is entered into in consideration of the
other, and

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
542

(d)
that the area of land acquired by the house-building
company 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 by the house-building company exceeds the
permitted area, the chargeable consideration for the acquisition is
5
taken to be the amount calculated by deducting the market value
of the permitted area from the market value of the old dwelling.
      (4)
A “house-building company” means a company that carries on the
business of constructing or adapting buildings or parts of
buildings for use as dwellings.
10

References in this paragraph to such a company include any
company connected with it.
      (5)
In this paragraph—
(a)
references to the acquisition of the new dwelling are to the
acquisition, by way of grant or transfer, of a major interest
15
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
dwelling; and
(c)
references to the market value of the old dwelling and of
20
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.
Acquisition by property trader from individual acquiring new dwelling
2     (1)
Where a dwelling (“the old dwelling”) is acquired by a property
25
trader from an individual (whether alone or with other
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
30
consists of or includes acquiring dwellings from
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-
35
building company,
(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
40
(ii)
intends to occupy the new dwelling as his only or
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
45
(ii)
to grant a lease or licence of the old 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 old dwelling, and

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
543

(e)
that the area of land acquired by the property trader does
not exceed the permitted area.

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
5
the area of land acquired by the property trader 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 old dwelling.
      (4)
The provisions of paragraph 1(4) (meaning of “house-building
10
company” etc) also have effect for the purposes of this paragraph.
      (5)
In this paragraph—
(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;
15
(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
20
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
25
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,
30
(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
35
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
40
(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
45
calculated by deducting the market value of the permitted area
from the market value of the dwelling.
      (4)
In this paragraph—

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
544

(a)
references to the acquisition of the dwelling are to the
acquisition, by way of transfer, of a major interest in the
dwelling; and
(b)
references to the market value of the dwelling and of the
permitted area are, respectively, to the market value of that
5
major interest in the dwelling and of that interest so far as
it relates to that area.
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
10
trader from an individual (whether alone or with other
individuals), the acquisition is exempt from charge if—
(a)
the individual has made arrangements to sell a dwelling
(“the old dwelling”) and acquire another dwelling (“the
second dwelling”),
15
(b)
the arrangements to sell the old dwelling fail, and
(c)
the acquisition of the old dwelling is made for the purpose
of enabling the individual’s acquisition of the second
dwelling to proceed,

and the following conditions are met.
20
      (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—
25
(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,
30
(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
35
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
40
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
45
from the market value of the old dwelling.
      (4)
In this paragraph—

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
545

(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;
(b)
references to the acquisition of the old dwelling are to the
acquisition, by way of transfer, of a major interest in the
5
dwelling; and
(c)
references to the market value of the old 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.
10
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
exempt from charge if the following conditions are met.
      (2)
The conditions are—
15
(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,
(b)
that the acquisition is made in connection with a change of
residence by the individual resulting from relocation of
20
employment,
(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.
25
      (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
from the market value of the dwelling.
30
      (4)
In this paragraph “relocation of employment” means a change of
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
35
(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
40
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.

The individual’s “new place of employment” means the place
45
where he normally performs, or is normally to perform, the duties
of his employment after the relocation.
      (6)
In this paragraph—