Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017

1. Introduction

2. Background to the Act

3. Application of the Act

4. General Overview of the Act

5. Commentary on Sections

   1. Part 1 – Overview

   2. Part 2 – the Tax and Key Concepts

      1. Section 2 - Land transaction tax

      2. Sections 3–5 - Land transaction, chargeable interest and exempt interest

      3. Section 6 - Acquisition and disposal of chargeable interest

      4. Section 7 - Buyer and seller

      5. Section 8 - Linked transactions

      6. Section 9 - Land partly in Wales and partly in England

      7. Section 10 - Contract and transfer

      8. Section 11 - Contract providing for transfer to third party

      9. Section 12 - Contract providing for transfer to third party: effect of transfer of rights

      10. Section 13 - Pre-completion transactions

      11. Section 14 - Meaning of substantial performance

      12. Section 15 - Options and rights of pre-emption

      13. Section 16 - Exchanges

      14. Sections 17-18 - Chargeable transaction and chargeable consideration

      15. Sections 19-20 - Contingent, uncertain or unascertained consideration

      16. Section 21 - Annuities

      17. Sections 22–23 - Deemed market value and Exceptions

   3. Part 3 – Calculation of Tax and Reliefs

      1. Sections 24–29 - Calculation of tax

      2. Sections 30–31 - Reliefs

   4. Part 4 – Leases

      1. Section 32 - Leases

   5. Part 5 – Application of Act and Tcma to Certain Persons and Bodies

      1. Section 33 - Companies

      2. Section 34 - Unit trust schemes

      3. Section 35 - Open-ended investment companies

      4. Section 36 - Co-ownership authorised contractual schemes

      5. Section 37 – 40 - Joint buyers

      6. Sections 41-42 - Partnerships and Trusts

      7. Section 43 - Persons acting in a representative capacity

   6. Part 6 – Returns and Payments

      1. Section 44 - Duty to make a return

      2. Sections 45-46 - Notifiable transactions

      3. Sections 47 - 52 - Adjustments

      4. Sections 53–55 - Declarations

      5. Sections 56-57 - Liability for tax and payment of tax

      6. Section 58 - Deferral requests in cases of contingent or uncertain consideration

      7. Section 59 - Calculation of deferrable amount

      8. Section 60 - Deferral requests: notices of WRA decisions

      9. Section 61 - Deferral requests: effect of WRA’s decision

      10. Section 62 - Variation of deferral requests

      11. Section 63 - Failure to comply with WRA’s agreement to defer

      12. Section 64 - Regulations about deferral of LTT

      13. Section 65 - Registration of land transactions

   7. Part 7 – General Anti-Avoidance Rule

      1. Section 66 - General anti-avoidance rule

         1. Section 81A TCMA - Meaning of “general anti-avoidance rule” and overview

         2. Section 81B TCMA - Tax avoidance arrangements

         3. Section 81C TCMA - Artificial tax avoidance arrangements

         4. Section 81D TCMA - Meaning of “tax” and “tax advantage”

         5. Section 81E TCMA - Adjustments to counteract tax advantages

         6. Section 81F TCMA - Notice of proposed counteraction

         7. Section 81G TCMA - Final counteraction notice

         8. Section 81H TCMA - Proceedings in connection with the anti-avoidance rule

         9. Section 81I TCMA - General anti-avoidance rule: commencement and transitional provision

   8. Part 8 – Interpretation and Final Provisions

      1. Sections 67–75 - Interpretation

      2. Section 76 - Amendments to TCMA

      3. Section 77 - Independent review of land transaction tax

      4. Sections 78–82 - Final provisions

      5. Schedule 1 - Overview of Schedules

      6. Schedule 2 - Pre-completion transactions

         1. Part 1 – Introduction and key concepts

            1. Application of the Schedule

            2. Meaning of pre-completion transaction

            3. Tax not charged on transferee by reason of the pre-completion transaction

         2. Part 2 - Pre-completion transactions which are assignments of rights

            1. Pre-completion transactions which are assignment of rights

            2. Assignment of rights: application of rules about completion and consideration

            3. Assignment of rights: transferor treated as making separate acquisition

            4. Notional land transaction: effect of rescission etc. following substantial performance

            5. Assignment of rights relating to part only of original contract

            6. Assignment of rights: references to “the seller”

         3. Part 3 - Pre-completion transactions which are free-standing transfers

            1. Free-standing transfers: consideration and substantial performance

            2. References to “the seller” in cases involving free-standing transfers

         4. Part 4 - The minimum consideration rule

            1. The minimum consideration rule

            2. The first minimum amount

            3. The second minimum amount

         5. Part 5 - Reliefs

            1. Relief for transferor: assignment of rights

            2. Relief for original buyer: qualifying subsales

      7. Schedule 3 - Transactions exempt from charge

         1. No chargeable consideration

         2. Acquisitions by the Crown

         3. Transactions in connection with divorce or the dissolution of civil partnership etc.

         4. Assents and appropriations by personal representatives and variation of testamentary dispositions etc.

         5. Power to add, remove or vary exemptions

      8. Schedule 4 – Chargeable consideration

         1. Money or money’s worth

         2. Value added tax

         3. Postponed consideration

         4. Just and reasonable apportionment

         5. Exchanges

         6. Partition etc.: disregard of existing interest

         7. Valuation of non-monetary consideration

         8. Debt as consideration

         9. Cases where conditions for exemption not fully met

         10. Conversion of amounts in foreign currency

         11. Carrying out of works

         12. Provision of services

         13. Land transaction entered into by reason of employment

         14. Indemnity given by employer

         15. Buyer bearing inheritance tax liability capital gains tax liability

         16. Buyer bearing capital gains tax liability

         17. Costs of enfranchisement

         18. Arrangements involving public or educational bodies

      9. Schedule 5 - Higher rates residential property transactions

         1. Part 2: Buyer is an individual: single dwelling transactions

            1. Higher rates residential property transactions

            2. Buyer has a major interest in other dwelling

            3. Two or more buyers

            4. Interest in same main residence exception

            5. Replacement of main residence exception

            6. Replacement of main residence: transactions during interim period

         2. Part 3: Buyer is an individual: multiple dwelling transactions

         3. Part 4 - Buyer is not an individual

         4. Part 5 - Supplementary provisions

            1. Further provision in connection with replacement of main residence exception

            2. Spouses and civil partners purchasing alone

            3. Property adjustment on divorce, dissolution of civil partnership etc.

            4. Settlements and bare trusts

            5. Partnerships

            6. Alternative finance arrangements

            7. Major interests in dwellings inherited jointly

         5. Part 6 - Interpretation

      10. Schedule 6 - Leases

          1. Part 2 - Duration of lease and treatment of overlapping leases

             1. Leases for a fixed term

             2. Leases that continue after a fixed period

             3. Leases that continue after a fixed term: grant of a new lease

             4. Leases for an indefinite term

             5. Successive linked leases

             6. Rent for overlap period in case of grant of further lease

             7. Tenant holding over: new lease backdated to previous year

          2. Part 3 - Rent and other consideration

             1. Rent

             2. Variable or uncertain rent

             3. First rent review in final quarter of fifth year

             4. Adjustment of tax where rent determined on reconsideration date

             5. Underpayment of tax where rent determined on reconsideration date

             6. Overpayment of tax where rent determined on reconsideration date

             7. Reverse premiums

             8. Tenant’s obligations etc. that do not count as chargeable consideration

             9. Surrender of existing lease in return for new lease

             10. Assignment of lease: assumption of obligation by assignee

             11. Loan or deposit in connection with grant or assignment of lease

          3. Part 4 - Agreements for lease, assignments and variations

             1. Agreement to lease

             2. Assignment of agreement for lease

             3. Cases where assignment of lease treated as grant of lease

             4. Assignment of lease

             5. Reduction of rent or term or other variation of lease

             6. Increase of rent treated as grant of new lease: variation of lease in first 5 years

          4. Part 5 - Calculation of tax chargeable

             1. Residential leases, non-residential leases and mixed leases

             2. No tax chargeable in respect of rent: residential leases

             3. Tax rates and bands: rent element of non-residential and mixed leases

             4. Calculation of tax chargeable in respect of rent: non-residential and mixed leases

             5. Calculation of tax chargeable in respect of rent: linked transactions

             6. Net present value

             7. Temporal discount rate

             8. Tax chargeable in respect of consideration other than rent: general

             9. Tax chargeable in respect of consideration other than rent: mixed leases

             10. Relevant rent

      11. Schedule 7– Partnerships

          1. Part 2 - General provisions

          2. Part 3 – Ordinary partnership transactions

          3. Part 4 - Transactions involving transfers to a partnership

          4. Part 5 - Transactions involving transfers from a partnership

          5. Part 6 - Other partnership transactions

          6. Part 7 - Application of Parts 5 and 6 in relation to leases

          7. Part 8 - Transfers involving property-investment partnerships

          8. Part 9 - Application of exemptions, reliefs, provisions of TCMA and notification provisions

      12. Schedule 8 - Trusts

      13. Schedule 9 - Sale and Leaseback Relief

      14. Schedule 10 - Alternative Property Finance Reliefs

          1. Part 2 - The reliefs

             1. Land sold to financial institution and leased to a person

             2. Land sold to financial institution and re-sold to a person

          2. Part 3 - Circumstances where arrangements not relieved

             1. No relief where group, acquisition or reconstruction reliefs available

             2. Land sold to financial institution but arrangements in place to transfer control of the institution

          3. Part 4 - Exempt interest

             1. Interest held by financial institution an exempt interest

      15. Schedule 11 - Relief for alternative finance investment bonds

          1. Part 2 - Issue, transfer and redemption of rights under bond not to be treated as chargeable consideration

          2. Part 3 - Conditions for operation of reliefs etc.

          3. Part 4 - Relief for certain transactions

             1. Replacement of asset

      16. Schedule 12 - Relief for incorporation of limited liability partnership

      17. Schedule 13 - Relief for acquisitions involving multiple dwellings

          1. Transactions to which this Schedule applies

          2. Determining the amount of tax chargeable

          3. Certain buildings not yet constructed or adapted to count as dwelling

      18. Schedule 14 – Relief for certain acquisitions of dwellings

          1. Part 2 - Relief for certain acquisitions of dwellings

          2. Part 3 - Relief for transactions entered into by persons exercising collective rights

      19. Schedule 15 - Treatment of certain transactions relating to social housing

          1. Part 2 - Right to buy relief

             1. Relief for right to buy transaction

          2. Part 3 - Shared ownership leases

             1. Shared ownership lease relief: election for market value treatment

             2. Rent to shared ownership lease: charge to tax

          3. Part 4 - Shared ownership trusts

             1. Shared ownership trusts: meaning of shared ownership trust and other key terms

             2. Shared ownership trust: the buyer

             3. Shared ownership trust: election for market value treatment

             4. Shared ownership trust transfer upon termination

             5. Shared ownership trust: staircasing transactions

             6. Shared ownership trust: treatment of additional payments where not election made

             7. Shared ownership trust: declaration not linked with staircasing etc.

             8. Rent to shared ownership trust: charge to tax

          4. Part 5 - Rent to mortgage

             1. Rent to mortgage: chargeable consideration

          5. Part 6 - Relief for certain acquisition by registered social landlords

      20. Schedule 16 - Group relief

          1. Part 2 - The relief

          2. Part 3 - Restrictions on the availability of relief

          3. Part 4 - Withdrawal of relief

          4. Part 5 - Recovery of relief from certain persons

      21. Schedule 17 - Reconstruction and acquisition reliefs

          1. Part 2 - Reconstruction relief

          2. Part 3 - Acquisition relief

          3. Part 4 - Withdrawal of reconstruction and acquisition relief

             1. Cases in which reconstruction or acquisition relief not withdrawn

             2. Withdrawal of reconstruction or acquisition relief on subsequent non-exempt transfer

          4. Part 5 - Recovery of reconstruction or acquisition relief

      22. Schedule 18 - Charities relief

          1. Transactions eligible for relief

          2. Withdrawal of charities relief

          3. Charity not a qualifying charity

          4. Joint purchase by qualifying charity and another person: partial relief

          5. Withdrawal of partial relief

          6. Partial relief: charity not a qualifying charity

          7. Application of this Schedule to certain trusts

      23. Schedule 19 - Open-ended investment company reliefs

          1. Relief from land transaction tax: conversion of an authorised unit trust to an open-ended investment company

          2. Relief from land transaction tax: amalgamation of an authorised unit trust with an open-ended investment company

      24. Schedule 20 – Relief for acquisitions by public bodies and health bodies

          1. Relief for certain acquisitions involving public bodies

          2. Relief for acquisitions by certain health service bodies

      25. Schedule 21 – Compulsory purchase relief and planning obligations relief

          1. Relief for compulsory purchase facilitating development

          2. Relief for compliance with planning obligations

      26. Schedule 22 - Miscellaneous reliefs

          1. Lighthouses reliefs

          2. Visiting forces and international military headquarters reliefs

          3. Relief for property accepted in satisfaction of tax

          4. Trunk roads relief

          5. Relief for bodies established for national purposes

          6. Relief for reorganisation of Parliamentary constituencies

          7. Building societies relief

          8. Friendly societies relief

          9. Co-operative and community benefit society and credit union relief

      27. Schedule 23 –Amendments to the Tax Collection and Management (Wales) Act 2016

6. Record of Proceedings in National Assembly for Wales