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

553

 

(c)   

the tax so chargeable is to be calculated by reference to the

rates in force at the effective date of the transaction, and

(d)   

the return must be accompanied by payment of the tax or

additional tax payable.

      (4)  

The provisions of Schedule 10 (returns, enquiries, assessments and

5

other matters) apply to a return under this paragraph as they

apply to a return under section 76 (general requirement to deliver

land transaction return), with the adaptation that references to the

effective date of the transaction shall be read as references to the

day on which the lease becomes treated as being for a longer fixed

10

term.

      (5)  

For the purposes of section 77 (notifiable transactions) a lease to

which this paragraph applies is a lease for whatever is its fixed

term.

Treatment of leases for indefinite term

15

4     (1)  

For the purposes of this Part (except section 77 (notifiable

transactions))—

(a)   

a lease for an indefinite term is treated in the first instance

as if it were a lease for a fixed term of a year,

(b)   

if the lease continues after the end of the term resulting

20

from the application of paragraph (a), it is treated as if it

were a lease for a fixed term of two years,

(c)   

if the lease continues after the end of the term resulting

from the application of paragraph (b), it is treated as if it

were a lease for a fixed term of three years,

25

           

and so on.

      (2)  

No account shall be taken for the purposes of this Part of any other

statutory provision in England and Wales or Northern Ireland

deeming a lease for an indefinite period to be a lease for a different

term.

30

      (3)  

Where the effect of sub-paragraph (1) in relation to the

continuation of the lease after the end of a deemed fixed term is

that additional tax is payable in respect of a transaction or that tax

is payable in respect of a transaction where none was payable

before—

35

(a)   

the purchaser must deliver a return or further return in

respect of that transaction before the end of the period of

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

40

the information contained in the return,

(c)   

the tax so chargeable is to be calculated by reference to the

rates in force at the effective date of the transaction, and

(d)   

the return must be accompanied by payment of the tax or

additional tax payable.

45

      (4)  

The provisions of Schedule 10 (returns, enquiries, assessments and

other matters) apply to a return under this paragraph as they

apply to a return under section 76 (general requirement to deliver

land transaction return), with the adaptation that references to the

 

 

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

554

 

effective date of the transaction shall be read as references to the

day on which the lease becomes treated as being for a longer fixed

term.

     (4A)  

For the purposes of section 77 (notifiable transactions) a lease for

an indefinite term is a lease for a term of less then seven years.

5

      (5)  

References in this paragraph to a lease for an indefinite period

include—

(a)   

a periodic tenancy or other interest or right terminable by

a period of notice,

(b)   

a tenancy at will in England and Wales or Northern

10

Ireland, or

(c)   

any other interest or right terminable by notice at any time.

Treatment of successive linked leases

5     (1)  

This paragraph applies where—

(a)   

successive leases are granted or treated as granted

15

(whether at the same time or at different times) of the same

or substantially the same premises, and

(b)   

those grants are linked transactions.

      (2)  

This Part applies as if the series of leases were a single lease—

(a)   

granted at the time of the grant of the first lease in the

20

series,

(b)   

for a term equal to the aggregate of the terms of all the

leases, and

(c)   

in consideration of the rent payable under all of the leases.

      (3)  

The grant of later leases in the series is accordingly disregarded for

25

the purposes of this Part except section 81A (return or further

return in consequence of later linked transaction).

Rent

6     (1)  

For the purposes of this Part a single sum expressed to be payable

in respect of rent, or expressed to be payable in respect of rent and

30

other matters but not apportioned, shall be treated as entirely rent.

      (2)  

Sub-paragraph (1) is without prejudice to the application of

paragraph 4 of Schedule 4 (chargeable consideration: just and

reasonable apportionment) where separate sums are expressed to

be payable in respect of rent and other matters.

35

Variable or uncertain rent

7     (1)  

This paragraph applies to determine the amount of rent payable

under a lease where that amount—

(a)   

varies in accordance with provision in the lease, or

(b)   

is contingent, uncertain or unascertained.

40

      (2)  

As regards rent payable in respect of any period before the end of

the fifth year of the term of the lease—

(a)   

the provisions of this Part apply as in relation to other

chargeable consideration, 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

555

 

(b)   

the provisions of section 51(1) and (2) accordingly apply if

the amount is contingent, uncertain or unascertained.

      (3)  

As regards rent payable in respect of any period after the end of

the fifth year of the term of the lease, the annual amount is

assumed for the purposes of this Part to be, in every case, equal to

5

the highest amount of rent payable in respect of any consecutive

twelve month period in the first five years of the term.

           

In determining that amount take into account (if necessary) any

amounts determined as mentioned in sub-paragraph (2)(b).

      (4)  

This paragraph has effect subject to paragraph 8 (adjustment

10

where rent payable ceases to be uncertain).

      (5)  

No account shall be taken for the purposes of this Part of any

provision for rent to be adjusted in line with the retail prices index.

First rent review in final quarter of fifth year

7A         

Where—

15

(a)   

a lease contains provision under which the rent may be

adjusted,

(b)   

under that provision the first (or only) such adjustment—

(i)   

is to an amount that (before the adjustment) is

uncertain, and

20

(ii)   

has effect from a date (the “review date”) that is

expressed as falling five years after a specified date,

   

and

(c)   

the specified date falls within the three months before the

beginning of the term of the lease,

25

           

this Schedule has effect as if references to the first five years of the

term of the lease were to the period beginning with the start of the

term of the lease and ending with the review date.

           

References to the fifth year of the term of the lease shall be read

accordingly.”.

30

Adjustment where rent ceases to be uncertain

8     (1)  

Where the provisions of section 51(1) and (2) (contingent,

uncertain or unascertained consideration) apply in relation to a

transaction by virtue of paragraph 7 (uncertain rent) and—

(a)   

the end of the fifth year of the term of the lease is reached,

35

or

(b)   

the amount of rent payable in respect of the first five years

of the term of the lease ceases to be uncertain at an earlier

date,

           

the following provisions have effect to require or permit

40

reconsideration of how this Part applies to the transaction (and to

any transaction in relation to which it is a linked transaction).

      (2)  

For the purposes of this paragraph the amount of rent payable

ceases to be uncertain when—

(a)   

in the case of contingent rent, the contingency occurs or it

45

becomes clear that it will not occur, 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

556

 

(b)   

in the case of uncertain or unascertained rent, the amount

becomes ascertained.

      (3)  

If the result as regards the rent paid or payable in respect of the

first five years of the term of the lease is that a transaction becomes

notifiable, or that additional tax is payable in respect of a

5

transaction or that tax is payable where none was payable

before—

(a)   

the purchaser must make a return to the Inland Revenue

within 30 days of the date referred to in sub-paragraph

(1)(a) or (b),

10

(b)   

the return must contain a self-assessment of the tax

chargeable in respect of the transaction on the basis of the

information contained in the return,

(c)   

the tax so chargeable is to be calculated by reference to the

rates in force at the effective date of the transaction, and

15

(d)   

the return must be accompanied by payment of any tax or

additional tax payable.

      (4)  

The provisions of Schedule 10 (returns, enquiries, assessment and

other matters) apply to a return under this paragraph as they

apply to a return under section 76 (general requirement to make

20

land transaction return), subject to the adaptation that references

to the effective date of the transaction shall be read as references to

the date referred to in sub-paragraph (1)(a) or (b).

      (5)  

If the result as regards the rent paid or payable in respect of the

first five years of the term of the lease is that less tax is payable in

25

respect of the transaction than has already been paid—

(a)   

the purchaser may, within the period allowed for

amendment of the land transaction return, amend the

return accordingly;

(b)   

after the end of that period he may (if the land transaction

30

return is not so amended) make a claim to the Inland

Revenue for repayment of the amount overpaid.

Rent for overlap period in case of grant of further lease

9     (1)  

This paragraph applies where—

(a)   

A surrenders an existing lease to B (“the old lease”) and in

35

consideration of that surrender B grants a lease to A of the

same or substantially the same premises (“the new lease”),

(b)   

the tenant under a lease (“the old lease”) of premises to

which Part 2 of the Landlord and Tenant Act 1954 or the

Business Tenancies (Northern Ireland) Order 1996 applies

40

makes a request for a new tenancy (“the new lease”) which

is duly executed, or

(c)   

a person claiming relief against re-entry or forfeiture as

under-lessee in relation to the original sub-lease (“the old

lease”) is granted a lease (“the new lease”) in pursuance of

45

an order of a court.

      (2)  

For the purposes of this Part the rent payable under the new lease

in respect of any period falling within the overlap period is treated

as reduced by the amount of the rent that would have been

payable in respect of that period under the old lease.

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

557

 

      (3)  

The overlap period is the period between the date of grant of the

new lease and what would have been the end of the term of the old

lease had it not been terminated.

      (4)  

The rent that would have been payable under the old lease shall be

taken to be the amount taken into account in determining the

5

stamp duty land tax chargeable in respect of the acquisition of the

old lease.

      (5)  

This paragraph does not have effect so as to require the rent

payable under the new lease to be treated as a negative amount.

Tenants’ obligations etc that do not count as chargeable consideration

10

10    (1)  

In the case of the grant of a lease none of the following counts as

chargeable consideration—

(a)   

any undertaking by the tenant to repair, maintain or insure

the demised premises (in Scotland, the leased premises);

(b)   

any undertaking by the tenant to pay any amount in

15

respect of services, repairs, maintenance or insurance or

the landlord’s costs of management;

(c)   

any other obligation undertaken by the tenant that is not

such as to affect the rent that a tenant would be prepared

to pay in the open market;

20

(d)   

any guarantee of the payment of rent or the performance

of any other obligation of the tenant under the lease;

(e)   

any penal rent, or increased rent in the nature of a penal

rent, payable in respect of the breach of any obligation of

the tenant under the lease.

25

      (2)  

Where sub-paragraph (1) applies in relation to an obligation, a

payment made in discharge of the obligation does not count as

chargeable consideration.

      (3)  

The release of any such obligation as is mentioned in sub-

paragraph (1) does not count as chargeable consideration in

30

relation to the surrender of the lease.

Cases where assignment of lease treated as grant of lease

11    (1)  

If the grant of a lease (“the original lease”) is exempt from charge

by virtue of any of the provisions specified in sub-paragraph (2),

the first assignment of the lease that is not exempt from charge by

35

virtue of any of those provisions is treated for the purposes of this

Part as if it were the grant of a lease by the assignor.

      (2)  

The provisions are—

(a)   

section 57A (sale and leaseback arrangements);

(b)   

Part 1 or 2 of Schedule 7 (group relief or reconstruction or

40

acquisition relief);

(c)   

section 66 (transfers involving public bodies);

(d)   

Schedule 8 (charities relief);

(e)   

any such regulations as are mentioned in section 123(3)

(regulations reproducing in relation to stamp duty land tax

45

the effect of enactments providing for exemption from

stamp duty).

 

 

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

558

 

      (3)  

The grant is treated as being—

(a)   

for a term equal to the unexpired term of the original lease,

and

(b)   

on the same terms as those on which the assignee holds

that lease after the assignment.

5

      (4)  

This paragraph does not apply where the relief in question is

group relief, reconstruction or acquisition relief or charities relief

and is withdrawn as a result of a disqualifying event occurring

before the effective date of the assignment.

      (5)  

For the purposes of sub-paragraph (4) “disqualifying event”

10

means—

(a)   

in relation to the withdrawal of group relief, the purchaser

ceasing to be a member of the same group as the vendor

(within the meaning of Part 1 of Schedule 7);

(b)   

in relation to the withdrawal of reconstruction or

15

acquisition relief, the change of control of the acquiring

company mentioned in paragraph 9(1)(a) of that Schedule

or, as the case may be, the event mentioned in paragraph

11(1)(a) or (2)(a) of that Schedule;

(c)   

in relation to the withdrawal of charities relief, a

20

disqualifying event as defined in paragraph 2(3) of

Schedule 8.

Assignment of lease: responsibility of assignee for returns etc

12    (1)  

Where a lease is assigned, anything that but for the assignment

would be required or authorised to be done by or in relation to the

25

assignor under or by virtue of—

(a)   

section 80 (adjustment where contingency ceases or

consideration is ascertained),

(b)   

section 81A (return or further return in consequence of

later linked transaction),

30

(c)   

paragraph 3 or 4 of this Schedule (return or further return

required where lease for indefinite period continues), or

(d)   

paragraph 8 of this Schedule (adjustment where rent

ceases to be uncertain),

           

shall, if the event giving rise to the adjustment or return occurs

35

after the effective date of the assignment, be done instead by or in

relation to the assignee.

      (2)  

So far as necessary for giving effect to sub-paragraph (1) anything

previously done by or in relation to the assignor shall be treated as

if it had been done by or in relation to the assignee.

40

      (3)  

This paragraph does not apply if the assignment falls to be treated

as the grant of a lease by the assignor (see paragraph 11).

Agreement for lease

12A   (1)  

This paragraph applies where in England and Wales or Northern

Ireland—

45

(a)   

an agreement for a lease is entered into, 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

559

 

(b)   

the agreement is substantially performed without having

been completed.

      (2)  

The agreement is treated as if it were the grant of a lease in

accordance with the agreement (“the notional lease”), beginning

with the date of substantial performance.

5

           

The effective date of the transaction is that date.

      (3)  

Where a lease is subsequently granted in pursuance of the

agreement—

(a)   

the notional lease is treated as if it were surrendered at that

time, and

10

(b)   

the lease itself is treated for the purposes of paragraph 9

(rent for overlap period in case of grant of further lease) as

if it were granted in consideration of that surrender.

      (4)  

Where sub-paragraph (1) 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.

      (5)  

In this paragraph “substantially performed” and “completed”

20

have the same meanings as in section 44 (contract and

conveyance).

Assignment of agreement for lease

12B   (1)  

This paragraph applies, in place of section 45 (contract and

conveyance: effect of transfer of rights), where in England and

25

Wales or Northern Ireland a person assigns his interest as lessee

under an agreement for a lease.

      (2)  

If the assignment occurs without the agreement having been

substantially performed, section 44 (contract and conveyance) has

effect as if—

30

(a)   

the contract were with the assignee and not the assignor,

and

(b)   

the consideration given by the assignee for entering into

the contract included any consideration given by him for

the assignment.

35

      (3)  

If the assignment occurs after the agreement has been

substantially performed—

(a)   

the assignment is a separate land transaction, and

(b)   

the effective date of that transaction is the date of the

assignment.

40

      (4)  

Where there are successive assignments, this paragraph has effect

in relation to each of them.

Increase of rent treated as grant of new lease: variation of lease

13    (1)  

Where a lease is varied so as to increase the amount of the rent, the

variation is treated for the purposes of this Part as if it were the

45

grant of a lease in consideration of the additional rent made

payable by it.

 

 

 
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