Finance (No.2) Bill

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Schedule 24 — Stamp duty land tax: amendments of Schedule 15 to FA 2003
475

      (5)
In paragraph 19, omit sub-paragraphs (2A), (2B), (2D) and (8).”
Transfer of chargeable interest from a partnership to a partnership
8
In paragraph 23 (transfer of chargeable interest from a partnership to a
partnership), for sub-paragraphs (2) and (3) substitute—
    “(2)
Paragraphs 10(2) and 18(2) do not apply.
5
     (2A)
The chargeable consideration for the transaction shall be taken to
be what it would have been if paragraph 10(2) had applied or, if
greater, what it would have been if paragraph 18(2) had applied.
      (3)
Where the whole or part of the chargeable consideration for the
transaction is rent—
10
(a)
paragraphs 11 and 19 do not apply;
(b)
the tax chargeable in respect of so much of the chargeable
consideration as consists of rent shall be taken to be what
it would have been if paragraph 11 had applied or, if
greater, what it would have been if paragraph 19 had
15
applied;
(c)
the disapplication of the 0% band provided for by
paragraph 9(2) of Schedule 5 has effect if—
(i)
it would have had effect if paragraph 11(2B) of this
Schedule had applied, or
20
(ii)
it would have had effect if paragraph 19(2B) of this
Schedule had applied.”
Transfer of partnership interest: restriction of charge to property-investment partnerships
9     (1)
In paragraph 14 (transfer of partnership interest: consideration given and
chargeable interest held), for the heading substitute—
25
“Transfer for consideration of interest in property-investment partnership”.
      (2)
In sub-paragraph (1)(a) of that paragraph, before “partnership” insert
“property-investment”.
      (3)
After sub-paragraph (7) of that paragraph insert—
    “(8)
In this paragraph—
30
“property-investment partnership” means a partnership
whose sole or main activity is investing or dealing in
chargeable interests (whether or not that activity involves
the carrying out of construction operations on the land in
question);
35
“construction operations” has the same meaning as in
Chapter 3 of Part 3 of the Finance Act 2004 (see section 74
of that Act).”
Prevention of double charge where money etc withdrawn from partnership
10
In paragraph 17A (withdrawal of money etc from partnership after transfer
40
of chargeable interest), after sub-paragraph (7) insert—
    “(8)
Where—

Finance (No.2) Bill
Schedule 25 — Stamp duty land tax: amendments of Schedule 17A to FA 2003
476

(a)
a qualifying event gives rise to a charge under this
paragraph, and
(b)
the same event gives rise to a charge under paragraph 14
(transfer for consideration of interest in property-
investment partnership),
5

the amount of the charge under this paragraph is reduced (but not
below nil) by the amount of the charge under that paragraph.”
Commencement
11    (1)
Paragraphs 2 to 8 have effect in relation to any transfer of which the effective
date is on or after the day on which this Act is passed.
10
      (2)
Paragraph 9 has effect in relation to any transfer that has (or, but for the
amendment made by that paragraph, would have) an effective date which is
on or after that day.
      (3)
Paragraph 10 has effect in relation to any qualifying event of which the
effective date is on or after that day.
15
      (4)
In this paragraph “effective date” has the same meaning as in Part 4 of FA
2003.
Schedule 25
Section 164

Stamp duty land tax: amendments of Schedule 17A to FA 2003
Introduction
20
1
Schedule 17A (stamp duty land tax: further provisions relating to leases) is
amended as follows.
Agricultural tenancies variable under statutory provisions
2     (1)
In paragraph 7 (variable or uncertain rent), after sub-paragraph (4) insert—
   “(4A)
For the purposes of this paragraph and paragraph 8, the cases
25
where the amount of rent payable under a lease is uncertain or
unascertained include cases where there is a possibility of that
amount being varied under—
(a)
section 12, 13 or 33 of the Agricultural Holdings Act 1986,
(b)
Part 2 of the Agricultural Tenancies Act 1995,
30
(c)
section 13, 14, 15 or 31 of the Agricultural Holdings
(Scotland) Act 1991, or
(d)
section 9, 10 or 11 of the Agricultural Holdings (Scotland)
Act 2003.”
      (2)
In paragraph 13(2), for the words after “increase of rent” substitute “in
35
pursuance of—
(a)
a provision contained in the lease, or
(b)
a provision mentioned in any of paragraphs (a) to (d) of
paragraph 7(4A).”

Finance (No.2) Bill
Schedule 25 — Stamp duty land tax: amendments of Schedule 17A to FA 2003
477

Backdated lease granted to tenant holding over
3     (1)
After paragraph 9 insert—
“Backdated lease granted to tenant holding over
9A    (1)
This paragraph applies where—
(a)
the tenant under a lease continues in occupation after the
5
date on which, under its terms, the lease terminates (“the
contractual termination date”),
(b)
he is granted a new lease of the same or substantially the
same premises, and
(c)
the term of the new lease is expressed to begin on or
10
immediately after the contractual termination date.
      (2)
The term of the new lease is treated for the purposes of this Part as
beginning on the date on which it is expressed to begin.
      (3)
The rent payable under the new lease in respect of any period
falling—
15
(a)
after the contractual termination date, and
(b)
before the date on which the new lease is granted,

is treated for the purposes of this Part as reduced by the amount of
taxable rent that is payable in respect of that period otherwise than
under the new lease.
20
      (4)
For the purposes of sub-paragraph (3) rent is “taxable” if or to the
extent that it is taken into account in determining liability to stamp
duty land tax.
      (5)
Sub-paragraph (3) does not have effect so as to require the rent
payable under the new lease to be treated as a negative amount.”
25
      (2)
In paragraph 7(3), for the words after “but disregard” substitute
“paragraphs 9(2) and 9A(3) (deemed reduction of rent, where further lease
granted, for period during which rents overlap)”.
Disapplication of “single lease” treatment where agreement for lease followed by grant
4
In paragraph 12A (agreement for lease), at the end of sub-paragraph (3)
30
insert—

“Paragraph 5 does not apply so as to treat the notional lease and
the lease itself as a single lease.”
5     (1)
In paragraph 19 (provisions relating to leases in Scotland), at the end of sub-
paragraph (2) insert—
35

“Paragraph 5 does not apply so as to treat the first lease and the
second lease as a single lease.”
      (2)
At the end of sub-paragraph (4) of that paragraph insert—

“Paragraph 5 does not apply so as to treat the notional lease and
the lease itself as a single lease.”
40

Finance (No.2) Bill
Schedule 25 — Stamp duty land tax: amendments of Schedule 17A to FA 2003
478

Disapplication of “new lease” treatment for certain rent increases after fifth year
6     (1)
In paragraph 13 (increase in rent treated as grant of new lease: variation of
lease), in the heading, after “variation of lease” insert “in first five years”.
      (2)
In sub-paragraph (1) of that paragraph, after “to increase the amount of the
rent” insert “as from a date before the end of the fifth year of the term of the
5
lease”.
Abnormal rent increase after fifth year
7     (1)
In paragraph 14 (increase of rent treated as grant of new lease: abnormal
increase after fifth year), in sub-paragraph (1)(a), for “in accordance with the
provisions of the lease” substitute “, whether in accordance with the
10
provisions of the lease or otherwise”.
      (2)
For sub-paragraph (4) of that paragraph substitute—
    “(4)
Where the provisions of this paragraph have not previously
applied to an increase in the rent payable under the lease, the rent
previously taxed is—
15
(a)
if paragraph (b) or (c) does not apply, the rent payable
under the lease without the increase referred to in sub-
paragraph (1);
(b)
if the amount of rent payable under the lease is determined
under paragraph 7 (variable or uncertain rent), the rent
20
that is assumed to be payable after the fifth year of the term
of the lease (in accordance with paragraph 7(3));
(c)
if there has been a variation in the lease falling within
paragraph 13 (increase of rent treated as grant of new
lease: variation of lease in first five years), the rent payable
25
as a result of the variation (or, if there has been more than
one such variation, the most recent one).
     (4A)
Where the provisions of this paragraph have previously applied to
an increase in the rent payable under the lease, the rent previously
taxed is the rent payable as a result of the last increase in relation
30
to which the provisions of this paragraph applied.
     (4B)
In determining the rent previously taxed, disregard paragraphs
9(2) and 9A(3) (deemed reduction of rent, where further lease
granted, for period during which rents overlap).”
      (3)
At the end of that paragraph insert—
35
    “(7)
The reference to a lease in sub-paragraph (1) is to—
(a)
a lease actually granted on or after the implementation
date, or
(b)
a lease that is treated as existing by reason of a deemed
grant under paragraph 12A(2) or 19(3) of which the
40
effective date is on or after the implementation date.”
8     (1)
In paragraph 15 (increase of rent after fifth year: whether regarded as
abnormal), for Steps One to Six substitute—

“Step One

Find the start date.
45

Finance (No.2) Bill
Schedule 25 — Stamp duty land tax: amendments of Schedule 17A to FA 2003
479


Where the provisions of paragraph 14 have not previously applied
to an increase in the rent payable under the lease, the start date
is—
(a)
if paragraph (b) or (c) does not apply, the beginning of the
term of the lease;
5
(b)
if the amount of rent payable under the lease is determined
under paragraph 7 (variable or uncertain rent), the
beginning of the period by reference to which the rent
assumed to be payable after the fifth year of the term of the
lease is determined in accordance with paragraph 7(3);
10
(c)
if there has been a variation in the lease falling within
paragraph 13 (increase of rent treated as grant of new
lease: variation of lease in first five years), the date of the
variation (or, if there has been more than one such
variation, the date of the most recent one).
15

Where the provisions of paragraph 14 have previously applied to
an increase in the rent payable under the lease, the start date is the
date of the last increase in relation to which the provisions of that
paragraph applied.

Step Two
20

Find the number of whole years in the period between the start
date and the date on which the new rent first becomes payable.

Step Three

The rent increase is regarded as abnormal if the excess rent (see
paragraph 14(3)) is greater than:
25

where—
R is the rent previously taxed (see paragraph 14(4) or (4A)),
and
Y is the number of whole years found under Step Two.”
Commencement
30
9     (1)
Paragraph 2 has effect in relation to any lease granted or treated as granted
on or after commencement day.
      (2)
Paragraph 3 has effect in relation to any case where—
(a)
the grant of the old lease was chargeable to stamp duty land tax, and
(b)
the new lease is granted on or after commencement day.
35

“The old lease” and “the new lease” mean the leases referred to in sub-
paragraphs (1)(a) and (1)(b), respectively, of paragraph 9A of Schedule 17A
to FA 2003 (inserted by paragraph 3).
      (3)
Paragraphs 4 and 5 have effect in relation to any agreement that is
substantially performed on or after commencement day.
40
      (4)
Paragraph 6 has effect in relation to any variation of a lease made on or after
commencement day.

Finance (No.2) Bill
Schedule 26 — Repeals
Part 1 — Excise duties
480

      (5)
Paragraphs 7 and 8 have effect in relation to any increase of rent that takes
effect on or after commencement day.
      (6)
In this paragraph “commencement day” means the day on which this Act is
passed.
Schedule 26
5
178

Repeals
Part 1
Excise duties
(1) Provisions of ALDA 1979 of no practical utility etc

Short title and chapter
Extent of repeal

10

Alcoholic Liquor Duties Act
Section 12(4).

1979 (c. 4)
Section 14.

Section 15(4).

Section 18(5).

Section 21.

15

Section 24.

Section 26.

Section 32.

Section 35.

Section 55A.

20

Section 67.

Section 69.

Section 71.

Section 74.

Section 82.

25

Finance Act 1981 (c. 35)
In Schedule 8, paragraphs 13, 17 and 21.

Finance Act 1985 (c. 54)
In Schedule 3, paragraph 2.

Finance Act 1986 (c. 41)
In Schedule 5, paragraph 3(2).

Territorial Sea Act 1987 (c. 49)
In Schedule 1, paragraph 5(2).

Finance Act 1988 (c. 39)
In Schedule 1, paragraphs 6 and 10.

30

Finance Act 1994 (c. 9)
In Schedule 4, in paragraph 18(1), the words

from “(offence” to the end, and paragraphs

23, 25, 28, 36, 42 to 44 and 48.

In Schedule 5, paragraph 3(1)(i) and (n).

Finance Act 1995 (c. 4)
In Schedule 2, paragraph 4.

35

Licensing Act 2003 (c. 17)
In Schedule 6, paragraph 73.

(2) Amusement machine licence duty

Short title and chapter
Extent of repeal

Betting and Gaming Duties Act
Section 22(2)(b).

1981 (c. 63).
Section 25A.

40

Finance (No.2) Bill
Schedule 26 — Repeals
Part 3 — Income tax, corporation tax and capital gains tax
481

Short title and chapter
Extent of repeal

Betting and Gaming Duties Act
In section 26(2)—

1981 (c. 63).—cont.
(a)
the definition of “video machine”, and

(b)
in the definition of “two-penny

machine”, the words from “and “five-

5

penny machine”” to the end.

In Schedule 3, paragraph 6.

In Schedule 4, paragraphs 2, 3 and 15.

Part 2
Value added tax
10
Gaming machines

Short title and chapter
Extent of repeal

Betting and Gaming Duties Act
The word “or” immediately after section 2(2)(b).

1981 (c. 63)

Value Added Tax Act 1994
In section 23(1), the words “to play”.

15

(c. 23)

Part 3
Income tax, corporation tax and capital gains tax
(1) Abolition of corporation tax starting rate and non-corporate
distribution rate
20

Short title and chapter
Extent of repeal

Income and Corporation Taxes
Sections 13AA and 13AB.

Act 1988 (c. 1)
In section 13A(1), the words “or 13AA(8)”.

Schedule A2.

Finance Act 1998 (c. 36)
In Schedule 18, in paragraph 8(1), in the second

25

step, the words “or 13AA(2)”.

Finance Act 1999 (c. 16)
Section 28.

Finance Act 2004 (c. 36)
Section 28.

Schedule 3.


These repeals have effect in accordance with section 26 of this Act.
30
(2) Group relief where surrendering company not resident in UK

Short title and chapter
Extent of repeal

Finance Act 2000 (c. 17)
In Schedule 27, paragraph 3(a).


This repeal has effect in accordance with Schedule 1 to this Act.