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The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018

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Title and commencement

1.—(1) The title of these Regulations is the Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018.

(2) These Regulations come into force on 1 April 2018.

Interpretation

2.  In these Regulations—

“the FA 2003” (“DC 2003”) means the Finance Act 2003(1);

“the FA 2009” (“DC 2009”) means the Finance Act 2009(2);

“the LTT Act” (“y Ddeddf TTT”) means the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017;

“the commencement date” (“y dyddiad cychwyn”) means such date as is appointed by order by the Treasury under section 16(4) of the Wales Act 2014(3);

HMRC” (“CThEM”) means Her Majesty’s Revenue and Customs (within the meaning of section 4 of the Commissioners for Revenue and Customs Act 2005(4)); and

“a section 16(6) event” (“digwyddiad adran 16(6)”) means one of the events listed in paragraphs (a) to (c) of section 16(6) of the Wales Act 2014.

Contracts entered into on or before 17 December 2014

3.—(1) This regulation applies to contracts entered into on or before 17 December 2014 for a land transaction under which the transaction is to be completed by a transfer and there is an effective date in relation to the transaction on or after the commencement date.

(2) Where this regulation applies and the transaction is excluded by a section 16(6) event, section 10 of the LTT Act applies subject to paragraph (3).

(3) This paragraph applies where there has been substantial performance of the contract as described in section 44(4) of the FA 2003, and tax in respect of the substantial performance has been paid to HMRC under that Act.

(4) Where paragraph (3) applies, section 10(5)(b) of the LTT Act applies except that the tax is chargeable on the latter transaction only to the extent (if any) that the amount of tax chargeable on it is greater than the amount of tax chargeable on the contract under the FA 2003 and paid to HMRC.

Contracts entered into after 17 December 2014 but before the commencement date

4.—(1) This regulation applies to contracts entered into after 17 December 2014 but before the commencement date for a land transaction under which the transaction is to be completed by a transfer and there is an effective date in relation to the transaction on or after the commencement date.

(2) Where this regulation applies and there is substantial performance of the contract as described in section 44(4) of the FA 2003 prior to the commencement date, section 10 of the LTT Act applies subject to paragraph (3).

(3) Where paragraph (2) applies and tax in respect of the substantial performance has been paid to HMRC under the FA 2003, paragraph (4) applies.

(4) Where this paragraph applies, section 10(5)(b) of the LTT Act applies except the tax is chargeable on the latter transaction only to the extent (if any) that the amount of tax chargeable on it is greater than the amount of tax chargeable on the contract under the FA 2003 and paid to HMRC.

Alternative property finance relief

5.—(1) This regulation applies where arrangements described in section 71A of the FA 2003 are entered into prior to the commencement date.

(2) Where this regulation applies and the first and second transactions described in section 71A of the FA 2003 are completed prior to the commencement date, any further transaction described by subsection (4) of that section is relieved from tax under paragraph 2 of Schedule 10 to the LTT Act, provided that—

(a)the effective date of that further transaction is on or after the commencement date; and

(b)the conditions mentioned in section 71A(4) of the FA 2003 have been met.

Alternative finance investment bonds

6.—(1) This regulation applies where arrangements described in paragraph 5(2) of Schedule 61 to the FA 2009 are entered into prior to the commencement date.

(2) Where this regulation applies and the first transaction described in paragraph 5(2) of Schedule 61 to the FA 2009 is completed prior to the commencement date, the second transaction described in paragraph 5(11)(a) of Schedule 61 to the FA 2009 is relieved from tax under paragraph 15 of Schedule 11 to the LTT Act, provided that—

(a)the effective date of that second transaction is on or after the commencement date; and

(b)the conditions mentioned in paragraph 8(1) of Schedule 61 to the FA 2009 have been met.

Transfer of partnership interest pursuant to earlier arrangements

7.—(1) This regulation applies where paragraph 17(1) of Schedule 15 to the FA 2003 applies and—

(a)the effective date of the land transfer referred to in paragraph 17(1)(a) of that Schedule is prior to the commencement date; and

(b)the partnership transfer referred to in paragraph 17(1)(c) of that Schedule is on or after the commencement date.

(2) Where this regulation applies, the land transfer is treated for the purposes of paragraph 18 of Schedule 7 to the LTT Act as if it were a land transfer mentioned in that paragraph.

Withdrawal of money etc. from partnership after transfer of a chargeable interest

8.—(1) This regulation applies where paragraph 17A(1) of Schedule 15 to the FA 2003 applies and—

(a)the effective date of the land transfer referred to in paragraph 17A(1)(a) of that Schedule is prior to the commencement date; and

(b)the qualifying event referred to in paragraph 17A(1)(c) of that Schedule occurs on or after the commencement date.

(2) Where this regulation applies—

(a)the land transfer is treated for the purposes of paragraph 19 of Schedule 7 to the LTT Act as if it were a land transfer mentioned in paragraph 19(1) of that Schedule; and

(b)a qualifying event referred to in paragraph 17A(2) of Schedule 15 to the FA 2003 is treated as if it were a qualifying event for the purposes of paragraph 19(2) of Schedule 7 to the LTT Act.

Overlapping leases

9.—(1) This regulation applies where the old lease referred to in paragraph 7(1) of Schedule 6 to the LTT Act has been granted prior to the commencement date.

(2) Where this regulation applies—

(a)paragraph 7(1) of Schedule 6 to the LTT Act applies to the old lease; and

(b)the amount of taxable rent under the old lease for the purposes of paragraph 7(2) and (3)(b) of that Schedule is to mean the amount that was taken into account in determining the tax chargeable under the provisions of Schedule 5 to the FA 2003 in respect of the acquisition of the old lease.

Cases where assignment of lease treated as grant of lease

10.—(1) This regulation applies where paragraph 11(1) of Schedule 17A to the FA 2003 applies and—

(a)the effective date of the grant of a lease referred to in paragraph 11(1) of that Schedule is prior to the commencement date; and

(b)the first assignment of the lease referred to in paragraph 11(2) of that Schedule occurs on or after the commencement date.

(2) Where this regulation applies—

(a)the grant of the lease referred to in paragraph (1)(a) is treated as the grant of a lease for the purposes of paragraph 22(1) of Schedule 6 to the LTT Act;

(b)the first assignment of the lease referred to in paragraph (1)(b) is treated as the first assignment of a lease for the purposes of paragraph 22(2) of Schedule 6 to the LTT Act; and

(c)the provisions in paragraph 11(3) and (5) of Schedule 17A to the FA 2003 are treated for the purposes of paragraph 22 of Schedule 6 to the LTT Act as if they were, where applicable, the corresponding provisions in paragraph 22(4) and (6) of Schedule 6 to the LTT Act.

Variation of lease treated as grant of new lease

11.—(1) This regulation applies to a lease granted prior to the commencement date (to which the provisions of Schedule 17A to the FA 2003 apply) where there is a variation of the lease on or after the commencement date to increase the amount of rent, which, if it had been before that date, would have been a variation to which paragraph 13(1) of that Schedule would have applied.

(2) Where this regulation applies, for the purposes of paragraph 25 of Schedule 6 to the LTT Act—

(a)the variation of the lease is treated as the grant of a lease; and

(b)the chargeable consideration (other than in respect of any consideration other than rent) is the additional rent.

Higher rates residential property transactions – replacement of main residence exception

12.—(1) This regulation applies to a transaction the effective date of which is, or is earlier than, 26 November 2018.

(2) For the purpose of determining whether such a transaction is a higher rates residential property transaction, Schedule 5 to the LTT Act applies with the following modifications—

(a)paragraph 8(2)(b) has effect as if for “during the period of 3 years ending with” there were substituted “the same as or earlier than”;

(b)paragraph 8(2)(d) has effect as if for “during the period of 3 years referred to in paragraph (b)” there were substituted “before the effective date of the transaction concerned”;

(c)paragraph 17(2)(b) has effect as if for “during the period of 3 years ending with” there were substituted “the same as or earlier than”; and

(d)paragraph 17(2)(d) has effect as if for “during the period of 3 years referred to in paragraph (b)” there were substituted “before the effective date of the transaction concerned”.

Mark Drakeford

Cabinet Secretary for Finance, one of the Welsh Ministers

31 January 2018

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