Finance Bill

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Finance Bill

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73
Acquisition relief: disregard of company holding own shares
(1)
In section 75 of FA 1986 (relief on acquisition of undertaking of company in
pursuance of scheme for reconstruction of that company), after subsection (5)
insert—
“(5A)
If immediately before the acquisition the target company or the
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acquiring company holds any of its own shares, the shares are to be
treated for the purposes of subsections (4) and (5) as having been
cancelled before the acquisition (and, accordingly, the company is to be
treated as if it were not a shareholder of itself).”
(2)
In section 77 of that Act (relief on acquisition of target company’s share
10
capital), after subsection (3) insert—
“(3A)
If immediately before the acquisition the target company or the
acquiring company holds any of its own shares, the shares are to be
treated for the purposes of subsection (3) as having been cancelled
before the acquisition (and, accordingly, the company is to be treated as
15
if it were not a shareholder of itself).”
(3)
In Part 2 of Schedule 7 to FA 2003 (SDLT: reconstruction and acquisition
reliefs), in paragraph 7 (reconstruction relief) after sub-paragraph (5) insert—
   “(5A)
If immediately before the acquisition the target company or the
acquiring company holds any of its own shares, the shares are to be
20
treated for the purposes of sub-paragraphs (2) and (4) as having been
cancelled before the acquisition (and, accordingly, the company is to
be treated as if it were not a shareholder of itself).”
(4)
The amendments made by subsections (1) and (2) have effect in relation to any
instrument executed on or after the day on which this Act is passed.
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(5)
The amendment made by subsection (3) has effect in relation to any land
transaction of which the effective date is on or after that day.
Other reliefs etc
74
SDLT: alternative finance arrangements
(1)
In FA 2003, after section 73A insert—
30
“73B
Exempt interests
(1)
An interest held by a financial institution as a result of the first
transaction within the meaning of section 71A(1)(a), 72(1)(a) or
72A(1)(a) is an exempt interest for the purposes of stamp duty land tax.
(2)
That interest ceases to be an exempt interest if—
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(a)
the lease or agreement mentioned in section 71A(1)(c), 72(1)(b)
or 72A(1)(b) ceases to have effect, or
(b)
the right under section 71A(1)(d), 72(1)(c) or 72A(1)(c) ceases to
have effect or becomes subject to a restriction.
(3)
Subsection (1) does not apply if the first transaction is exempt from
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charge by virtue of Schedule 7.
(4)
Subsection (1) does not make an interest exempt in respect of—

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(a)
the first transaction itself, or
(b)
a further transaction or third transaction within the meaning of
section 71A(4), 72(4) or 72A(4).”
(2)
In section 48 of that Act (stamp duty land tax: exempt interests), after
subsection (3) insert—
5
“(3A)
Section 73B makes additional provision about exempt interests in
relation to alternative finance arrangements.”
(3)
For the text of sections 71A(8), 72(7), 72A(8) and 73(5)(a) of that Act (alternative
finance arrangements: meaning of “financial institution”), substitute “In this
section “financial institution” has the meaning given by section 46 of the
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Finance Act 2005 (alternative finance arrangements).”
(4)
The amendments made by this section—
(a)
have effect in relation to anything that would, but for the exemption
provided by new section 73B inserted by subsection (1) above, be a land
transaction with an effective date on or after 22nd March 2007, and
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(b)
apply, in accordance with paragraph (a), to interests irrespective of the
date of their creation.
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SDLT: exchanges
(1)
In section 47(1) of FA 2003 (exchanges), insert at the end “(and they are not
linked transactions within the meaning of section 108)”.
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(2)
In section 108 of that Act (linked transactions), insert at the end—
“(4)
This section is subject to section 47(1).”
(3)
The amendments made by this section have effect in relation to a set of land
transactions if the effective date of any of them is on or after the day on which
this Act is passed.
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76
SDLT: shared ownership trusts
(1)
In Schedule 9 to FA 2003 (right to buy and shared ownership leases), insert at
the end—
“Shared ownership trust: introduction
7     (1)
In this Schedule “shared ownership trust” means a trust of land,
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within the meaning of section 1 of the Trusts of Land and
Appointment of Trustees Act 1996, which satisfies the following
conditions.
      (2)
Condition 1 is that the trust property is—
(a)
a dwelling, and
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(b)
in England or Wales.
      (3)
Condition 2 is that one of the beneficiaries (“the social landlord”) is a
qualifying body (within the meaning of paragraph 5(2)).
      (4)
Condition 3 is that the terms of the trust—

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(a)
provide for one or more of the individual beneficiaries (“the
purchaser”) to have exclusive use of the trust property as the
only or main residence of the purchaser,
(b)
require the purchaser to make an initial payment to the social
landlord (“the initial capital”),
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(c)
require the purchaser to make additional payments to the
social landlord by way of compensation under section
13(6)(a) of the Trusts of Land and Appointment of Trustees
Act 1996, (“rent-equivalent payments”),
(d)
enable the purchaser to make other additional payments to
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the social landlord (“equity-acquisition payments”),
(e)
determine the initial beneficial interests of the social landlord
and of the purchaser by reference to the initial capital,
(f)
specify a sum, equating or relating to the market value of the
dwelling, by reference to which the initial capital was
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calculated, and
(g)
provide for the purchaser’s beneficial interest in the trust
property to increase, and the social landlord’s to diminish (or
to be extinguished), as equity-acquisition payments are
made.
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      (5)
Section 118 (meaning of “market value”) does not apply to this
paragraph.
      (6)
In Condition 1 “dwelling” includes—
(a)
a building which is being constructed or adapted for use as a
dwelling,
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(b)
land which is to be used for the purpose of the construction
of a dwelling, and
(c)
land which is, or is to become, the garden or grounds of a
dwelling.
Shared ownership trust: “purchaser”
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8
For the purposes of the application of stamp duty land tax in relation
to a shared ownership trust, the person (or persons) identified as the
purchaser in accordance with paragraph 7, and not the social
landlord or any other beneficiary, is (or are) to be treated as the
purchaser of the trust property.
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Shared ownership trust: election for market value treatment
9     (1)
This paragraph applies where—
(a)
a shared ownership trust is declared, and
(b)
the purchaser elects for tax to be charged in accordance with
this paragraph.
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      (2)
An election must be included in—
(a)
the land transaction return for the declaration of the shared
ownership trust, or
(b)
an amendment of that return.
      (3)
An election may not be revoked.
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      (4)
Where this paragraph applies—

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(a)
the chargeable consideration for the declaration of the shared
ownership trust shall be taken to be the amount stated in
accordance with paragraph 7(4)(f), and
(b)
no account shall be taken for the purposes of stamp duty land
tax of rent-equivalent payments.
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      (5)
The transfer to the purchaser of an interest in the trust property upon
the termination of the trust is exempt from charge if—
(a)
an election was made under this paragraph, and
(b)
any tax chargeable in respect of the declaration of the shared
ownership trust has been paid.
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Shared ownership trust: treatment of staircasing transaction
10    (1)
An equity-acquisition additional payment under a shared
ownership trust, and the consequent increase in the purchaser’s
beneficial interest, shall be exempt from charge if—
(a)
an election was made under paragraph 9, and
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(b)
any tax chargeable in respect of the declaration of trust has
been paid.
      (2)
An equity-acquisition additional payment under a shared
ownership trust, and the consequent increase in the purchaser’s
beneficial interest, shall also be exempt from charge if following the
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increase the purchaser’s beneficial interest does not exceed 80% of
the total beneficial interest in the trust property.
Shared ownership trust: treatment of additional payments where no election made
11
Where no election has been made under paragraph 9 in respect of a
shared ownership trust—
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(a)
the initial capital shall be treated for the purposes of stamp
duty land tax as chargeable consideration other than rent,
and
(b)
any rent-equivalent additional payment by the purchaser
shall be treated for the purposes of stamp duty land tax as a
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payment of rent.”
(2)
The amendment made by subsection (1) has effect in relation to land
transactions with an effective date on or after the day on which this Act is
passed.
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SDLT: shared ownership lease
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In paragraph 2 of Schedule 9 to FA 2003 (stamp duty land tax: shared
ownership lease), after sub-paragraph (4) insert—
   “(4A)
Where this paragraph applies no account shall be taken for the
purposes of stamp duty land tax of the rent mentioned in sub-
paragraph (2)(d).”
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