Interpretation
Section 59 – Meaning of “residential property”
147.Section 59 defines “residential property”. Pursuant to section 24, bands and rates for LBTT must be set separately for residential property transactions and non-residential property transactions. If property is not residential property, it is non-residential property (examples of which are commercial and agricultural property). The power in subsection (9) allows for the rules in section 59 to be amended by order so as to change what counts as residential property. Orders will be subject to the affirmative procedure (see section 68).
148.Defined terms used in this section:
| “major interest” | section 59 |
Section 60 – Meaning of “major interest” in land
149.Section 60 defines “major interest”, which has particular relevance to the notification rules in section 30. Major interest means ownership of land or a tenant’s right. Less common interests in land such as real burdens, servitudes and options are not major interests. Now that the feudal system of land tenure has been abolished pursuant to the Abolition of Feudal Tenure (Scotland) Act 2000 (asp 5), the interest of a feudal superior is no longer an interest in land recognised in the law of Scotland.
Section 61 – Meaning of “subject-matter” and “main subject-matter”
150.Section 61 provides that “subject-matter” includes the main subject-matter of the transaction and any interest or right pertaining to it. So the acquisition of the ownership of land and the connected right to enforce a real burden over neighbouring property are not to be dealt with as two separate transactions.
Section 62 – Meaning of “market value”
151.Section 62 defines “market value” by reference to UK Capital Gains Tax rules. This is relevant to several provisions in the Act, including section 22, paragraphs 5(4) and (6), 7, 8(4) and 13 of schedule 2 (chargeable consideration), paragraphs 3, 6, 10 and 22 of schedule 4 (relief for certain acquisitions of residential property), paragraph 15 of schedule 7 (alternative property finance relief), paragraphs 11 and 18 of schedule 8 (relief for alternative finance investment bonds), paragraphs 15, 17 and 25 of schedule 10 (group relief), paragraph 14 of schedule 11 (reconstruction relief and acquisition relief) and in paragraphs 13, 17, 18, 21, 28, 32 and 35 of schedule 17 (partnerships).
Section 63 – Meaning of “effective date” of a transaction
152.Section 63 defines “effective date”. This date is the tax point that determines when liability to tax and notification obligations arise. In most cases the effective date will be when the buyer pays the price and settles the transaction. Special rules apply for contracts that are substantially performed before completion, for the grant of options and rights of pre-emption and for agreements for lease which are substantially performed. The power in subsection (1)(b) allows for regulations to prescribe a date other than the date of completion as the effective date. Such regulations will be subject to the negative procedure (see section 68).
Section 64 – Meaning of “completion”
153.Section 64 defines “completion”. Completion generally means settlement. For instance, in the case of a routine house purchase, that would be the point at which the buyer has paid the purchase price and receives a signed disposition (the “conveyance”) and the keys to the house. In this case, the point of completion is earlier than the point of registration of the disposition in the Land Register, at which point the buyer obtains the real right in land.(10) The usual rule about completion/settlement would not always work effectively in the particular case of leases, so completion in that context means when the lease is executed by the parties or otherwise constituted.
Section 65– General interpretation
154.Section 65 sets out certain definitions used in the Act. In particular the section provides broad, inclusive definitions for “contract” and “conveyance”. Whilst for the routine conveyance of a real right in land the terms “missives” and “disposition” would be common, the concept of “chargeable interest” in section 4 is very broad and covers interests other than real rights in land; therefore it is appropriate to use broader terminology. A contract or conveyance might, for example, be subject to the law of a jurisdiction other than Scotland (see section 1(2)). These definitions are sufficiently broad to accommodate electronic documents as referred to in Part 10 of the Land Registration etc. (Scotland) Act 2012 (asp 5).
Section 66 – Index of defined expressions
155.Section 66 introduces schedule 20 which provides an index to definitions used in the Act.
As electronic conveyancing practices become more common the process of delivering dispositions, paying tax and obtaining registration will become more streamlined. The “effective date” may then be the same date as the date of registration.
