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Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016

Part 4 of schedule 2A – Certain types of buyer

Paragraph 5 of schedule 2A – Joint buyers

36.Paragraph 5 – which is relevant to chargeable transactions - deals with the not uncommon case where a couple buy a dwelling. Where the couple each take a share of the ownership of the title they will be treated for the purposes of paragraph 2 of schedule 2A as if they 100% own the dwelling. Paragraph 12 of schedule 2A – which is relevant to existing ownership - is also relevant since it deems each person that is jointly entitled to the ownership of a dwelling to be the owner of the dwelling. The definition of “jointly entitled” covers common property in Scots law.

37.The same also applies to other cases where there are two or more buyers, in other words to cases where the jointly entitled persons are not a couple. For example, if siblings were to inherit equal shares in the ownership of a dwelling, each sibling would be treated as the 100% owner for the purposes of paragraph 2 of schedule 2A.

38.The effect of paragraph 5 of schedule 2A is that the conditions in paragraph 2(1)(c) and (d) and 3(1)(c) will be met if they are met in relation to any one of the joint buyers, even though they may not be met in relation to others. So if two people, A and B, who each currently own a dwelling which they occupy as their main residences, jointly buy a dwelling to move into as their new joint main residence and A sells his or her existing dwelling while B retains his or her existing dwelling to rent out, the additional amount is payable on the joint purchase because B is not replacing his or her main residence, even though A is. Similarly if one of the joint buyers is not an individual, then the conditions in paragraph 3(1)(c) will be met in the same way as if there was one buyer who was not an individual.

39.Interpretative provisions of the 2013 Act relevant to paragraph 5—

“buyer”section 7
“chargeable transaction”section 15
“jointly entitled”section 65.

Paragraph 6 of schedule 2A – Spouses, civil partners, cohabitants and children

40.Amongst other things, paragraph 6 ensures that spouses (including same-sex spouses) are not treated differently according to how the titles for the couple’s property or properties are registered. For the purposes of paragraph 2 of schedule 2A, the same tax position will arise whether a first or second property is registered in one spouse’s name, in the other spouse’s, or jointly. Dwellings in the name of one spouse will count against the other for the purpose of determining whether the other partner owns more than one dwelling. Sub-paragraphs (2) and (3) disapply this rule where the couple have separated. Separation in this context does not require to be formal separation, of the types referenced in paragraphs 4 and 5 of schedule 1 to the 2013 Act, but such formal separation would be relevant evidence of practical separation.

41.Paragraph 6 treats civil partners in the same way as spouses and the same tax treatment is also afforded to cohabitants who are defined as persons living together as though married (and therefore this will include same-sex cohabitants). This is consistent with the approach taken in the Family Law (Scotland) Act 2006 and other Acts of the Scottish Parliament.

42.Further, paragraph 6 brings into consideration children of the buyer (or their partner) who are aged under 16 (the age of legal capacity in Scots law). This is to reflect that such a child’s ownership of residential property is practically the responsibility of their parent(s), and as an anti-avoidance measure to disincentivise avoidance of the additional tax by artificially registering title in such a child’s name.

43.Interpretative provisions of the 2013 Act relevant to paragraph 6—

“buyer”section 7
“dwelling”Part 6 of schedule 5
what counts as a dwelling ownedPart 6 of schedule 2A.

44.In Scots law, reference to a person’s “child” includes reference to an adopted child by virtue of section 40 of the Adoption and Children (Scotland) Act 2007, and includes situations where parentage is determined by the Human Fertilisation and Embryology Act 2008. Marriages (including same-sex marriages) celebrated outside Scotland have equivalent legal status to Scottish marriages by virtue of section 38 of the Family Law (Scotland) Act 2006 (see also sections 212 to 218 of the Civil Partnership Act 2004 for the status of same-sex civil partnerships from outside the UK).

Paragraph 7 of schedule 2A – Trustees in certain trusts

45.Paragraph 7 concerns certain cases where the buyer is acting as a trustee of a settlement, which is a trust other than a bare trust. Currently for the purposes of LBTT, only the beneficiaries of bare trusts are treated as the buyer when a trustee enters into a land transaction. Paragraph 7 extends that treatment for the purposes of paragraph 2 of schedule 2A, so that certain other beneficiaries, namely those with substantial rights (rights to occupy a dwelling or right to income from it over a trust) are treated as the buyer in a chargeable transaction for the purpose of considering whether the conditions in paragraph 2(1)(c) and (cd) are met in relation to the transaction. Account also needs to be taken of paragraph 13 of schedule 2A which treats certain trust property as being owned by the beneficiary.

46.Interpretative provisions of the 2013 Act relevant to paragraph 7—

“buyer”section 7
“chargeable transaction”section 15
“dwelling”Part 6 of schedule 5
“relevant interest”paragraph 20(3) of schedule 2A
“settlement”paragraph 20(1) of schedule 2A.

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