Finance Bill

House of Commons

Session 2002 - 03
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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
546

(a)
references to the acquisition of the dwelling are to the
acquisition, by way of transfer, of a major interest in the
dwelling;
(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; and
(c)
references to an individual’s employer include a
prospective employer.
Acquisition by property trader in case of relocation of employment
10
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
met.
      (2)
The conditions are—
15
(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
resulting from relocation of employment,
(b)
that the individual occupied the dwelling as his only or
20
main residence at some time in the period of two years
ending with the date of the acquisition,
(c)
that the acquisition is made in connection with a change of
residence by the individual resulting from relocation of
employment,
25
(d)
that the consideration for the acquisition does not exceed
the market value of the dwelling,
(e)
that the property trader does not intend—
(i)
to spend more than the permitted amount on
refurbishment of the dwelling, or
30
(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
(f)
that the area of land acquired does not exceed the
35
permitted area.

Paragraph (e)(ii) does not apply to the grant of a 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 (e) are met but the
area of land acquired exceeds the permitted area, the chargeable
40
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
the individual’s place of employment due to—
45
(a)
his becoming employed by a new employer,
(b)
an alteration of the duties of his employment, or
(c)
an alteration of the place where he normally performs
those duties.

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
547

      (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
travelling distance of his new place of employment, and
5
(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
where he normally performs, or is normally to perform, the duties
of his employment after the relocation.
10
      (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; and
(b)
references to the market value of the dwelling and of the
15
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.
Meaning of “dwelling”, “new dwelling” and “the permitted area”
7     (1)
“Dwelling” includes land occupied and enjoyed with the dwelling
20
as its garden or grounds.
      (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
25
been occupied since its adaptation.
      (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
30
hectare, or
(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
35
consist of that part of the land that would be the most suitable for
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—
40
(a)
a company,
(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.
45
      (2)
In relation to a property trader a “principal” means—
(a)
in the case of a company, a director;

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
548

(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.
      (3)
For the purposes of this Schedule—
5
(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
trader include the principals or employees of any such
10
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,
but does not include—
15
(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
dwelling, is—
20
(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
25
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
30
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
35
(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.
40
      (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
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
549

(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
5
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
10
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
15
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
20
connected with any of its principals or employees) to
occupy the 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.
      (6)
Where relief is withdrawn the amount of tax chargeable is the
25
amount that would have been chargeable in respect of the
acquisition but for the relief.”.
      (3)
In section 81 (further return where relief withdrawn)—
(a)
in subsection (1) (obligation to deliver a further return), before
paragraph (a) insert—
30
“(za)
paragraph 11 of Schedule 6A (relief for certain
acquisitions of residential property),”; and
(b)
in subsection (4) (meaning of disqualifying event), before paragraph
(a) insert—
“(za)
in relation to the withdrawal of relief under Schedule
35
6A, an event mentioned in paragraph (a), (b) or (c) of
paragraph 11(2), (3), (4) or (5) of that Schedule;”.
      (4)
In section 87 (interest on unpaid tax)—
(a)
in subsection (3)(a) (relevant date where relief is withdrawn), before
sub-paragraph (i) insert—
40
“(ia)
Schedule 6A (relief for certain acquisitions of
residential property),”; and
(b)
in subsection (4) (meaning of disqualifying event), before paragraph
(a) insert—
“(za)
in relation to the withdrawal of relief under Schedule
45
6A an event mentioned in paragraph (a), (b) or (c) of
paragraph 11(2), (3), (4) or (5) of that Schedule;”.

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
550

Initial transfer of assets to trustees of unit trust scheme
18
After section 64 insert—
“64A
Initial transfer of assets to trustees of unit trust scheme
(1)
The acquisition of a chargeable interest by trustees of a unit trust
scheme is exempt from charge if the following conditions are met.
5
(2)
The conditions are that—
(a)
immediately before the acquisition—
(i)
there were no assets held by the trustees for the
purposes of the scheme, and
(ii)
there were no units of the scheme in issue,
10
(b)
the only consideration for the acquisition is the issue of units
in the scheme to the vendor, and
(c)
immediately after the acquisition the vendor is the only unit
holder of the scheme.”.
Return or further return in consequence of later linked transaction
15
19    (1)
After section 81 (further return where relief withdrawn) insert—
“81A
Return or further return in consequence of later linked transaction
(1)
Where the effect of a transaction (“the later transaction”) that is
linked to an earlier transaction is that the earlier transaction becomes
notifiable, or that additional tax is payable in respect of the earlier
20
transaction or that tax is payable in respect of the earlier transaction
where none was payable before—
(a)
the purchaser under the earlier transaction must deliver a
return or further return in respect of that transaction before
the end of the period of 30 days after the effective date of the
25
later transaction,
(b)
the return must include a self-assessment of the amount of
tax chargeable as a result of the later transaction,
(c)
the tax so chargeable is to be calculated by reference to the
rates in force at the effective date of the earlier transaction,
30
and
(d)
the return must be accompanied by payment of the tax or
additional tax payable.
(2)
The provisions of Schedule 10 (returns, enquiries, assessments and
other matters) apply to a return under this section as they apply to a
35
return under section 76 (general requirement to deliver land
transaction return), with the following adaptations—
(a)
in paragraph 5 (formal notice to deliver return), the
requirement in sub-paragraph (2)(a) that the notice specify
the transaction to which it relates shall be read as requiring
40
both the earlier and later transactions to be specified;
(b)
references to the effective date of the transaction to which the
return relates shall be read as references to the effective date
of the later transaction.
(3)
This section does not affect any requirement to make a return under
45
section 76 in respect of the later transaction.”.

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 2 — Re-enactment, with changes, of amendments made by section 109 regulations
551

      (2)
In section 81(3) for “land transaction return” substitute “return under section
76 (general requirement to deliver land transaction return)”.
      (3)
In section 87 (interest on unpaid tax), in subsection (3) (meaning of “the
relevant date”), after paragraph (a) insert—
“(aa)
in the case of an amount payable under section 81A in respect
5
of an earlier transaction because of the effect of a later linked
transaction, the effective date of the later transaction;”.
Declaration by person authorised to act on behalf of purchaser
20
After section 81A (inserted by paragraph 19 above) insert—
“81B
Declaration by person authorised to act on behalf of individual
10
(1)
This section applies to the declaration mentioned in paragraph
1(1)(c) of Schedule 10 or paragraph 2(1)(c) of Schedule 11
(declaration that return or self-certificate is correct and complete).
(2)
The requirement that an individual make such a declaration (alone
or jointly with others) is treated as met if a declaration to that effect
15
is made by a person authorised to act on behalf of that individual in
relation to the matters to which the return or certificate relates.
(3)
For the purposes of this section a person is not regarded as
authorised to act on behalf of an individual unless he is so authorised
by a power of attorney in writing, signed by that individual.
20

In this subsection as it applies in Scotland “power of attorney”
includes factory and commission.
(4)
Nothing in this section affects the making of a declaration in
accordance with—
(a)
section 100(2) (persons through whom a company acts), or
25
(b)
section 106(1) or (2) (person authorised to act on behalf of
incapacitated person or minor).”.
Crown application
21    (1)
Section 107 (Crown application) is amended as follows.
      (2)
For subsection (1) (extent of Crown application) substitute—
30
“(1)
This Part binds the Crown, subject to the following provisions of this
section.”.
      (3)
After subsection (3) add—
“(4)
Nothing in this section shall be read as making the Crown liable to
prosecution for an offence.”.
35
Further provision relating to leases
22    (1)
For section 120 (meaning of “lease” and other supplementary provisions)
substitute—
“120
Further provisions relating to leases
Schedule 17A contains further provisions relating to leases.”.
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
552

      (2)
After Schedule 17 insert—
“Schedule 17A
Section 120

Further provisions relating to leases
Meaning of “lease”
1
In the application of this Part to England and Wales or Northern
5
Ireland “lease” means—
(a)
an interest or right in or over land for a term of years
(whether fixed or periodic), or
(b)
a tenancy at will or other interest or right in or over land
terminable by notice at any time.
10
Leases for a fixed term
2
In the application of the provisions of this Part to a lease for a fixed
term, no account shall be taken of—
(a)
any contingency as a result of which the lease may
determine before the end of the fixed term, or
15
(b)
any right of either party to determine the lease or renew it.
Leases that continue after a fixed term
3     (1)
This paragraph applies to—
(a)
a lease for a fixed term and thereafter until determined, or
(b)
a lease for a fixed term that may continue beyond the fixed
20
term by operation of law.
      (2)
For the purposes of this Part (except section 77 (notifiable
transactions)), a lease to which this paragraph applies is treated—
(a)
in the first instance as if it were a lease for the original fixed
term and no longer,
25
(b)
if the lease continues after the end of that term, as if it were
a lease for a fixed term one year longer than the original
fixed term,
(c)
if the lease continues after the end of the term resulting
from the application of paragraph (b), as if it were a lease
30
for a fixed term two years longer than the original fixed
term,

and so on.
      (3)
Where the effect of sub-paragraph (2) in relation to the
continuation of the lease after the end of a fixed term is that
35
additional tax is payable in respect of a transaction or that tax is
payable in respect of a transaction where none was payable
before—
(a)
the purchaser must deliver a return or further return in
respect of that transaction before the end of the period of
40
30 days after the end of that term,
(b)
the return must include a self-assessment of the amount of
tax chargeable in respect of the transaction on the basis of
the information contained in the return,