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

(as introduced by section 1(2))

SCHEDULE 1 E+W OVERVIEW OF SCHEDULES

Commencement Information

I1 Sch. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

E+W

The Schedules to this Act are arranged as follows—

(a) Schedules 2 to 4 comprise a group of Schedules which make provision related to the key concepts of land transaction tax—

(i) Schedule 2 sets out how this Act applies to pre-completion transactions;

(ii) Schedule 3 specifies certain transactions which are exempt from a charge to the tax;

(iii) Schedule 4 makes detailed provision about what counts as chargeable consideration for a land transaction;

(b) Schedule 5 makes provision about higher rates residential property transactions;

(c) Schedule 6 makes provision about the application of this Act to leases;

(d) Schedules 7 and 8 comprise a group of Schedules making provision about the application of this Act to certain entities, specifically partnerships (Schedule 7) and trusts (Schedule 8);

(e) Schedules 9 to 22 comprise a group of Schedules which make provision about reliefs available from the tax;

(f) Schedule 23 makes amendments to TCMA.

(as introduced by section 13)

SCHEDULE 2 E+W PRE-COMPLETION TRANSACTIONS

PART 1 E+W INTRODUCTION AND KEY CONCEPTS

Overview E+W

1 (1) This Schedule makes provision about the application of this Act (in particular section 10 (contract and transfer)) to pre-completion transactions (the meaning of which is set out in paragraph 3). E+W

(2) The Schedule is arranged as follows—

(a) this Part makes introductory provisions setting out the circumstances where this Schedule applies (paragraph 2) and explaining the meaning of ““pre-completion transaction”” and other key terms referred to in the Schedule;

(b) Part 2 sets out how this Act applies in cases where the pre-completion transaction is an assignment of rights (the meaning of which is set out in paragraph 6);

(c) Part 3 sets out how this Act applies in cases involving free-standing transfers (the meaning of which is set out in paragraph 12);

(d) Part 4 provides for a special rule (““the minimum consideration rule””) which applies to determine the consideration given in cases where the parties in relation to a pre-completion transaction are connected or are otherwise not acting at arm's length;

(e) Part 5 provides for relief to be available to certain buyers in cases where certain pre-completion transactions are entered into;

(f) Part 6 makes some general interpretative provisions.

Commencement Information

I2 Sch. 2 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Application of this Schedule E+W

2 (1) This Schedule applies where— E+W

(a) a person (““the original buyer””) enters into a contract (““the original contract””) for the acquisition by the original buyer of a chargeable interest under which the acquisition is to be completed by a transfer, and

(b) there is a pre-completion transaction.

(2) The reference in sub-paragraph (1)(a) to a contract does not include a contract that is an assignment of rights in relation to another contract.

(3) For any one contract for the acquisition of a chargeable interest there is only one original buyer (and for the purposes of this Schedule joint original buyers are to be treated as one original buyer).

(4) This Schedule does not apply where paragraph 21 of Schedule 6 (assignment of agreement for lease) applies (and accordingly, despite paragraph 3, the assignment of an agreement for lease is not a pre-completion transaction).

Commencement Information

I3 Sch. 2 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Meaning of ““pre-completion transaction”” E+W

3 (1) A transaction is a pre-completion transaction if— E+W

(a) as a result of the transaction a person other than the original buyer (“"the transferee””) becomes entitled to call for a transfer to the transferee of the whole or part of the subject-matter of the original contract, and

(b) immediately before the transaction took place a person (other than the transferee but not necessarily the original buyer) was entitled under the original contract to call for a transfer of the whole or that part of that subject-matter.

(2) A transaction that gives effect to a person's acquisition of the whole or part of the subject-matter of the original contract is not a pre-completion transaction.

(3) The grant or assignment of an option is not a pre-completion transaction.

(4) The fact that a transaction has the effect of discharging the original contract does not prevent that transaction from being a pre-completion transaction.

Commencement Information

I4 Sch. 2 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Other key terms E+W

4 (1) In this Schedule, references to part of the subject-matter of the original contract— E+W

(a) are to a chargeable interest that is the same as the chargeable interest referred to in paragraph 2(1)(a) except that it relates to part only of the land concerned, and

(b) also include, so far as is appropriate, interests or rights appurtenant or pertaining to the chargeable interest.

(2) In this Schedule, “"the transferor””, in relation to a pre-completion transaction, means a party to the pre-completion transaction who immediately before the pre-completion transaction took place was entitled to call for a transfer of (what became) the subject-matter of the pre-completion transaction.

(3) References in this Schedule to the ““subject-matter”” of a pre-completion transaction—

(a) are to the chargeable interest the transfer of which the transferee is entitled to call for as a result of the pre-completion transaction, and

(b) also include, so far as is appropriate, interests or rights appurtenant or pertaining to the chargeable interest.

Commencement Information

I5 Sch. 2 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tax not charged on transferee by reason of the pre-completion transaction E+W

5 E+W The transferee is not regarded as entering into a land transaction only by reason of the pre-completion transaction.

Commencement Information

I6 Sch. 2 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 2 E+W PRE-COMPLETION TRANSACTIONS WHICH ARE ASSIGNMENTS OF RIGHTS

Pre-completion transactions which are assignments of rights E+W

6 E+W A pre-completion transaction is an ““assignment of rights”” if the entitlement of the transferee referred to in paragraph 3(1)(a) is an entitlement to exercise rights under the original contract.

Commencement Information

I7 Sch. 2 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignments of rights: application of rules about completion and consideration E+W

7 (1) This paragraph applies if the pre-completion transaction is an assignment of rights. E+W

(2) If the subject-matter of the original contract is transferred to the transferee, the transfer is taken to be the completion of the original contract (despite section 10 and in particular subsection (10)(a) of that section).

(3) Sub-paragraphs (4) to (8) apply if—

(a) the subject-matter of the original contract is transferred to the transferee, or

(b) the original contract is substantially performed by the transferee.

(4) The transferee is taken to be the buyer in the land transaction effected as mentioned in section 10(3), or treated as effected under section 10(4).

(5) For the purpose of determining the chargeable consideration for that land transaction, the land transaction is taken to give effect to a contract the consideration under which is the consideration paid or provided by the transferee or a person connected with the transferee—

(a) for the subject-matter of the original contract, and

(b) for the assignment of rights.

(6) Paragraph 1 of Schedule 4 (chargeable consideration: money or money's worth) has effect accordingly but subject to sub-paragraphs (7) and (8) of this paragraph.

(7) This paragraph does not allow any amount of consideration given by a person to be counted twice in determining the chargeable consideration.

(8) In any case where there is a relevant connection between the parties as mentioned in paragraph 15(2) (minimum consideration rule), the chargeable consideration for the land transaction mentioned in sub-paragraph (4) of this paragraph is calculated (regardless of whether the consideration is taken to be the amount in paragraph (a), (b) or (c) of paragraph 15(2)) as if in paragraph 1 of Schedule 4 the words ““or a person connected with the buyer”” were omitted.

(9) The original contract is to be taken to be ““substantially performed by the transferee”” where a land transaction is treated as effected under section 10(4) by reason of—

(a) the transferee under the assignment of rights, or a person connected with the transferee, taking possession of the whole, or substantially the whole, of the subject-matter of the original contract,

(b) a substantial amount of the consideration being paid or provided by the transferee or a person connected with the transferee, or

(c) consideration paid or provided by the transferee, or a person connected with the transferee, amounting, when taken together with consideration paid or provided by another person, to a substantial amount of the consideration.

(10) References in sub-paragraph (9) to possession and to the payment or provision of a substantial amount of the consideration are to be read in accordance with subsections (2) and (3) of section 14 (meaning of substantial performance).

(11) In sub-paragraph (9), ““the consideration””—

(a) in relation to the land transaction, means (what is taken to be) the consideration for the acquisition of the subject-matter of the land transaction;

(b) in relation to the original contract, means the consideration for the transferee's acquisition of the subject-matter of that contract;

(c) in relation to the assignment of rights, means the consideration for the transferee's acquisition of the rights to which that contract relates.

Commencement Information

I8 Sch. 2 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignment of rights: transferor treated as making separate acquisition E+W

8 (1) Where paragraph 7(4) to (8) applies (assignment of rights: original contract completed or substantially performed) this Act has effect as if— E+W

(a) the effective date of the land transaction mentioned in paragraph 7(4) (““the transferee's land transaction””) were also the effective date of another land transaction (a ““notional land transaction””), and

(b) the original buyer were the buyer in that notional land transaction.

(2) The notional land transaction is referred to in this paragraph as being ““associated with”” the assignment of rights under which the original buyer is the transferor.

(3) Where sub-paragraph (1) applies and the assignment of rights mentioned in paragraph 7(1) (““the implemented assignment of rights””) was preceded by one or more related assignments of rights, then for the purposes of this Act there is taken to be, for each assignment of rights (other than the first) in the chain formed by the implemented assignment of rights and those preceding assignments of rights, an additional notional land transaction—

(a) the effective date of which is the effective date of the transferee's land transaction, and

(b) where the buyer is the transferor under that assignment of rights.

(4) In sub-paragraph (3), “"related assignment of rights”” means a transaction that is an assignment of rights in relation to the original contract and has some subject-matter in common with the implemented assignment of rights.

(5) The additional notional land transaction is referred to in this paragraph as being ““associated with”” the assignment of rights.

(6) For the purpose of determining the chargeable consideration—

(a) for the notional land transaction, Schedule 4 has effect as if paragraph 1 of that Schedule provided that the chargeable consideration is (except as otherwise provided) the sum of A and B;

(b) for any additional notional land transaction, that Schedule has effect as if paragraph 1 of it provided that the chargeable consideration is (except as otherwise provided) the sum of A, B and C.

(7) A is the total amount of any consideration in money or money's worth given (whether directly or indirectly) by any of the following as consideration under the original contract⁠—

(a) the transferee under the assignment of rights with which the notional land transaction or the additional notional land transaction is associated;

(b) where the assignment of rights is one in a chain of successive transactions that are pre-completion transactions in relation to the original contract (all having at least part of their subject-matter in common), the transferee under any subsequent pre-completion transaction in that chain;

(c) a person connected with a person falling within paragraph (a) or (b).

(8) B is the total amount of any other consideration in money or money's worth given as consideration under the original contract (directly or indirectly) by—

(a) the buyer (under the notional land transaction or the additional notional land transaction), or

(b) a person connected with the buyer.

(9) C is the amount of any consideration in money or money's worth given for the preceding assignment of rights by—

(a) the buyer (under the additional notional land transaction), or

(b) a person connected with the buyer.

(10) In sub-paragraph (9), “"the preceding assignment of rights”” means the assignment of rights as a result of which the buyer became entitled to call for a transfer of (what became) the subject-matter of the assignment of rights associated with the additional notional land transaction.

Commencement Information

I9 Sch. 2 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Notional land transactions: effect of rescission etc. following substantial performance E+W

9 (1) This paragraph applies where paragraph 8(1) (transferor treated as making separate acquisition) applies by virtue of the substantial performance by the transferee of the original contract. E+W

(2) If the original contract is (to any extent) subsequently rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of paragraph 8(1), and any tax paid by virtue of paragraph 8(3), must (to that extent) be repaid by WRA.

(3) But repayment of tax is due only if a claim for it is made by amendment, in accordance with section 41 of TCMA, of the return in respect of the notional or additional notional land transaction.

Commencement Information

I10 Sch. 2 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignment of rights relating to part only of original contract E+W

10 E+W Where the transferee under the assignment of rights referred to in paragraph 7(1) is entitled to call for the transfer of part, but not the whole, of the subject-matter of the original contract—

(a) paragraph 7 applies as if the original contract, so far as relating to that part of its subject-matter, were a separate contract, and

(b) the references in paragraph 8 to the original contract are to be read accordingly.

Commencement Information

I11 Sch. 2 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignment of rights: references to ““the seller”” E+W

11 (1) This paragraph applies where— E+W

(a) the pre-completion transaction is an assignment of rights, and

(b) either the subject-matter of the original contract is transferred to the transferee or the original contract is substantially performed by the transferee.

(2) This paragraph does not apply if the original contract is itself a free-standing transfer (see Part 3 of this Schedule for the treatment of such cases).

(3) The general rule is that in relation to a relevant land transaction, references in this Act to the seller are to be read as references to the seller under the original contract (but see sub-paragraphs (4) and (5)).

(4) In cases where the original contract was substantially performed before the transferee became entitled to call for a transfer of the whole or part of the subject-matter of the original contract, references in this Act to the seller are to be read as references to the person who was the buyer under the original contract when it was substantially performed.

(5) In relation to a relevant land transaction, references to the seller in any of the following provisions are to be read as including the seller under the original contract and the transferor under any relevant assignment of rights—

(a) paragraph 8(1)(a) of Schedule 4 (debt as consideration);

(b) paragraph 11(2)(c) of that Schedule (carrying out of works);

(c) paragraph 14 of that Schedule (indemnity given by buyer);

(d) paragraph 1(1) and (2) of Schedule 20 (transfers involving public bodies);

(e) paragraph 2(1)(a) of Schedule 21 (compliance with planning obligations: conditions for relief).

(6) The following are ““relevant land transactions””—

(a) the land transaction given effect by the transfer mentioned in sub-paragraph (1)(b) or treated as having been given effect by the substantial performance mentioned in that sub-paragraph;

(b) the notional land transaction mentioned in paragraph 8(1) and any additional notional land transaction under paragraph 8(3).

(7) In determining under section 8(1) whether or not a relevant land transaction such as is mentioned in sub-paragraph (6)(a) is linked to another transaction, it may be assumed that any of the following is the seller in the relevant land transaction—

(a) the seller (determined in accordance with sub-paragraph (3)), or

(b) the transferor under any relevant assignment of rights.

(8) The following are “"relevant assignments of rights”” in relation to a relevant land transaction—

(a) the assignment of rights mentioned in sub-paragraph (1)(a);

(b) any other transaction that is an assignment of rights in relation to the original contract and has some subject-matter in common with the assignment of rights mentioned in paragraph (a).

Commencement Information

I12 Sch. 2 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 3 E+W PRE-COMPLETION TRANSACTIONS WHICH ARE FREE-STANDING TRANSFERS

Pre-completion transactions which are free-standing transfers E+W

12 E+W A pre-completion transaction which is not an assignment of rights is referred to in this Schedule as a “"free-standing transfer””.

Commencement Information

I13 Sch. 2 para. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3

Free-standing transfers: consideration and substantial performance E+W

13 (1) This paragraph applies where the pre-completion transaction is a free-standing transfer. E+W

(2) If the transferee acquires the subject-matter of the free-standing transfer, the consideration for the transaction giving effect to that acquisition is taken to include the consideration given for the free-standing transfer (if that would not otherwise be the case).

(3) References in sub-paragraph (2) to an acquisition include an acquisition treated as having taken place by virtue of section 10(4) (and the reference to the transaction giving effect to that acquisition is to be read accordingly).

(4) An action taken by the transferee (or an assignee of the transferee) that would, if taken by the original buyer, constitute (for the purposes of section 14(1)) the taking of possession of the whole or substantially the whole of the subject-matter of the original contract is treated as being the substantial performance of the original contract.

(5) If a transaction that is a free-standing transfer in relation to a contract is also a free-standing transfer in relation to another contract (in particular, where there have been successive free-standing transfers), each of those contracts is to be regarded as “"the original contract”” for the purposes of separate applications of sub-paragraph (4).

(6) In sub-paragraph (4)—

(a) the reference to the transferee includes a person connected with the transferee, and

(b) the reference to an assignee of the transferee—

(i) is to a person who, as a result of a transaction that is an assignment of rights in relation to the free-standing transfer, is entitled to call for a transfer of the whole or part of the subject-matter of the free-standing transfer, and

(ii) includes a person connected with such a person.

Commencement Information

I14 Sch. 2 para. 13 in force at 1.4.2018 by S.I. 2018/34, art. 3

References to ““the seller”” in cases involving free-standing transfers E+W

14 (1) This paragraph applies where— E+W

(a) the pre-completion transaction is a free-standing transfer and the transferee acquires the subject-matter of the free-standing transfer as mentioned in paragraph 13(2) (read with paragraph 13(3)), or

(b) the pre-completion transaction is an assignment of rights and either—

(i) the subject-matter of the original contract is transferred to the transferee, or

(ii) the original contract is substantially performed by the transferee,

but paragraph 11(1) (references to the seller where transferee is assignee under an assignment of rights) does not apply because the original contract is a free-standing transfer (see paragraph 11(2)).

(2) The general rule is that in relation to the relevant land transaction, references in this Act to the seller are to be read as references to the seller under the first appropriate transaction (but see sub-paragraph (3)).

(3) In relation to the relevant land transaction, references to the seller in the specified provisions (see sub-paragraph (4)) are to be read as including—

(a) the seller in the first appropriate transaction,

(b) the transferor under the final transaction, and

(c) the transferor under any other pre-completion transaction relating to, and which has some subject-matter in common with, the transactions mentioned in paragraphs (a) and (b).

(4) The specified provisions are—

(a) paragraph 8(1)(a) of Schedule 4 (debt as consideration);

(b) paragraph 11(2)(c) of that Schedule (carrying out of works);

(c) paragraph 14 of that Schedule (indemnity given by buyer);

(d) paragraph 1(1) and (2) of Schedule 20 (transfers involving public bodies);

(e) paragraph 2(1)(a) of Schedule 21 (compliance with planning obligations: conditions for relief).

(5) In determining under section 8(1) whether or not the relevant land transaction is linked to another transaction, it may be assumed that any of the following is the seller in the relevant land transaction—

(a) the seller in the first appropriate transaction,

(b) the transferor under the final transaction, and

(c) the transferor under any other pre-completion transaction relating to, and which has some subject-matter in common with, the transactions mentioned in paragraphs (a) and (b).

(6) In this paragraph—

(a) “"the relevant land transaction”” means—

(i) the land transaction mentioned in sub-paragraph (1)(a), or

(ii) in a case falling within sub-paragraph (1)(b), the land transaction given effect by the transfer to the transferee of the subject-matter of the original contract or the substantial performance by the transferee of the original contract;

(b) “"the final transaction”” means—

(i) in a case falling within sub-paragraph (1)(a), the transaction giving effect to the acquisition by the transferee of the subject-matter of the free standing transfer;

(ii) in a case falling within sub-paragraph (1)(b), the transaction giving effect to the acquisition by the transferee of the subject-matter of the assignment of rights (whether by the transfer of the subject-matter of the original contract to the transferee, the substantial performance of the original contract by the transferee or otherwise);

(c) “"the first appropriate transaction”” means the original contract, unless sub-paragraph (7) applies.

(7) In applying this paragraph to a case where the original contract is not performed at the same time as, and in connection with the performance of the final transaction, “"the first appropriate transaction”” means a transaction that is a pre-completion transaction in relation to the original contract and meets the following conditions.

(8) The conditions are that the pre-completion transaction—

(a) is performed at the time when the final transaction is performed and (if it is not itself that final transaction) is performed in connection with the performance of the final transaction,

(b) is a transaction on which the entitlement of the transferee to call for the transfer of the subject-matter of the final transaction depends, and

(c) is not preceded by another pre-completion transaction meeting the conditions in paragraphs (a) and (b).

(9) For the purposes of sub-paragraphs (7) and (8)—

(a) a contract for a land transaction is taken to be ““performed”” when it is substantially performed or completed (whichever is earlier);

(b) a free-standing transfer other than a contract is taken to be ““performed”” when the transferee under that free-standing transfer (or an assignee of that transferee, as defined in paragraph 13(6)(b)) acquires the subject-matter of that free-standing transfer.

(10) Where the final transaction is a pre-completion transaction in relation to each of two or more contracts such as are mentioned in paragraph 2(1)(a) that together form a series of such contracts (each having some subject-matter in common with all the others), references in this paragraph to the ““original contract”” are to be read as references to the first contract in that series.

Commencement Information

I15 Sch. 2 para. 14 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 4 E+W THE MINIMUM CONSIDERATION RULE

The minimum consideration rule E+W

15 (1) This paragraph applies where paragraph 7(3) or 13(2) (pre-completion transactions: chargeable interest acquired, or treated as acquired, by transferee) applies. E+W

(2) If there is a relevant connection between parties, then for the purposes of paragraph 1 of Schedule 4 the consideration given by the buyer for the subject-matter of the land transaction referred to in paragraph 7(4) or 13(2) is taken to be the highest of—

(a) the amount it would be apart from this sub-paragraph,

(b) the first minimum amount (see paragraph 16), or

(c) the second minimum amount (see paragraph 17).

(3) There is a ““relevant connection between parties”” if the transferee in relation to the pre-completion transaction mentioned in paragraph 7(1) or 13(1) (““the implemented transaction””) is connected with, or is not acting at arm's length in relation to—

(a) the transferor in relation to the implemented transaction, or

(b) a transferor in relation to a pre-completion transaction—

(i) which is one in a chain of successive pre-completion transactions (all having at least part of their subject-matter in common and including the implemented transaction) in relation to the original contract, and

(ii) which precedes the implemented transaction in the chain.

(4) Where the implemented transaction is a pre-completion transaction in relation to—

(a) a contract for a land transaction that is not itself a free-standing transfer in relation to any other contract, and

(b) a contract, or two or more successive contracts, that are themselves free-standing transfers in relation to the contract mentioned in paragraph (a),

references in this Part of this Schedule to the ““original contract”” are to the contract mentioned in paragraph (a) only (and references to the “"original buyer”” are to be read accordingly).

Commencement Information

I16 Sch. 2 para. 15 in force at 1.4.2018 by S.I. 2018/34, art. 3

The first minimum amount E+W

16 (1) The ““first minimum amount”” is to be determined in accordance with sub-paragraph (2) unless conditions A to C in sub-paragraph (3) are met, in which case it is to be determined in accordance with that sub-paragraph. E+W

(2) The ““first minimum amount”” is—

(a) if the chargeable interest acquired (or treated as acquired) under the land transaction referred to in paragraph 7(4) or 13(2) is the whole subject-matter of the original contract, the amount of any consideration (in money or money's worth) agreed to be given, under the terms of the original contract, for the acquisition of that subject-matter, or

(b) if paragraph (a) does not apply, so much of the amount mentioned in that paragraph as is referable, on a just and reasonable apportionment, to the chargeable interest acquired (or treated as acquired) under the land transaction referred to in paragraph 7(4) or 13(2).

(3) If conditions A to C are met, the ““first minimum amount”” is the amount of any consideration (in money or money's worth) agreed, under the terms of the transfer to the first T, to be given in respect of the subject-matter of that transaction (including any consideration relating to an obligation of the transferor under the transfer to the first T).

• Condition A That the pre-completion transaction referred to in paragraph 7(4) or 13(2) is one of a chain of successive transactions (all having at least part of their subject-matter in common) that are pre-completion transactions in relation to the original contract.

• Condition B That a person (““T””) is the transferor under a pre-completion transaction that forms part of the chain and T is connected with, or not acting at arm's length in relation to—

  (a)

  the transferee under that transaction, or

  (b)

  the transferee under a subsequent transaction in the chain (including the pre-completion transaction referred to in paragraph 7(4) or 13(2)).

• Condition C That, having regard to all the circumstances, the obtaining of a tax advantage (for any person) was not the main purpose, or one of the main purposes, of T entering into any pre-completion transaction in the chain or any arrangement of which such a transaction was part.

(4) In this paragraph—

(a) “"the first T”” means—

(i) if condition B is met in relation to only one pre-completion transaction, T, or

(ii) if condition B is met in relation to more than one pre-completion transaction in the chain, the transferor in relation to the first of the pre-completion transactions in relation to which condition B is met;

(b) “"the transfer to the first T”” means—

(i) the pre-completion transaction under which the first T is the transferee, or

(ii) the original contract (if T is the original buyer);

(c) “"tax advantage”” has the same meaning as in section 31(3).

Commencement Information

I17 Sch. 2 para. 16 in force at 1.4.2018 by S.I. 2018/34, art. 3

The second minimum amount E+W

17 (1) The ““second minimum amount”” is the total of the net amounts of consideration given by the relevant parties. E+W

(2) The net amount of consideration given by any relevant party is—

Figure 1 where—

CP is the total amount of consideration given by the party for the acquisition of the chargeable interest or as consideration for a pre-completion transaction;

CR is the total of any amounts of consideration given to the party by another relevant party (or other relevant parties) as consideration for the acquisition of the chargeable interest or as consideration for the pre-completion transaction,

and if CR is greater than CP then the net amount of consideration given by the relevant party is taken to be zero.

(3) The relevant parties are—

(a) the original buyer, and

(b) the transferee,

unless sub-paragraph (4) applies.

(4) If the pre-completion transaction mentioned in paragraph 7(1) or 13(1) (““the implemented transaction””) is one in a chain of successive transactions (all having at least part of their subject-matter in common) that are pre-completion transactions in relation to the original contract, only the following are relevant parties—

(a) the transferor and the transferee in relation to the implemented transaction;

(b) a transferor in relation to a preceding transaction, if that transferor is connected with, or is not acting at arm's length in relation to, the transferee under the implemented transaction;

(c) the transferee under a pre-completion transaction where the transferor is a relevant party (whether by virtue of this paragraph (c) or otherwise),

and in this sub-paragraph and sub-paragraph (6) “"preceding transaction”” means a pre-completion transaction that precedes the implemented transaction in the chain.

(5) For the purposes of sub-paragraph (2)—

(a) amounts given by a person connected with a relevant party are treated as given by the relevant party;

(b) amounts given to a person connected with a relevant party are treated as given to the relevant party,

but a person who is a relevant party is not to be treated, for the purposes of this paragraph, as connected with another relevant party (even if, apart from this sub-paragraph, that would be the case).

(6) If the subject-matter of the implemented transaction is not the whole subject-matter of the original contract—

(a) the amounts that are taken for the purposes of sub-paragraph (2) to be given ““for the acquisition of the chargeable interest”” are to be determined on a just and reasonable basis, and

(b) only so much of the consideration for a preceding transaction as is referable, on a just and reasonable basis, to the subject-matter of the implemented transaction is to be taken into account under sub-paragraph (2).

Commencement Information

I18 Sch. 2 para. 17 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 5 E+W RELIEFS

Relief for transferor: assignment of rights E+W

18 (1) This paragraph applies where— E+W

(a) a person would, in the absence of this paragraph, be liable to pay tax in respect of a notional land transaction deemed to take place under paragraph 8(1) or an additional notional land transaction deemed to take place under paragraph 8(3), and

(b) the original contract had not been substantially performed when the assignment of rights mentioned in paragraph 7(1) was entered into.

(2) If the buyer in respect of the notional land transaction, or additional notional land transaction, claims relief under this paragraph, the buyer is relieved from tax in respect of that transaction.

(3) But no relief is available under this paragraph if the land transaction mentioned in paragraph 7(4) is relieved from tax by virtue of Schedule 10 (alternative property finance reliefs).

Commencement Information

I19 Sch. 2 para. 18 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relief for original buyer: qualifying subsales E+W

19 (1) This paragraph applies if— E+W

(a) the pre-completion transaction is a qualifying subsale (see sub-paragraph (6)),

(b) the original buyer would, in the absence of this paragraph, be liable to pay tax in respect of the land transaction given effect by the completion of the original contract or treated as having been given effect by the substantial performance of the original contract,

(c) the performance of the qualifying subsale takes place at the same time as, and in connection with, the performance of the original contract, and

(d) relief is claimed in respect of the land transaction mentioned in paragraph (b).

(2) If the subject-matter of the qualifying subsale is the whole of the subject-matter of the original contract, the original buyer is relieved from tax in respect of the land transaction mentioned in sub-paragraph (1)(b).

(3) If the subject-matter of the qualifying subsale is part of the subject-matter of the original contract, the amount of consideration for the land transaction mentioned in sub-paragraph (1)(b) is taken to be—

Figure 2 where—

OC is the amount that the consideration would be apart from this sub-paragraph, and

QS is so much of OC as is referable to the subject-matter of the qualifying subsale,

and OC may be reduced more than once if there is more than one qualifying subsale.

(4) But no relief is available under this paragraph if—

(a) the original contract had been substantially performed when the qualifying subsale was entered into, or

(b) the transaction effected, or treated as effected, by the performance of the qualifying subsale is relieved from tax by virtue of Schedule 10 (alternative property finance reliefs).

(5) For the purposes of this paragraph, a contract for a land transaction is taken to be ““performed”” when it is substantially performed or completed (whichever is earlier).

(6) A pre-completion transaction is a ““qualifying subsale”” if it is a contract under which the original buyer contracts to sell the whole or part of the subject-matter of the original contract to the transferee.

(7) If a transaction is a qualifying subsale in relation to more than one contract such as is mentioned in paragraph 2(1)(a), this paragraph applies separately in relation to each such original contract for the purpose of determining what relief, if any, may be available with respect to the land transaction in question.

Commencement Information

I20 Sch. 2 para. 19 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 6 E+W INTERPRETATION AND INDEX

Interpretation E+W

20 E+W In this Schedule—

• “"contract”” (“"contract”") includes any agreement;

• “"transfer”” (“"trosglwyddiad”") includes any instrument.

Commencement Information

I21 Sch. 2 para. 20 in force at 1.4.2018 by S.I. 2018/34, art. 3

Index of expressions defined in this Schedule E+W

21 E+W The following Table lists expressions defined or otherwise explained in this Schedule.

Table 1

Expression	Paragraph
“"additional notional land transaction”” (“"trafodiad tir tybiannol ychwanegol”")	Paragraph 8(3)
“"assignment of rights”” (“"aseinio hawliau”")	Paragraph 6
“"contract”” (“"contract”")	Paragraph 20
“"free-standing transfer”” (“"trosglwyddiad annibynnol”")	Paragraph 12
“"notional land transaction”” (“"trafodiad tir tybiannol”")	Paragraph 8(1)
“"original buyer”” (“"prynwr gwreiddiol”") and “"original contract”” (“"contract gwreiddiol”")	Paragraph 2(1)(a) (but see also paragraph 15(4))
“"part of the subject-matter of the original contract”” (“"rhan o destun y contract gwreiddiol”")	Paragraph 4(1)
“"pre-completion transaction”” (“"trafodiad cyngwblhau”")	Paragraph 3
“"qualifying subsale”” (“"is-werthiant cymwys”")	Paragraph 19(6)
“"subject-matter”” (“"testun”") (of a precompletion transaction)	Paragraph 4(3)
“"transfer”” (“"trosglwyddiad”")	Paragraph 20
“"the transferee”” (“"y trosglwyddai”") (in relation to a pre-completion transaction)	Paragraph 3(1)(a)
“"the transferor”” (“"y trosglwyddwr”") (in relation to a pre-completion transaction)	Paragraph 4(2)

Commencement Information

I22 Sch. 2 para. 21 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 17)

SCHEDULE 3 E+W TRANSACTIONS EXEMPT FROM CHARGE

No chargeable consideration E+W

1 E+W A land transaction is exempt from charge if there is no chargeable consideration for the transaction (but see section 22 (deemed market value)).

Commencement Information

I23 Sch. 3 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisitions by the Crown E+W

2 E+W A land transaction under which the buyer is any of the following is exempt from charge —

(a) the Welsh Ministers, the First Minister, the Counsel General to the Welsh Government;

(b) a Minister of the Crown;

(c) the Scottish Ministers;

(d) a Northern Ireland department;

(e) the National Assembly for Wales Commission;

(f) the Corporate Officer of the House of Lords;

(g) the Corporate Officer of the House of Commons;

(h) the Scottish Parliamentary Corporate Body;

(i) the Northern Ireland Assembly Commission.

Commencement Information

I24 Sch. 3 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transactions in connection with divorce etc. E+W

3 E+W A transaction between one party to a marriage and the other (whether or not the marriage is subsisting at the time of the transaction) is exempt from charge if it is effected —

(a) in pursuance of an order of a court made on granting in respect of the parties [F1 an order or decree for the dissolution or annulment of the marriage or their] judicial separation;

(b) in pursuance of an order of a court made in connection with the dissolution or annulment of the marriage, or the parties' judicial separation, at any time after the granting of [F2 such an order or] decree as mentioned in paragraph (a);

(c) in pursuance of—

(i) an order of a court made at any time under section 22A, 23A or 24A of the Matrimonial Causes Act 1973 (c. 18), or

(ii) an incidental order of a court made under section 8(2) of the Family Law (Scotland) Act 1985 (c. 37) by virtue of section 14(1) of that Act;

(d) at any time in pursuance of an agreement of the parties made in contemplation or otherwise in connection with the dissolution or annulment of the marriage, their judicial separation or the making of a separation order in respect of them.

Textual Amendments

F1 Words in Sch. 3 para. 3(a) substituted (6.4.2022) by Divorce, Dissolution and Separation Act 2020 (c. 11), s. 8(1)(8), Sch. para. 59(2)(a); S.I. 2022/283, reg. 2

F2 Words in Sch. 3 para. 3(b) substituted (6.4.2022) by Divorce, Dissolution and Separation Act 2020 (c. 11), s. 8(1)(8), Sch. para. 59(3)(a); S.I. 2022/283, reg. 2

Commencement Information

I25 Sch. 3 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transactions in connection with dissolution of civil partnership etc. E+W

4 E+W A transaction between one party to a civil partnership and the other (whether or not the civil partnership is subsisting at the time of the transaction) is exempt from charge if it is effected—

(a) in pursuance of an order of a court made on granting in respect of the parties an order or decree for the dissolution or annulment of the civil partnership or their judicial separation;

(b) in pursuance of an order of a court made in connection with the dissolution or annulment of the civil partnership, or the parties' judicial separation, at any time after the granting of such an order or decree as mentioned in paragraph (a);

(c) in pursuance of—

(i) an order of a court made at any time under any provision of Schedule 5 to the Civil Partnership Act 2004 (c. 33) that corresponds to section 22A, 23A or 24A of the Matrimonial Causes Act 1973 (c. 18), or

(ii) an incidental order of a court made under any provision of the Civil Partnership Act 2004 (c. 33) that corresponds to section 8(2) of the Family Law (Scotland) Act 1985 (c. 37) by virtue of section 14(1) of that Act of 1985;

(d) at any time in pursuance of an agreement of the parties made in contemplation of or otherwise in connection with the dissolution or annulment of the civil partnership, their judicial separation or the making of a separation order in respect of them.

Commencement Information

I26 Sch. 3 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assents and appropriations by personal representatives E+W

5 (1) The acquisition of property by a person in or towards satisfaction of the person's entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge. E+W

(2) Sub-paragraph (1) does not apply if the person acquiring the property gives any consideration for it, other than the assumption of secured debt.

(3) Where sub-paragraph (1) does not apply because of sub-paragraph (2), the chargeable consideration for the transaction is determined in accordance with paragraph 9(1) of Schedule 4.

(4) In this paragraph—

• “"debt”” (“"dyled”") means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date, and

• “"secured debt”” (“"dyled sicredig”") means debt that, immediately after the death of the deceased person, is secured on the property.

Commencement Information

I27 Sch. 3 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Variation of testamentary dispositions etc. E+W

6 (1) A transaction following a person's death that varies a disposition (whether effected by will, under the law relating to intestacy or otherwise) of property of which the deceased was competent to dispose is exempt from charge if the following conditions are met. E+W

(2) The conditions are—

(a) that the transaction is carried out within the period of two years after a person's death, and

(b) that no consideration in money or money's worth other than the making of a variation of another such disposition is given for it.

(3) Where the condition in sub-paragraph (2)(b) is not met, the chargeable consideration for the transaction is determined in accordance with paragraph 9(3) of Schedule 4.

(4) This paragraph applies whether or not the administration of the estate is complete or the property has been distributed in accordance with the original dispositions.

Commencement Information

I28 Sch. 3 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Power to add, remove or vary exemptions E+W

7 E+W The Welsh Ministers may by regulations amend this Schedule so as to—

(a) provide for any other description of land transaction to be exempt from charge;

(b) provide that a description of land transaction is no longer exempt from charge;

(c) vary a description of land transaction that is exempt from charge.

Commencement Information

I29 Sch. 3 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 18(1))

SCHEDULE 4 E+W CHARGEABLE CONSIDERATION

Money or money's worth E+W

1 E+W The chargeable consideration for a transaction is, except as otherwise provided, any consideration in money or money's worth given for the subject-matter of the transaction, directly or indirectly, by the buyer or a person connected with the buyer.

Commencement Information

I30 Sch. 4 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Value added tax E+W

2 E+W The chargeable consideration for a transaction includes any value added tax chargeable in respect of the transaction, other than value added tax chargeable by virtue of an option to tax any land under Part 1 of Schedule 10 to the Value Added Tax Act 1994 (c. 23) made after the effective date of the transaction.

Commencement Information

I31 Sch. 4 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Postponed consideration E+W

3 E+W The amount or value of the chargeable consideration for a transaction is to be determined without any discount for postponement of the right to receive it or any part of it.

Commencement Information

I32 Sch. 4 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Just and reasonable apportionment E+W

4 (1) For the purposes of this Act, consideration attributable— E+W

(a) to two or more land transactions,

(b) in part to a land transaction and in part to another matter, or

(c) in part to matters making it chargeable consideration and in part to other matters,

is to be apportioned on a just and reasonable basis.

(2) If the consideration is not so apportioned, this Act has effect as if it had been so apportioned.

(3) For the purposes of this paragraph, any consideration given for what is in substance one bargain is to be treated as attributable to all the elements of the bargain, even though—

(a) separate consideration is, or purports to be, given for different elements of the bargain, or

(b) there are, or purport to be, separate transactions in respect of different elements of the bargain.

Commencement Information

I33 Sch. 4 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Exchanges E+W

5 (1) This paragraph applies to determine the chargeable consideration where one or more land transactions are entered into by a person (alone or jointly) as buyer wholly or partly in consideration of one or more other land transactions being entered into by that person (alone or jointly) as seller. E+W

(2) In this paragraph—

(a) “"relevant transaction”” means any of those transactions, and

(b) “"relevant acquisition”” means a relevant transaction entered into as buyer and “"relevant disposal”” means a relevant transaction entered into as seller.

(3) The following rules apply if the subject-matter of any of the relevant transactions is a major interest in land—

(a) where a single relevant acquisition is made, the chargeable consideration for the acquisition is—

(i) the market value of the subject-matter of the acquisition as at the effective date of the transaction,

(ii) if the acquisition is the grant of a lease at a rent, that rent, and

(iii) any value added tax chargeable in respect of that acquisition as at the effective date of the transaction;

(b) where two or more relevant acquisitions are made, the chargeable consideration for each relevant acquisition is—

(i) the market value of the subject-matter of the acquisition as at the effective date of the transaction,

(ii) if the acquisition is the grant of a lease at a rent, that rent, and

(iii) any value added tax chargeable in respect of that acquisition as at the effective date of the transaction.

(4) In determining market value for the purpose of sub-paragraph (3)(a)(i) and (b)(i), no account is to be taken of a reduction in what would otherwise be the market value of the subject-matter where the reduction is the result of anything done, the main purpose or one of the main purposes of which, is to avoid tax (whether by the buyer or any other person).

(5) The following rules apply if the subject-matter of none of the relevant transactions is a major interest in land—

(a) where a single relevant acquisition is made in consideration of one or more relevant disposals, the chargeable consideration for the acquisition is the amount or value of any chargeable consideration other than the disposal or disposals that is given for the acquisition;

(b) where two or more relevant acquisitions are made in consideration of one or more relevant disposals, the chargeable consideration for each relevant acquisition is the appropriate proportion of the amount or value of any chargeable consideration other than the disposal or disposals that is given for the acquisitions.

(6) For the purposes of sub-paragraph (5)(b) the appropriate proportion is—

Figure 3 where—

MV is the market value of the subject-matter of the acquisition for which the chargeable consideration is being determined, and

TMV is the total market value of the subject-matter of all the relevant acquisitions.

(7) This paragraph has effect subject to paragraph 6 (partition etc.: disregard of existing interest).

(8) This paragraph does not apply in a case to which paragraph 18 (arrangements involving public or educational bodies) applies.

Commencement Information

I34 Sch. 4 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Partition etc.: disregard of existing interest E+W

6 E+W In the case of a land transaction giving effect to a partition or division of a chargeable interest to which persons are jointly entitled, the share of the interest held by the buyer immediately before the partition or division does not count as chargeable consideration.

Commencement Information

I35 Sch. 4 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Valuation of non-monetary consideration E+W

7 E+W Except as otherwise provided, the value of any chargeable consideration for a land transaction, other than—

(a) money (whether in sterling or another currency), or

(b) debt as defined for the purposes of paragraph 8 (debt as consideration),

is to be taken to be its market value at the effective date of the transaction.

Commencement Information

I36 Sch. 4 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Debt as consideration E+W

8 (1) Where the chargeable consideration for a land transaction consists in whole or in part of — E+W

(a) the satisfaction or release of debt due to the buyer or owed by the seller, or

(b) the assumption of existing debt by the buyer,

the amount of debt satisfied, released or assumed is to be taken to be the whole or, as the case may be, part of the chargeable consideration for the transaction.

(2) But where the chargeable consideration for a land transaction consists in whole or in part of both—

(a) the satisfaction or release of debt owed by the seller, and

(b) the assumption of that debt by the buyer,

the amount of debt assumed is to be taken to be the whole or, as the case may be, part of the chargeable consideration for the transaction.

(3) Where—

(a) debt is secured on the subject-matter of a land transaction immediately before and immediately after the transaction, and

(b) the rights or liabilities in relation to that debt of any party to the transaction are changed as a result of or in connection with the transaction,

then for the purposes of this paragraph there is an assumption of that debt by the buyer, and that assumption of debt constitutes chargeable consideration for the transaction.

(4) Where in a case in which sub-paragraph (1)(b) or (2) applies—

(a) the debt assumed is or includes debt secured on the property forming the subject-matter of the transaction, and

(b) immediately before the transaction there were two or more persons each holding an undivided share of that property, or there are two or more such persons immediately afterwards,

the amount of secured debt assumed is to be determined as if the amount of that debt owed by each of those persons at a given time were the proportion of it corresponding to the person's undivided share of the property at that time.

(5) For the purposes of sub-paragraph (4), each joint tenant of property is treated as holding an equal undivided share of it.

(6) If the effect of this paragraph would be that the amount of the chargeable consideration for the transaction exceeded the market value of the subject-matter of the transaction, the amount of the chargeable consideration is treated as limited to that value.

(7) In this paragraph—

(a) “"debt”” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date,

(b) “"existing debt””, in relation to a transaction, means debt created or arising before the effective date of, and otherwise than in connection with, the transaction, and

(c) references to the amount of a debt are to the principal amount payable or, as the case may be, the total of the principal amounts payable, together with the amount of any interest that has accrued due on or before the effective date of the transaction.

Commencement Information

I37 Sch. 4 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Cases where conditions for exemption not fully met E+W

9 (1) Where a land transaction would be exempt from charge under paragraph 5 of Schedule 3 (assents and appropriations by personal representatives) but for sub-paragraph (2) of that paragraph (cases where person acquiring property gives consideration for it), the chargeable consideration for the transaction does not include the amount of any secured debt assumed. E+W

(2) In sub-paragraph (1) “"secured debt”” has the same meaning as in paragraph 5 of Schedule 3.

(3) Where a land transaction would be exempt from charge under paragraph 6 of Schedule 3 (variation of testamentary dispositions etc.) but for a failure to meet the condition in sub-paragraph (2)(b) of that paragraph (no consideration other than variation of another disposition), the chargeable consideration for the transaction does not include the making of any variation as is mentioned in that sub-paragraph.

Commencement Information

I38 Sch. 4 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

Conversion of amounts in foreign currency E+W

10 (1) References in this Act to the amount or value of the consideration for a transaction are to its amount or value in sterling. E+W

(2) For the purposes of this Act, the sterling equivalent of an amount expressed in another currency is to be ascertained by reference to the London closing exchange rate on the effective date of the transaction (unless the parties have used a different rate for the purposes of the transaction).

Commencement Information

I39 Sch. 4 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

Carrying out of works E+W

11 (1) Where the whole or part of the consideration for a land transaction consists of the carrying out of works of construction, improvement or repair of a building or other works to enhance the value of land, then— E+W

(a) to the extent that the conditions specified in sub-paragraph (2) are met, the value of the works does not count as chargeable consideration, and

(b) to the extent that those conditions are not met, the value of the works is to be taken into account as chargeable consideration.

(2) The conditions referred to in sub-paragraph (1) are—

(a) that the works are carried out after the effective date of the transaction,

(b) that the works are carried out on land acquired or to be acquired under the transaction or on other land held by the buyer or a person connected with the buyer, and

(c) that it is not a condition of the transaction that the works are carried out by the seller or a person connected with the seller.

(3) Where by virtue of—

(a) section 10(5) (contract and transfer), or

(b) paragraph 20 of Schedule 6 (agreement for lease),

there are two notifiable transactions (the first being the contract or agreement and the second being the transaction effected on completion or, as the case may be, the grant of the lease), the condition in sub-paragraph (2)(a) is treated as met in relation to the second transaction if it is met in relation to the first.

(4) In this paragraph—

(a) references to the acquisition of land are to the acquisition of a major interest in it;

(b) the value of the works is to be taken to be the amount that would have to be paid in the open market as at the effective date of the transaction for the carrying out of the works in question (including any value added tax that would be chargeable in respect of the carrying out of the works).

(5) This paragraph is subject to paragraph 18 (arrangements involving public or educational bodies).

Commencement Information

I40 Sch. 4 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

Provision of services E+W

12 (1) Where the whole or part of the consideration for a land transaction consists of the provision of services (other than the carrying out of works to which paragraph 11 applies), the value of that consideration is to be taken to be the amount that would have to be paid in the open market as at the effective date of the transaction to obtain those services. E+W

(2) That amount includes any value added tax that would be chargeable in respect of the provision of the services.

(3) This paragraph is subject to paragraph 18 (arrangements involving public or educational bodies).

Commencement Information

I41 Sch. 4 para. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3

Land transaction entered into by reason of employment E+W

13 E+W Where a land transaction is entered into by reason of the buyer's employment, or that of a person connected with the buyer, then—

(a) if the transaction gives rise to a charge to tax under Chapter 5 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (taxable benefits: living accommodation) and—

(i) no rent is payable by the buyer, or

(ii) the rent payable by the buyer is less than the cash equivalent of the benefit calculated under section 105 or 106 of that Act,

there is to be taken to be payable by the buyer as rent an amount equal to the cash equivalent chargeable under those sections;

(b) if the transaction would give rise to a charge under that Chapter but for section 99 of that Act (accommodation provided for performance of duties), the consideration for the transaction is the actual consideration (if any);

(c) if neither paragraph (a) nor paragraph (b) applies, the consideration for the transaction is to be taken to be not less than the market value of the subject-matter of the transaction as at the effective date of the transaction.

Commencement Information

I42 Sch. 4 para. 13 in force at 1.4.2018 by S.I. 2018/34, art. 3

Indemnity given by buyer E+W

14 E+W Where the buyer agrees to indemnify the seller in respect of liability to a third party arising from breach of an obligation owed by the seller in relation to the land that is the subject of the transaction, neither the agreement nor any payment made in pursuance of it counts as chargeable consideration.

Commencement Information

I43 Sch. 4 para. 14 in force at 1.4.2018 by S.I. 2018/34, art. 3

Buyer bearing inheritance tax liability E+W

15 E+W Where—

(a) there is a land transaction that is—

(i) a transfer of value within section 3 of the Inheritance Tax Act 1984 (c. 51) (transfers of value), or

(ii) a disposition, effected by will or under the law of intestacy, of a chargeable interest comprised in the estate of a person immediately before the person's death,

and

(b) the buyer is or becomes liable to pay, agrees to pay or does in fact pay any inheritance tax due in respect of the transfer or disposition,

the buyer's liability, agreement or payment does not count as chargeable consideration for the transaction.

Commencement Information

I44 Sch. 4 para. 15 in force at 1.4.2018 by S.I. 2018/34, art. 3

Buyer bearing capital gains tax liability E+W

16 (1) Where— E+W

(a) there is a land transaction under which the chargeable interest in question—

(i) is acquired otherwise than by a bargain made at arm's length, or

(ii) is treated by section 18 of the Taxation of Chargeable Gains Act 1992 (c. 12) (transactions between connected persons) as so acquired,

and

(b) the buyer is or becomes liable to pay, or does in fact pay, any capital gains tax due in respect of the corresponding disposal of the chargeable interest,

the buyer's liability or payment does not count as chargeable consideration for the transaction.

(2) Sub-paragraph (1) does not apply if there is chargeable consideration for the transaction (disregarding the liability or payment referred to in sub-paragraph (1)(b)).

Commencement Information

I45 Sch. 4 para. 16 in force at 1.4.2018 by S.I. 2018/34, art. 3

Costs of enfranchisement E+W

17 E+W Costs borne by the buyer under section 9(4) of the Leasehold Reform Act 1967 (c. 88) or section 33 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (costs of enfranchisement) do not count as chargeable consideration.

Commencement Information

I46 Sch. 4 para. 17 in force at 1.4.2018 by S.I. 2018/34, art. 3

Arrangements involving public or educational bodies E+W

18 (1) This paragraph applies in any case where arrangements are entered into under which— E+W

(a) there is a transfer, or the grant or assignment of a lease, of land by a qualifying body (““A””) to a person who is not a qualifying body (““B””) (““the main transfer””),

(b) in consideration (whether in whole or in part) of the main transfer there is a grant by B to A of a lease or sub-lease of the whole, or substantially the whole, of that land (““the leaseback””),

(c) B undertakes to carry out works or provide services to A, and

(d) some or all of the consideration given by A to B for the carrying out of those works or the provision of those services is consideration in money,

whether or not there is also a transfer, or the grant or assignment of a lease, of any other land by A to B (a ““transfer of surplus land””).

(2) The following are qualifying bodies—

(a) public bodies within paragraph 1 of Schedule 20 or specified in regulations under that paragraph (relief for certain transactions involving public bodies);

(b) institutions within the further education sector or the higher education sector within the meaning of section 91 of the Further and Higher Education Act 1992 (c. 13);

(c) further education corporations within the meaning of section 17 of that Act;

(d) higher education corporations within the meaning section 90 of that Act.

(3) The following do not count as chargeable consideration for the main transfer or any transfer of surplus land—

(a) the leaseback,

(b) the carrying out of building works by B for A, or

(c) the provision of services by B to A.

(4) The chargeable consideration for the leaseback does not include—

(a) the main transfer,

(b) any transfer of surplus land, or

(c) the consideration in money paid by A to B for the building works or other services referred to in sub-paragraph (3).

(5) Sub-paragraphs (3) and (4) are to be disregarded for the purposes of determining whether the land transaction in question is notifiable.

Commencement Information

I47 Sch. 4 para. 18 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 24(10))

SCHEDULE 5 E+W HIGHER RATES RESIDENTIAL PROPERTY TRANSACTIONS

Modifications etc. (not altering text)

C1 Sch. 5 applied (with modifications) (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 12

PART 1 E+W INTRODUCTORY

Overview E+W

1 (1) This Schedule makes provision about higher rates residential property transactions. E+W

(2) This Schedule is arranged as follows—

(a) Part 2 describes the chargeable transactions that are higher rates residential property transactions where the buyer is an individual and the transaction involves a dwelling;

(b) Part 3 describes the chargeable transactions that are higher rates residential property transactions where the buyer is an individual and the transaction involves multiple dwellings;

(c) Part 4 describes the chargeable transactions that are higher rates residential property transactions where the buyer is not an individual;

(d) Part 5 contains supplementary provision, including about returns and about the application of the provisions in Parts 2, 3 and 4 in specified circumstances;

(e) Part 6 contains interpretative provision.

Commencement Information

I48 Sch. 5 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 2 E+W BUYER IS AN INDIVIDUAL: SINGLE DWELLING TRANSACTIONS

Introductory E+W

2 E+W This Part sets out when a chargeable transaction is a ““higher rates residential property transaction”” for the purpose of regulations under section 24(1)(b) in the case of a transaction involving a dwelling where the buyer is an individual.

Commencement Information

I49 Sch. 5 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Higher rates residential property transactions E+W

3 (1) A chargeable transaction is a higher rates residential property transaction if— E+W

(a) it falls within sub-paragraph (2), and

(b) paragraph 5 applies.

(2) A transaction falls within this sub-paragraph if—

(a) the buyer is an individual,

(b) the main subject-matter of the transaction consists of a major interest in a dwelling (““the purchased dwelling””), and

(c) the chargeable consideration for the transaction is £40,000 or more.

(3) But a transaction does not fall within sub-paragraph (2) if at the end of the day that is the effective date of the transaction—

(a) the purchased dwelling is subject to a lease,

(b) the main subject-matter of the transaction is reversionary on that lease, and

(c) the lease meets the conditions set out in sub-paragraph (4).

(4) The conditions are that—

(a) the lease is not held by a person connected with the buyer, and

(b) the lease has an unexpired term of more than 21 years.

(5) This paragraph applies subject to the exceptions provided for in—

(a) paragraph 7 (interest in same main residence exception), and

(b) paragraph 8 (replacement of main residence exception).

(6) In this Part of this Schedule, “"purchased dwelling”” has the meaning given by sub-paragraph (2)(b).

Commencement Information

I50 Sch. 5 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

4 E+W Where paragraph 9 applies, an intermediate transaction (within the meaning given by that paragraph) is to be treated as a higher rates residential property transaction.

Commencement Information

I51 Sch. 5 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Buyer has a major interest in other dwelling E+W

5 (1) This paragraph applies in relation to a transaction if, at the end of the day that is the effective date of the transaction— E+W

(a) the buyer has a major interest in a dwelling other than the purchased dwelling, and

(b) that interest has a market value of £40,000 or more.

(2) But this paragraph does not apply if the interest described in sub-paragraph (1) is reversionary on a lease which—

(a) is not held by a person connected with the buyer, and

(b) has an unexpired term of more than 21 years.

(3) Where the buyer is jointly entitled with one or more persons to the major interest referred to in sub-paragraph (1)(a), the reference in sub-paragraph (1)(b) to the market value of the interest is to the market value of the buyer's beneficial share in the interest as determined in accordance with sub-paragraph (4) or (5).

(4) Where the buyer is beneficially entitled as a tenant in common, the market value of the buyer's beneficial share is equal to—

Figure 4 where—

MV is the market value of the major interest, and

PI is—

(a)

the percentage of the interest to which the buyer is entitled, or

(b)

where—

(i)

the buyer and the buyer's spouse or civil partner are living together on the effective date of the transaction (for the meaning of ““living together””, see paragraph 25(3)), and

(ii)

taken together the buyer and the buyer's spouse or civil partner are entitled as tenants in common,

the percentage of the interest to which the buyer and the buyer's spouse or civil partner are so entitled.

(5) Where the buyer is beneficially entitled as a joint tenant, the market value of the buyer's beneficial share is equal to—

Figure 5 where—

MV is the market value of the major interest, and

JT is the number of joint tenants entitled to the interest.

(6) For the purpose of sub-paragraph (5), the buyer and the buyer's spouse or civil partner are to be treated as one joint tenant if—

(a) they are living together on the effective date of the transaction (for the meaning of ““living together””, see paragraph 25(3)), and

(b) they are beneficially entitled as joint tenants to the interest.

Commencement Information

I52 Sch. 5 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Two or more buyers E+W

6 E+W Where there are two or more buyers who are individuals in a transaction—

(a) the transaction is a higher rates residential property transaction if paragraph 3 applies in relation to any one of the buyers;

(b) an intermediate transaction (within the meaning of paragraph 9(2)) is to be treated as a higher rates residential property transaction if paragraph 9 applies in relation to any one of the buyers.

Commencement Information

I53 Sch. 5 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Interest in same main residence exception E+W

7 E+W A transaction is not a higher rates residential property transaction under paragraph 3 if the main subject-matter of the transaction is a major interest in a dwelling—

(a) in which, immediately before the effective date of the transaction, the buyer [F3 or the buyer’s spouse or civil partner] had another major interest, and

(b) which, immediately before and after the effective date of the transaction, is the buyer's only or main residence.

Textual Amendments

F3 Words in Sch. 5 para. 7(a) inserted (1.4.2018) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendment to Schedule 5) Regulations 2018 (S.I. 2018/125), regs. 1(2), 2(a)

Commencement Information

I54 Sch. 5 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Replacement of main residence exception E+W

8 (1) A transaction is not a higher rates residential property transaction under paragraph 3 if the purchased dwelling is a replacement for the buyer's only or main residence. E+W

(2) For the purposes of this paragraph, the purchased dwelling is a replacement for the buyer's only or main residence if—

(a) on the effective date of the transaction (““the transaction concerned””) the buyer intends the purchased dwelling to be the buyer's only or main residence,

(b) in another land transaction (““the previous transaction””), the effective date of which was during [F4 the permitted period], the buyer or the buyer's spouse or civil partner at the time disposed of a major interest in another dwelling (““the sold dwelling””),

(c) immediately after the effective date of the previous transaction, neither the buyer nor the buyer's spouse or civil partner had a major interest in the sold dwelling,

(d) at any time during [F5 the permitted period] referred to in paragraph (b) the sold dwelling was the buyer's only or main residence, and

(e) at no time during the period beginning with the effective date of the previous transaction and ending with the effective date of the transaction concerned has the buyer or the buyer's spouse or civil partner acquired a major interest in any other dwelling with the intention of it being the buyer's only or main residence.

[F6 (2A) For the purposes of sub-paragraphs (2)(b) and (d), “the permitted period” means—

(a) the period of 3 years ending with the effective date of the transaction concerned, or

(b) any period ending with the effective date of the transaction concerned that is longer than 3 years if the conditions in sub-paragraph (2B) are met.

(2B) The conditions are—

(a) a relevant restriction came into force during the period of 3 years beginning with the effective date of the previous transaction (“the relevant period”),

(b) the relevant restriction had a substantial adverse effect on the buyer’s ability to acquire a dwelling as a replacement for the buyer’s only or main residence before the end of the relevant period, and

(c) the transaction concerned is entered into—

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

(2C) If the conditions in sub-paragraph (2B) are met, the buyer must include a statement in the return in respect of the transaction concerned that explains how the conditions in sub-paragraph (2B) are met.]

(3) Sub-paragraph (2)(c) does not apply in relation to a spouse or civil partner of the buyer if the two of them were not living together on the effective date of the transaction concerned (for the meaning of ““living together””, see paragraph 25(3)).

(4) For the purposes of this paragraph, the purchased dwelling may become a replacement for the buyer's only or main residence if—

(a) on the effective date of the transaction (““the transaction concerned””) the buyer intended the purchased dwelling to be the buyer's only or main residence,

(b) in another land transaction [F7 (“the disposal transaction”)] the effective date of which is during [F8 the permitted period], the buyer or the buyer's spouse, former spouse, civil partner or former civil partner disposes of a major interest in another dwelling (““the sold dwelling””),

(c) immediately after the effective date of [F9 the disposal transaction], neither the buyer nor the buyer's spouse or civil partner has a major interest in the sold dwelling, and

(d) at any time during the period of 3 years ending with the effective date of the transaction concerned the sold dwelling was the buyer's only or main residence.

[F10 (4A) For the purposes of sub-paragraph (4)(b), “the permitted period” means—

(a) the period of 3 years beginning with the day after the effective date of the transaction concerned, or

(b) any period beginning with the day after the effective date of the transaction concerned that is longer than 3 years if the conditions in sub-paragraph (4B) or sub-paragraph (4C) are met.

(4B) The conditions are—

(a) a relevant restriction came into force during the period of 3 years beginning with the day after the effective date of the transaction concerned (“the relevant period”),

(b) the relevant restriction had a substantial adverse effect on the ability of the buyer or the buyer’s spouse, former spouse, civil partner or former civil partner to dispose of the major interest in the sold dwelling before the end of the relevant period, and

(c) the disposal transaction is entered into—

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

(4C) The conditions are—

(a) on the effective date of the acquisition of the major interest in the sold dwelling by the buyer or the buyer’s spouse, former spouse, civil partner or former civil partner, the sold dwelling had a fire safety defect that a buyer of the interest could not reasonably have known about,

(b) a relevant person had a duty (to any extent) to remedy the fire safety defect, and

(c) either —

(i) the fire safety defect was not remedied on the effective date of the disposal transaction, or

(ii) where the fire safety defect was remedied on the effective date of the disposal transaction, the disposal transaction was entered into as soon as reasonably practicable after the fire safety defect was remedied.

(4D) In sub-paragraph (4C)—

• “fire safety defect” (“diffyg diogelwch tân”), in relation to a sold dwelling, means a fire safety defect that is liable to—

  (a)

  substantially reduce the number of persons interested in purchasing the sold dwelling than would be the case without the defect, or

  (b)

  substantially reduce the market value of the sold dwelling than would be the case without the defect;

• “relevant person” (“person perthnasol”) means—

  (a)

  where the major interest in the sold dwelling is a leasehold interest—

  (i)

  the landlord of the person who had the major interest, or

  (ii)

  the developer of the sold dwelling;

  (b)

  where the major interest in the sold dwelling is a freehold interest in commonhold land—

  (i)

  the commonhold association for the sold dwelling, or

  (ii)

  the developer of the sold dwelling;

  (c)

  where the major interest in the sold dwelling is a freehold interest (other than an interest in commonhold land), the developer of the sold dwelling.

(4E) In the definition of “relevant person” in sub-paragraph (4D), “developer” does not include a developer who is also the person who had the major interest.]

(5) Sub-paragraph (4)(c) does not apply in relation to a spouse or civil partner of the buyer if the two of them are not living together on the effective date of [F11 the disposal transaction] (for the meaning of ““living together””, see paragraph 25(3)).

(6) For further provision in connection with a dwelling becoming a replacement for the buyer's only or main residence, see paragraph 23.

Textual Amendments

F4 Words in Sch. 5 para. 8(2)(b) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(2)(a)

F5 Words in Sch. 5 para. 8(2)(d) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(2)(b)

F6 Sch. 5 para. 8(2A)-(2C) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(3)

F7 Words in Sch. 5 para. 8(4)(b) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(4)(a)(i)

F8 Words in Sch. 5 para. 8(4)(b) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(4)(a)(ii)

F9 Words in Sch. 5 para. 8(4)(c) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(4)(b)

F10 Sch. 5 para. 8(4A)-(4E) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(5)

F11 Words in Sch. 5 para. 8(5) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 3(6)

Commencement Information

I55 Sch. 5 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Replacement of main residence: transactions during interim period E+W

9 (1) This paragraph applies where— E+W

(a) the buyer in an intermediate transaction replaces a main residence in another transaction, and

(b) the effective date of the intermediate transaction is during the interim period.

(2) An intermediate transaction is a transaction—

(a) that falls within paragraph 3(2), and

(b) to which paragraph 5 does not apply.

(3) In determining whether a transaction falls within paragraph 3(2) for the purposes of this paragraph, the reference in paragraph 3(3) to the end of the day that is the effective date of the transaction has effect as though it were a reference to the end of either or both of the following—

(a) the day that is the effective date of the transaction;

(b) the day on which the interim period ends.

(4) For the purposes of this paragraph, a buyer replaces a main residence in another transaction if—

(a) in relation to a dwelling in Wales, the conditions set out in paragraph 8(2) are met in respect of the transaction,

(b) in relation to a dwelling in England or Northern Ireland, the conditions set out in paragraph 3(6) of Schedule 4ZA to the Finance Act 2003 (c. 14) are met in respect of the transaction, or

(c) in relation to a dwelling in Scotland, the conditions set out in paragraph 2(2) of Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013 (asp 11) are met in respect of the transaction.

(5) In this paragraph, the interim period means—

(a) where sub-paragraph (4)(a) applies, the period—

(i) beginning with the effective date of the previous transaction within the meaning given by paragraph 8(2)(b), and

(ii) ending with the effective date of the transaction concerned within the meaning given by paragraph 8(2)(a);

(b) where sub-paragraph (4)(b) applies, the period—

(i) beginning with the effective date of the previous transaction within the meaning given by paragraph 3(6)(b) of Schedule 4ZA to the Finance Act 2003 (c. 14), and

(ii) ending with the effective date of the transaction concerned within the meaning given by paragraph 3(6)(a) of that Schedule;

(c) where sub-paragraph (4)(c) applies, the period—

(i) beginning with the date on which the buyer disposed of the ownership of a dwelling as provided for in paragraph 2(2)(a) of Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013 (asp 11), and

(ii) ending with the effective date of the transaction referred to in that paragraph.

(6) For further provision in connection with an intermediate transaction being treated as a higher rates residential property transaction, see paragraph 24.

Commencement Information

I56 Sch. 5 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 3 E+W BUYER IS AN INDIVIDUAL: MULTIPLE DWELLING TRANSACTIONS

Introductory E+W

10 E+W This Part sets out when a chargeable transaction is a ““higher rates residential property transaction”” for the purpose of regulations under section 24(1)(b) in the case of a transaction involving multiple dwellings where the buyer is an individual.

Commencement Information

I57 Sch. 5 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

Higher rates residential property transaction E+W

11 (1) A chargeable transaction is a higher rates residential property transaction if— E+W

(a) it falls within sub-paragraph (2), and

(b) paragraph 13 or 15 applies.

(2) A transaction falls within this sub-paragraph if—

(a) the buyer is an individual, and

(b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (““the purchased dwellings””).

(3) In this Part of this Schedule, “"purchased dwellings”” has the meaning given by sub-paragraph (2)(b).

(4) Where paragraph 18 applies, an intermediate transaction (within the meaning given by that paragraph) is to be treated as a higher rates residential property transaction.

(5) A transaction within section 72(9) is not a higher rates residential property transaction save where Schedule 13 applies (see in particular paragraph 6(6) of that Schedule).

Commencement Information

I58 Sch. 5 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

Two or more buyers E+W

12 E+W Where there are two or more buyers who are individuals in a transaction—

(a) the transaction is a higher rates residential property transaction if paragraph 11 applies in relation to any one of the buyers;

(b) an intermediate transaction (within the meaning given by paragraph 18(2)) is to be treated as a higher rates residential property transaction if paragraph 18 applies in relation to any one of the buyers.

Commencement Information

I59 Sch. 5 para. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3

Two or more qualifying dwellings E+W

13 (1) This paragraph applies if at least two of the purchased dwellings are qualifying dwellings. E+W

(2) A purchased dwelling is a qualifying dwelling for the purposes of this Part of this Schedule if the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the purchased dwelling is £40,000 or more.

(3) But a purchased dwelling is not a qualifying dwelling if at the end of the day that is the effective date of the transaction—

(a) the purchased dwelling is subject to a lease,

(b) the main subject-matter of the transaction is reversionary on that lease, and

(c) the lease meets the conditions set out in sub-paragraph (4).

(4) The conditions are that—

(a) the lease is not held by a person connected with the buyer, and

(b) the lease has an unexpired term of more than 21 years.

(5) A purchased dwelling is not a qualifying dwelling if the exception provided for in paragraph 14 applies (subsidiary dwelling exception).

Commencement Information

I60 Sch. 5 para. 13 in force at 1.4.2018 by S.I. 2018/34, art. 3

Subsidiary dwelling exception E+W

14 (1) A purchased dwelling is not a qualifying dwelling if it is subsidiary to any of the other purchased dwellings. E+W

(2) For the purposes of this paragraph, one of the purchased dwellings (““dwelling A””) is subsidiary to another of the purchased dwellings (““dwelling B””) if—

(a) dwelling A is situated within the grounds of, or within the same building as, dwelling B, and

(b) the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to dwelling B is equal to, or greater than, two thirds of the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the following combined—

(i) dwelling A,

(ii) dwelling B, and

(iii) each of the other purchased dwellings (if any) which are situated within the grounds of, or within the same building as, dwelling B.

Commencement Information

I61 Sch. 5 para. 14 in force at 1.4.2018 by S.I. 2018/34, art. 3

Buyer has a major interest in other dwelling E+W

15 (1) This paragraph applies if— E+W

(a) only one of the purchased dwellings is a qualifying dwelling, and

(b) at the end of the day that is the effective date of the transaction—

(i) the buyer has a major interest in a dwelling other than one of the purchased dwellings, and

(ii) that interest has a market value of £40,000 or more.

(2) But this paragraph does not apply if the interest described in sub-paragraph (1)(b) is reversionary on a lease which—

(a) is not held by a person connected with the buyer, and

(b) has an unexpired term of more than 21 years.

(3) Where the buyer is jointly entitled with one or more persons to the major interest referred to in sub-paragraph (1)(b)(i), the reference in sub-paragraph (1)(b)(ii) to the market value of the interest is to the market value of the buyer's beneficial share in the interest as determined in accordance with sub-paragraph (4) or (5).

(4) Where the buyer is beneficially entitled as a tenant in common, the market value of the buyer's beneficial share is equal to—

Figure 6 where—

MV is the market value of the major interest, and

PI is—

(a)

the percentage of the interest to which the buyer is entitled, or

(b)

where—

(i)

the buyer and the buyer's spouse or civil partner are living together on the effective date of the transaction (for the meaning of ““living together””, see paragraph 25(3)), and

(ii)

taken together the buyer and the buyer's spouse or civil partner are entitled as tenants in common,

the percentage of the interest to which the buyer and the buyer's spouse or civil partner are so entitled.

(5) Where the buyer is beneficially entitled as a joint tenant, the market value of the buyer's beneficial share is equal to—

Figure 7 where—

MV is the market value of the major interest, and

JT is the number of joint tenants entitled to the interest.

(6) For the purpose of sub-paragraph (5), the buyer and the buyer's spouse or civil partner are to be treated as one joint tenant if—

(a) they are living together on the effective date of the transaction (for the meaning of ““living together””, see paragraph 25(3)), and

(b) they are beneficially entitled as joint tenants to the interest.

(7) This paragraph applies subject to the exceptions provided for in—

(a) paragraph 16 (interest in same main residence exception), and

(b) paragraph 17 (replacement of main residence exception).

Commencement Information

I62 Sch. 5 para. 15 in force at 1.4.2018 by S.I. 2018/34, art. 3

Interest in same main residence exception E+W

16 E+W Paragraph 15 does not apply if the main subject-matter of the transaction is a major interest in the qualifying dwelling referred to in paragraph 15(1)(a), and that dwelling is one—

(a) in which, immediately before the effective date of the transaction, the buyer [F12 or the buyer’s spouse or civil partner] had another major interest, and

(b) which, immediately before and after the effective date of the transaction, is the buyer's only or main residence.

Textual Amendments

F12 Words in Sch. 5 para. 16(a) inserted (1.4.2018) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendment to Schedule 5) Regulations 2018 (S.I. 2018/125), regs. 1(2), 2(b)

Commencement Information

I63 Sch. 5 para. 16 in force at 1.4.2018 by S.I. 2018/34, art. 3

Replacement of main residence exception E+W

17 (1) Paragraph 15 does not apply if the qualifying dwelling referred to in paragraph 15(1)(a) is a replacement for the buyer's only or main residence. E+W

(2) For the purposes of this paragraph, a qualifying dwelling is a replacement for the buyer's only or main residence if—

(a) on the effective date of the transaction (““the transaction concerned””) the buyer intends that qualifying dwelling to be the buyer's only or main residence,

(b) in another land transaction (““the previous transaction””), the effective date of which was during [F13 the permitted period], the buyer or the buyer's spouse or civil partner at the time disposed of a major interest in another dwelling (““the sold dwelling””),

(c) immediately after the effective date of the previous transaction, neither the buyer nor the buyer's spouse or civil partner had a major interest in the sold dwelling,

(d) at any time during [F14 the permitted period] referred to in paragraph (b) the sold dwelling was the buyer's only or main residence, and

(e) at no time during the period beginning with the effective date of the previous transaction and ending with the effective date of the transaction concerned has the buyer or the buyer's spouse or civil partner acquired a major interest in any other dwelling with the intention of it being the buyer's only or main residence.

[F15 (2A) For the purposes of sub-paragraphs (2)(b) and (d), “the permitted period” means—

(a) the period of 3 years ending with the effective date of the transaction concerned, or

(b) any period ending with the effective date of the transaction concerned that is longer than 3 years if the conditions in sub-paragraph (2B) are met.

(2B) The conditions are—

(a) a relevant restriction came into force during the period of 3 years beginning with the effective date of the previous transaction (“the relevant period”),

(b) the relevant restriction had a substantial adverse effect on the buyer’s ability to acquire a dwelling as a replacement for the buyer’s only or main residence before the end of the relevant period, and

(c) the transaction concerned is entered into—

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

(2C) If the conditions in sub-paragraph (2B) are met, the buyer must include a statement in the return in respect of the transaction concerned that explains how the conditions in sub-paragraph (2B) are met.]

(3) Sub-paragraph (2)(c) does not apply in relation to a spouse or civil partner of the buyer if the two of them were not living together on the effective date of the transaction concerned (for the meaning of ““living together””, see paragraph 25(3)).

(4) For the purposes of this paragraph, that qualifying dwelling may become a replacement for the buyer's only or main residence if—

(a) on the effective date of the transaction (““the transaction concerned””) the buyer intended that qualifying dwelling to be the buyer's only or main residence,

(b) in another land transaction [F16 (“the disposal transaction”)] the effective date of which is during [F17 the permitted period], the buyer or the buyer's spouse, former spouse, civil partner or former civil partner disposes of a major interest in another dwelling (““the sold dwelling””),

(c) immediately after the effective date of [F18 the disposal transaction], neither the buyer nor the buyer's spouse or civil partner has a major interest in the sold dwelling, and

(d) at any time during the period of 3 years ending with the effective date of the transaction concerned the sold dwelling was the buyer's only or main residence.

[F19 (4A) For the purposes of sub-paragraph (4)(b), “the permitted period” means—

(a) the period of 3 years beginning with the day after the effective date of the transaction concerned, or

(b) any period beginning with the day after the effective date of the transaction concerned that is longer than 3 years if the conditions in sub-paragraph (4B) or sub-paragraph (4C) are met.

(4B) The conditions are—

(a) a relevant restriction came into force during the period of 3 years beginning with the day after the effective date of the transaction concerned (“the relevant period”),

(b) the relevant restriction had a substantial adverse effect on the ability of the buyer or the buyer’s spouse, former spouse, civil partner or former civil partner to dispose of the major interest in the sold dwelling before the end of the relevant period, and

(c) the disposal transaction is entered into—

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

(4C) The conditions are—

(a) on the effective date of the acquisition of the major interest in the sold dwelling by the buyer or the buyer’s spouse, former spouse, civil partner or former civil partner the sold dwelling had a fire safety defect that a buyer of the interest could not reasonably have known about,

(b) a relevant person had a duty (to any extent) to remedy the fire safety defect, and

(c) either—

(i) the fire safety defect was not remedied on the effective date of the disposal transaction, or

(ii) where the fire safety defect was remedied on the effective date of the disposal transaction, the disposal transaction was entered into as soon as reasonably practicable after the fire safety defect was remedied.

(4D) In sub-paragraph (4C)—

• “fire safety defect” (“diffyg diogelwch tân”), in relation to a sold dwelling, means a fire safety defect that is liable to—

  (a)

  substantially reduce the number of persons interested in purchasing the sold dwelling than would be the case without the defect, or

  (b)

  substantially reduce the market value of the sold dwelling than would be the case without the defect;

• “relevant person” (“person perthnasol”) means—

  (a)

  where the major interest in the sold dwelling is a leasehold interest—

  (i)

  the landlord of the p who had the major interest, or

  (ii)

  the developer of the sold dwelling;

  (b)

  where the major interest in the sold dwelling is a freehold interest in commonhold land—

  (i)

  the commonhold association for the sold dwelling, or

  (ii)

  the developer of the sold dwelling;

  (c)

  where the major interest in the sold dwelling is a freehold interest (other than an interest in commonhold land), the developer of the sold dwelling.

(4E) In the definition of “relevant person” in sub-paragraph (4D), “developer” does not include a developer who is also the person who had the major interest.]

(5) Sub-paragraph (4)(c) does not apply in relation to a spouse or civil partner of the buyer if the two of them are not living together on the effective date of [F20 the disposal transaction] (for the meaning of ““living together””, see paragraph 25(3)).

(6) For further provision in connection with a dwelling becoming a replacement for the buyer's only or main residence, see paragraph 23.

Textual Amendments

F13 Words in Sch. 5 para. 17(2)(b) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(2)(a)

F14 Words in Sch. 5 para. 17(2)(d) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(2)(b)

F15 Sch. 5 para. 17(2A)-(2C) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(3)

F16 Words in Sch. 5 para. 17(4)(b) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(4)(a)(i)

F17 Words in Sch. 5 para. 17(4)(b) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(4)(a)(ii)

F18 Words in Sch. 5 para. 17(4)(c) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(4)(b)

F19 Sch. 5 para. 17(4A)-(4E) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(5)

F20 Words in Sch. 5 para. 17(5) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 4(6)

Commencement Information

I64 Sch. 5 para. 17 in force at 1.4.2018 by S.I. 2018/34, art. 3

Replacement of main residence: transactions during interim period E+W

18 (1) This paragraph applies where— E+W

(a) the buyer in an intermediate transaction replaces a main residence in another transaction, and

(b) the effective date of the intermediate transaction is during the interim period.

(2) An intermediate transaction is a transaction—

(a) that falls within paragraph 11(2),

(b) where only one of the purchased dwellings is a qualifying dwelling, and

(c) to which paragraph 15 does not apply.

(3) In determining whether a purchased dwelling is a qualifying dwelling for the purposes of this paragraph, the reference in paragraph 13(3) to the end of the day that is the effective date of the transaction has effect as though it were a reference to the end of either or both of the following—

(a) the day that is the effective date of the transaction;

(b) the day on which the interim period ends.

(4) For the purposes of this paragraph, a buyer replaces a main residence in another transaction if—

(a) in relation to a dwelling in Wales, the conditions set out in paragraph 17(2) are met in respect of the transaction,

(b) in relation to a dwelling in England or Northern Ireland, the conditions set out in paragraph 3(6) of Schedule 4ZA to the Finance Act 2003 (c. 14) are met in respect of the transaction, or

(c) in relation to a dwelling in Scotland, the conditions set out in paragraph 2(2) of Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013 (asp 11) are met in respect of the transaction.

(5) In this paragraph, the interim period means—

(a) where sub-paragraph (4)(a) applies, the period—

(i) beginning with the effective date of the previous transaction within the meaning given by paragraph 17(2)(b), and

(ii) ending with the effective date of the transaction concerned within the meaning given by paragraph 17(2)(a);

(b) where sub-paragraph (4)(b) applies, the period—

(i) beginning with the effective date of the previous transaction within the meaning given by paragraph 3(6)(b) of Schedule 4ZA to the Finance Act 2003 (c. 14), and

(ii) ending with the effective date of the transaction concerned within the meaning given by paragraph 3(6)(a) of that Schedule;

(c) where sub-paragraph (4)(c) applies, the period—

(i) beginning with the date on which the buyer disposed of the ownership of a dwelling as provided for in paragraph 2(2)(a) of Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013 (asp 11), and

(ii) ending with the effective date of the transaction referred to in that paragraph.

(6) For further provision in connection with an intermediate transaction being treated as a higher rates residential property transaction, see paragraph 24.

Commencement Information

I65 Sch. 5 para. 18 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 4 E+W BUYER IS NOT AN INDIVIDUAL

Introductory E+W

19 E+W This Part sets out when a chargeable transaction where the buyer is not an individual is a ““higher rates residential property transaction”” for the purpose of regulations under section 24(1)(b).

Commencement Information

I66 Sch. 5 para. 19 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transaction involving a dwelling E+W

20 (1) A chargeable transaction is a higher rates residential property transaction if— E+W

(a) the buyer is not an individual,

(b) the main subject-matter of the transaction consists of a major interest in a dwelling (““the purchased dwelling””), and

(c) the chargeable consideration for the dwelling is £40,000 or more.

(2) But a transaction is not a higher rates residential property transaction under sub-paragraph (1) if at the end of the day that is the effective date of the transaction—

(a) the purchased dwelling is subject to a lease,

(b) the main subject-matter of the transaction is reversionary on that lease, and

(c) the lease meets the conditions set out in sub-paragraph (3).

(3) The conditions are that—

(a) the lease is not held by a person connected with the buyer, and

(b) the lease has an unexpired term of more than 21 years.

Commencement Information

I67 Sch. 5 para. 20 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transaction involving multiple dwellings E+W

21 (1) A chargeable transaction is a higher rates residential property transaction if— E+W

(a) the buyer is not an individual,

(b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (““the purchased dwellings””), and

(c) at least one of the purchased dwellings is a dwelling to which sub-paragraph (2) applies.

(2) This sub-paragraph applies to a purchased dwelling if the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the purchased dwelling is £40,000 or more.

(3) But sub-paragraph (2) does not apply to a purchased dwelling if at the end of the day that is the effective date of the transaction—

(a) the purchased dwelling is subject to a lease,

(b) the main subject-matter of the transaction is reversionary on that lease, and

(c) the lease meets the conditions set out in sub-paragraph (4).

(4) The conditions are that—

(a) the lease is not held by a person connected with the buyer, and

(b) the lease has an unexpired term of more than 21 years.

(5) A transaction within section 72(9) is not a higher rates residential property transaction save where Schedule 13 applies (see in particular paragraph 6(6) of that Schedule).

Commencement Information

I68 Sch. 5 para. 21 in force at 1.4.2018 by S.I. 2018/34, art. 3

Two or more buyers E+W

22 E+W Where there are two or more buyers in a transaction, the transaction is a higher rates residential property transaction if paragraph 20 or 21 applies in relation to any one of the buyers.

Commencement Information

I69 Sch. 5 para. 22 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 5 E+W SUPPLEMENTARY PROVISIONS

Further provision in connection with replacement of main residence exception E+W

23 (1) This paragraph applies where by reason of paragraph 8(4) or 17(4) a chargeable transaction (““the transaction concerned””) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b). E+W

(2) The land transaction (““the subsequent transaction””) by reference to which the condition in paragraph 8(4)(b) or 17(4)(b) was met may not be taken into account for the purposes of paragraph 8(2)(b) or 17(2)(b) in determining whether any other chargeable transaction is a higher rates residential property transaction.

(3) Sub-paragraph (4) applies where—

(a) the effective date of the subsequent transaction falls on or before the filing date for the return in respect of the transaction concerned, and

(b) the return has not been made.

(4) The buyer may, when making the return in respect of the transaction concerned, treat the purchased dwelling referred to in paragraph 8(4) or 17(4) as though it had been a replacement for the buyer's only or main residence on the effective date of the transaction concerned; and in such a case the transaction concerned is to be treated as if it had never been a higher rates residential property transaction.

(5) Sub-paragraph (6) applies where the effect of the transaction concerned ceasing to be a higher rates residential property transaction is that less tax is payable in respect of it than the buyer has already paid in accordance with a return made for that transaction.

(6) In order to obtain repayment of the amount of tax overpaid, the buyer may—

(a) within the period allowed for amendment of the return, amend it accordingly (see section 41 of TCMA);

(b) after the end of that period (if that return is not so amended), make a claim for repayment of the amount overpaid in accordance with Chapter 7 of Part 3 of TCMA.

[F21 (7) If the effective date of the disposal transaction (within the meaning of paragraph 8(4)(b)) is within the period mentioned in paragraph 8(4A)(b) by virtue of the conditions in paragraph 8(4B) being met—

(a) section 78 of TCMA applies for the purposes of sub-paragraph (6) as if for “4 years” to the end there were substituted “12 months beginning with the effective date of the disposal transaction (within the meaning of paragraph 8(4)(b) of Schedule 5 to the LTTA) by reference to which the transaction concerned (within the meaning of paragraph 23(1) of that Schedule) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b) of LTTA.”;

(b) the claim must explain how the conditions in paragraph 8(4B) are met.

(8) If the effective date of the disposal transaction (within the meaning of paragraph 8(4)(b)) is within the period mentioned in paragraph 8(4A)(b) by virtue of the conditions in paragraph 8(4C) being met—

(a) section 78 of TCMA applies for the purposes of sub-paragraph (6) as if for “4 years” to the end there were substituted “12 months beginning with—

(i) the effective date of the disposal transaction (within the meaning of paragraph 8(4)(b) of Schedule 5 to the LTTA) by reference to which the transaction concerned (within the meaning of paragraph 23(1) of that Schedule) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b) of LTTA if the effective date of the disposal transaction is on or after 12 July 2024, or

(ii) 12 July 2024 if the effective date of the disposal transaction (within the meaning of paragraph 8(4)(b) of Schedule 5 to the LTTA) by reference to which the transaction concerned (within the meaning of paragraph 23(1) of that Schedule) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b) of LTTA is on or after 1 April 2021 but before 12 July 2024.”;

(b) the claim must explain how the conditions in paragraph 8(4C) are met.

(9) If the effective date of the disposal transaction (within the meaning of paragraph 17(4)(b)) is within the period mentioned in paragraph 17(4A)(b) by virtue of the conditions in paragraph 17(4B) being met—

(a) section 78 of TCMA applies for the purposes of sub-paragraph (6) as if for “4 years” to the end there were substituted “12 months beginning with the effective date of the disposal transaction (within the meaning of paragraph 17(4)(b) of Schedule 5 to the LTTA) by reference to which the transaction concerned (within the meaning of paragraph 23(1) of that Schedule) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b) of LTTA.”;

(b) the claim must explain how the conditions in paragraph 17(4B) are met.

(10) If the effective date of the disposal transaction (within the meaning of paragraph 17(4)(b)) is within the period mentioned in paragraph 17(4A)(b) by virtue of the conditions in paragraph 17(4C) being met—

(a) section 78 of TCMA applies for the purposes of sub-paragraph (6) as if for “4 years” to the end there were substituted “12 months beginning with—

(i) the effective date of the disposal transaction (within the meaning of paragraph 17(4)(b) of Schedule 5 to the LTTA) by reference to which the transaction concerned (within the meaning of paragraph 23(1) of that Schedule) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b) of LTTA if the effective date of the disposal transaction is on or after 12 July 2024, or

(ii) 12 July 2024 if the effective date of the disposal transaction (within the meaning of paragraph 17(4)(b) of Schedule 5 to the LTTA) by reference to which the transaction concerned (within the meaning of paragraph 23(1) of that Schedule) ceases to be a higher rates residential property transaction for the purpose of regulations under section 24(1)(b) of LTTA is on or after 1 April 2021 but before 12 July 2024.”;

(b) the claim must explain how the conditions in paragraph 17(4C) are met.]

Textual Amendments

F21 Sch. 5 para. 23(7)-(10) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 5(2)

Commencement Information

I70 Sch. 5 para. 23 in force at 1.4.2018 by S.I. 2018/34, art. 3

Further provision in connection with transactions being treated as higher rates residential property transactions E+W

24 (1) This paragraph applies where by reason of the application of paragraph 9 or 18 a chargeable transaction (““the intermediate transaction””) is treated as a higher rates residential property transaction. E+W

(2) The intermediate transaction is treated as a higher rates residential property transaction for the purposes of this Act as from the end of the interim period that applies in accordance with paragraph 9(5) or 18(5).

(3) The buyer in the intermediate transaction must make a return to WRA in respect of that transaction.

(4) A return made under this paragraph must—

(a) be made before the end of the period of 30 days beginning with the day after the end of the interim period that applies in accordance with paragraph 9(5) or 18(5), and

(b) include a self-assessment.

Commencement Information

I71 Sch. 5 para. 24 in force at 1.4.2018 by S.I. 2018/34, art. 3

Spouses and civil partners purchasing alone E+W

25 (1) Sub-paragraph (2) applies in relation to a chargeable transaction if— E+W

(a) the buyer (or one of them) is married or in a civil partnership on the effective date,

(b) the buyer and the buyer's spouse or civil partner are living together on that date, and

(c) the buyer's spouse or civil partner is not a buyer in the transaction.

(2) The transaction is to be treated as being a higher rates residential property transaction if it would have been a higher rates residential property transaction had the buyer's spouse or civil partner been a buyer.

(3) Individuals who are married to, or are civil partners of, each other are treated for the purposes of this Schedule as living together unless—

(a) they are separated under an order of a court of competent jurisdiction,

(b) they are separated by a deed of separation, or

(c) they are in fact separated in circumstances in which the separation is likely to be permanent.

Commencement Information

I72 Sch. 5 para. 25 in force at 1.4.2018 by S.I. 2018/34, art. 3

Property adjustment on divorce, dissolution of civil partnership etc. E+W

26 (1) For the purpose of determining whether paragraph 5 or 15 applies to a chargeable transaction, the buyer is not to be treated as having a major interest in another dwelling to which sub-paragraphs (2) and (3) apply. E+W

(2) This sub-paragraph applies to a dwelling the interest in which is held by the buyer as a tenant in common in consequence of—

(a) an order under section 24(1)(b) of the Matrimonial Causes Act 1973 (c. 18) (property adjustments orders in connection with matrimonial proceedings),

(b) an order under section 17(1)(a)(ii) of the Matrimonial and Family Proceedings Act 1984 (c. 42) (property adjustment orders after overseas divorce) corresponding to such an order as is mentioned in paragraph (a),

(c) an order under paragraph 7(1)(b) of Schedule 5 to the Civil Partnership Act 2004 (c. 33) (property adjustment orders in connection with dissolution etc. of civil partnership), or

(d) an order under paragraph 9 of Schedule 7 to the Civil Partnership Act 2004 (c. 33) (property adjustment orders in connection with overseas dissolution etc. of civil partnership) corresponding to such an order as is mentioned in paragraph (c).

(3) This sub-paragraph applies to a dwelling that is the only or main residence of a person for the benefit of whom an order referred to in sub-paragraph (2) is made.

Commencement Information

I73 Sch. 5 para. 26 in force at 1.4.2018 by S.I. 2018/34, art. 3

Settlements and bare trusts E+W

27 (1) Sub-paragraph (3) applies in relation to a land transaction if— E+W

(a) the main subject-matter of the transaction consists of a major interest in one or more dwellings,

(b) the buyer (or one of them) is acting as trustee of a settlement, and

(c) under the terms of the settlement a beneficiary will be entitled to—

(i) occupy the dwelling or dwellings for life, or

(ii) income earned in respect of the dwelling or dwellings.

(2) Sub-paragraph (3) also applies in relation to a land transaction if—

(a) the main subject-matter of the transaction consists of a term of years absolute in a dwelling, and

(b) the buyer (or one of them) is acting as a trustee of a bare trust (within the meaning given by paragraph 2(1) and (2) of Schedule 8).

(3) Where this sub-paragraph applies in relation to a land transaction the beneficiary of the settlement or bare trust (rather than the trustee) is to be treated for the purposes of this Schedule as the buyer (or as one of them).

(4) Paragraphs 3(3) and 4 of Schedule 8 (trustees to be treated as the buyer) have effect subject to sub-paragraph (3).

Commencement Information

I74 Sch. 5 para. 27 in force at 1.4.2018 by S.I. 2018/34, art. 3

28 (1) Sub-paragraph (3) applies where— E+W

(a) a person is a beneficiary under a settlement,

(b) a major interest in a dwelling forms part of the trust property, and

(c) under the terms of the settlement, the beneficiary is entitled to—

(i) occupy the dwelling for life, or

(ii) income earned in respect of the dwelling.

(2) Sub-paragraph (3) also applies where—

(a) a person is a beneficiary under a bare trust (within the meaning given by paragraph 2(1) and (2) of Schedule 8), and

(b) a term of years absolute in a dwelling forms part of the trust property.

(3) Where this sub-paragraph applies—

(a) the beneficiary is to be treated for the purposes of this Schedule as holding the interest in the dwelling, and

(b) if the trustee of the settlement or bare trust disposes of the interest, the beneficiary is to be treated for the purposes of this Schedule as having disposed of it.

Commencement Information

I75 Sch. 5 para. 28 in force at 1.4.2018 by S.I. 2018/34, art. 3

29 (1) Where— E+W

(a) the main subject-matter of a land transaction consists of an interest other than a major interest in a dwelling, and

(b) sub-paragraph (2) or (3) applies in relation to the transaction,

then, for the avoidance of doubt, the effect of paragraph 28 of this Schedule or, as the case may be, paragraph 3(1) of Schedule 8, is that the main subject-matter of the transaction is to be treated for the purposes of this Schedule as consisting of a major interest in a dwelling.

(2) This sub-paragraph applies in relation to a transaction where—

(a) a major interest in the dwelling is held on a bare trust for a beneficiary (““B””),

(b) there is a disposal of the whole or part of B's interest in the dwelling,

(c) immediately before the effective date of the transaction—

(i) the major interest is, by virtue of paragraph 3(1) of Schedule 8, treated as if it were vested in B, or

(ii) B is, by virtue of paragraph 28, treated as holding the major interest in the dwelling, and

(d) immediately after the effective date of the transaction—

(i) the major interest is, by virtue of paragraph 3(1) of Schedule 8, treated as if it were vested in the buyer, or

(ii) the buyer is, by virtue of paragraph 28, treated as holding the major interest.

(3) This sub-paragraph applies in relation to a transaction where—

(a) a person (““B””) is a beneficiary under a settlement where a major interest in the dwelling forms part of the trust property,

(b) under the terms of the settlement B is entitled to—

(i) occupy the dwelling for life, or

(ii) income earned in respect of the dwelling,

(c) there is a disposal of the whole or part of B's interest in the dwelling,

(d) immediately before the effective date of the transaction B is, by virtue of paragraph 28, treated as holding the major interest in the dwelling, and

(e) immediately after the effective date of the transaction the buyer is, by virtue of that paragraph, treated as holding the major interest.

(4) In determining whether sub-paragraph (2) or (3) applies to a transaction, ignore paragraphs 30 and 35(5).

Commencement Information

I76 Sch. 5 para. 29 in force at 1.4.2018 by S.I. 2018/34, art. 3

30 (1) This paragraph applies where, by reason of paragraph 27 or 28 or paragraph 3(1) of Schedule 8 (bare trusts), the child of a person (““P””) would (but for this paragraph) be treated for the purposes of this Schedule as— E+W

(a) being the buyer in relation to a land transaction,

(b) holding an interest in a dwelling, or

(c) having disposed of an interest in a dwelling.

(2) Where this paragraph applies—

(a) P and any spouse or civil partner of P are to be treated for the purposes of this Schedule as being the buyer, holding the interest or (as the case may be) having disposed of the interest, and

(b) the child is not to be so treated.

(3) Sub-paragraph (2)(a) does not apply in relation to a spouse or civil partner of P if the two of them are not living together (for the meaning of which, see paragraph 25(3)).

(4) This paragraph does not apply where—

(a) a person (““D””) acquires, holds or disposes of, a major interest in a dwelling in a child's name or on the child's behalf,

(b) D does so in the exercise of powers conferred on D as the deputy of the child, and

(c) D holds or, in the case of a disposal, held, that interest on trust for the child.

(5) In sub-paragraph (4), “"deputy”” means—

(a) a person appointed under section 16 of the Mental Capacity Act 2005 (c. 9), or

(b) a person appointed to an equivalent position under the law of a country or territory outside England and Wales (and accordingly the reference to an interest being held on trust by such a person is to its being held on an equivalent basis under that law).

Commencement Information

I77 Sch. 5 para. 30 in force at 1.4.2018 by S.I. 2018/34, art. 3

31 (1) This paragraph applies in relation to a land transaction if— E+W

(a) the main subject-matter of the transaction consists of a major interest in one or more dwellings,

(b) the buyer (or one of them) is acting as trustee of a settlement,

(c) that buyer is an individual, and

(d) under the terms of the settlement a beneficiary is not entitled to—

(i) occupy the dwelling or dwellings for life, or

(ii) income earned in respect of the dwelling or dwellings.

(2) In determining whether paragraph 20 or 21 applies to the transaction—

(a) if the buyer mentioned in sub-paragraph (1) is the only buyer, ignore sub-paragraph (1)(a) of those paragraphs, and

(b) if that buyer is not the only buyer, ignore sub-paragraph (1)(a) of those paragraphs when having regard to that buyer.

Commencement Information

I78 Sch. 5 para. 31 in force at 1.4.2018 by S.I. 2018/34, art. 3

Partnerships E+W

32 (1) Sub-paragraph (2) applies in relation to a chargeable transaction, the subject-matter of which consists of a major interest in one or more dwellings if— E+W

(a) the buyer (or one of them) is a partner in a partnership, but

(b) the buyer does not enter into the transaction for the purposes of the partnership.

(2) For the purposes of determining whether paragraph 5 or 15 applies to the transaction, any major interest in any other dwelling that is held by or on behalf of the partnership for the purposes of a trade carried on by the partnership is not to be treated as held by or on behalf of the buyer.

(3) Paragraph 4(1)(a) of Schedule 7 (chargeable interests held by partnerships treated as held by the partners) has effect subject to sub-paragraph (2).

Commencement Information

I79 Sch. 5 para. 32 in force at 1.4.2018 by S.I. 2018/34, art. 3

Alternative finance arrangements E+W

33 (1) This paragraph applies in relation to a chargeable transaction which is the first transaction under an alternative finance arrangement entered into between a person and a financial institution. E+W

(2) The person (rather than the institution) is to be treated for the purposes of this Schedule as the buyer in relation to the transaction.

(3) In this paragraph—

• “"alternative finance arrangement”” (“"trefniant cyllid arall”") means an arrangement of a kind mentioned in paragraph 2(1) or 3(1) of Schedule 10 (alternative property finance reliefs);

• “"financial institution”” (“"sefydliad ariannol”") has the meaning given by paragraph 8 of that Schedule;

• “"first transaction”” (“"trafodiad cyntaf”"), in relation to an alternative finance arrangement, has the meaning given by paragraph 2(1)(a) or 3(1)(a) of that Schedule.

Commencement Information

I80 Sch. 5 para. 33 in force at 1.4.2018 by S.I. 2018/34, art. 3

Major interests in dwellings inherited jointly E+W

34 (1) This paragraph applies where by virtue of an inheritance— E+W

(a) a person (““P””) becomes jointly entitled with one or more other persons to a major interest in a dwelling, and

(b) P's beneficial share in the interest does not exceed 50% (see sub-paragraph (4)).

(2) P is not to be treated for the purposes of paragraph 5(1)(a) or 15(1)(b) as having the major interest at any time during the period of 3 years beginning with the date of the inheritance.

(3) But if at any time during that period of 3 years P becomes the only person beneficially entitled to the whole of the interest or P's beneficial share in the interest exceeds 50% P is, from that time, to be treated as having the major interest for the purposes of the application of paragraphs 5(1)(a) and 15(1)(b) (subject to any disposal by P).

(4) P's share in the interest exceeds 50% if—

(a) P is beneficially entitled as a tenant in common or coparcener to more than half the interest,

(b) P and P's spouse or civil partner taken together are beneficially entitled as tenants in common or coparceners to more than half the interest, or

(c) P and P's spouse or civil partner are beneficially entitled as joint tenants to the interest and there is no more than one other joint tenant who is so entitled.

(5) Sub-paragraph (4)(b) and (c) do not apply if, on the effective date of the transaction referred to in paragraph 5 or 15, P and P's spouse or civil partner are not living together (for the meaning of ““living together””, see paragraph 25(3)).

(6) In this paragraph “"inheritance”” means the acquisition of an interest in or towards satisfaction of an entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person.

(7) This paragraph applies in relation to an interest acquired following a person's death as a result of a variation of a disposition (whether effected by will, under the law relating to intestacy or otherwise) of property comprised in that person's estate made within the period of 2 years after the person's death, as it applies in relation to an inheritance; and in such a case the reference in sub-paragraph (2) to the date of the inheritance means the date of the acquisition of the interest in accordance with the variation.

Commencement Information

I81 Sch. 5 para. 34 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 6 E+W INTERPRETATION

Dwellings outside Wales E+W

35 (1) In the provisions of this Schedule specified in sub-paragraph (4), references to a ““dwelling”” include references to a dwelling situated outside Wales. E+W

(2) In relation to a dwelling situated in England, those provisions are to be construed in accordance with the provisions of the Finance Act 2003 (c. 14).

(3) In the application of those provisions in relation to a dwelling situated in a country or territory outside England and Wales—

(a) references to a ““major interest”” in the dwelling are to an equivalent interest in the dwelling under the law of that country or territory,

(b) references to persons being beneficially entitled as joint tenants, tenants in common or coparceners to an interest in the dwelling are to persons having an equivalent entitlement to the interest in the dwelling under the law of that country or territory,

(c) references to a “"land transaction”” in relation to the dwelling are to the acquisition of an interest in the dwelling under the law of that country or territory,

(d) references to the “"effective date”” of a land transaction in relation to the dwelling are to the date on which the interest in the dwelling is acquired under the law of that country or territory, F22 ...

(e) references to ““inheritance”” are to the acquisition of an interest from a deceased person's estate in accordance with the laws of that country or territory concerning the inheritance of property.

[F23 (f) references to “relevant restrictions” are references to a prohibition or restriction of any activity by the law of that country or territory or by a public authority of that country or territory by virtue of such a law for the purpose of preventing and controlling or mitigating the effects of an emergency, and

(g) the reference to “emergency” in paragraph (f), if the dwelling is situated outside the United Kingdom, is to be interpreted as if each reference to the United Kingdom in section 19(1) of the Civil Contingencies Act 2004 (c. 36) were a reference to the country or territory in which the dwelling is situated.]

(4) The provisions of this Schedule referred to in sub-paragraphs (1), (2) and (3) are—

(a) paragraph 5(1)(a),

[F24 (b) paragraph 8(2)(b), (c), (d) and (e); paragraph 8(2A)(a) and (b); paragraph 8(2B)(a) and (c); paragraph 8(4)(b), (c) and (d); paragraph 8(4A)(a) and (b); paragraph 8(4B)(a) and (c) and paragraph 8(4C)(a),]

(c) paragraph 9(4),

(d) paragraph 15(1)(b),

[F25 (e) paragraph 17(2)(b), (c), (d) and (e); paragraph 17(2A)(a) and (b); paragraph 17(2B)(a) and (c); paragraph 17(4)(b), (c) and (d); paragraph 17(4A)(a) and (b); paragraph 17(4B)(a) and (c) and paragraph 17(4C)(a),]

(f) paragraph 18(4),

(g) paragraph 26,

(h) paragraph 28,

(i) paragraph 32(2), and

(j) paragraph 34.

(5) Where the child of a person (““P””) has an interest in a dwelling which is situated in a country or territory outside Wales—

(a) P and any spouse or civil partner of P are to be treated for the purposes of this Schedule as having that interest, and

(b) the child is not to be so treated.

(6) Sub-paragraph (5)(a) does not apply in relation to a spouse or civil partner of P if the two of them are not living together (for the meaning of which, see paragraph 25(3)).

(7) Sub-paragraph (5) does not apply where—

(a) a person (““D””) acquires, holds or disposes of, a major interest in a dwelling in a child's name or on the child's behalf,

(b) D does so in the exercise of powers conferred on D as the deputy of the child, and

(c) D holds or, in the case of a disposal, held, that interest on trust for the child.

(8) In sub-paragraph (7), “"deputy”” means—

(a) a person appointed under section 16 of the Mental Capacity Act 2005 (c. 9), or

(b) a person appointed to an equivalent position under the law of a country or territory outside England and Wales (and accordingly the reference to an interest being held on trust by such a person is to its being held on an equivalent basis under that law).

Textual Amendments

F22 Word in Sch. 5 para. 35(3)(d) omitted (12.7.2024) by virtue of The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 6(2)

F23 Sch. 5 para. 35(3)(f)(g) inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 6(3)

F24 Sch. 5 para. 35(4)(b) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 6(4)(a)

F25 Sch. 5 para. 35(4)(e) substituted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 6(4)(b)

Commencement Information

I82 Sch. 5 para. 35 in force at 1.4.2018 by S.I. 2018/34, art. 3

What counts as a dwelling E+W

36 (1) This paragraph sets out rules for determining what counts as a dwelling for the purposes of this Schedule. E+W

(2) A building or part of a building counts as a dwelling if—

(a) it is used or suitable for use as a dwelling, or

(b) it is in the process of being constructed or adapted for such use.

(3) Land that is, or is to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on that land) is taken to be part of that dwelling.

(4) Land that subsists, or is to subsist, for the benefit of a dwelling is taken to be part of that dwelling.

(5) The main subject-matter of a transaction is also taken to consist of or include an interest in a dwelling if—

(a) substantial performance of a contract constitutes the effective date of that transaction by virtue of a relevant deeming provision,

(b) the main subject-matter of the transaction consists of or includes an interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a dwelling, and

(c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed.

(6) In sub-paragraph (5)—

• “"contract”” (“"contract”") includes any agreement;

• “"relevant deeming provision”” (“"darpariaeth dybio berthnasol”") means any of sections 10 to 13 or paragraph 8(1) to (5) of Schedule 2 (pre-completion transactions) or paragraph 20 of Schedule 6 (agreement for lease);

• “"substantially performed”” (“"cyflawni'n sylweddol”") has the same meaning as in section 14.

(7) A building or part of a building used for a purpose specified in section 72(4) or (5) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).

(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.

Commencement Information

I83 Sch. 5 para. 36 in force at 1.4.2018 by S.I. 2018/34, art. 3

Major interest not to include certain leases E+W

37 E+W For the purposes of this Schedule, any term of years absolute or leasehold estate is not a ““major interest”” if its term does not exceed 7 years on the date of its grant.

Commencement Information

I84 Sch. 5 para. 37 in force at 1.4.2018 by S.I. 2018/34, art. 3

[F26 Meaning of emergency, public authority and relevant restriction E+W

Textual Amendments

F26 Sch. 5 para. 38 and crossheading inserted (12.7.2024) by The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (Amendments to Schedule 5) Regulations 2024 (S.I. 2024/791), regs. 1(2), 7

38. (1) For the purposes of this Schedule— E+W

• “emergency” (“argyfwng”) has the meaning given by section 19 of the Civil Contingencies Act 2004 (c. 36) and is not restricted to events or situations in relation to which powers are exercised under that Act;

• “public authority” (“awdurdod cyhoeddus”) means a person carrying out a function of a public nature;

• “relevant restriction” (“cyfyngiad perthnasol”) means a prohibition or restriction of any activity by an enactment, or by a public authority by virtue of an enactment, for the purpose of preventing, controlling or mitigating the effects of an emergency.

(2) In sub-paragraph (1) “relevant restriction” does not include a prohibition or restriction that ceased to have effect before 12 July 2024.]

(as introduced by section 32(2))

SCHEDULE 6 E+W LEASES

PART 1 E+W INTRODUCTORY

Overview E+W

1 (1) This Schedule makes provision about the application of this Act in relation to leases. E+W

(2) The Schedule is arranged as follows—

(a) Part 2 makes provision about determining the duration of a lease for the purposes of this Act and associated provision about leases with overlapping terms;

(b) Part 3 makes provision about the treatment of consideration in relation to leases, including rent and consideration other than rent and makes provision about not treating certain consideration as chargeable consideration;

(c) Part 4 makes provision about agreements for lease and the treatment of certain assignments and variations of leases for the purposes of this Act;

(d) Part 5 makes provision for no tax to be chargeable on the rent element of residential leases, sets out how the charge to tax is to be calculated on the rent element of other leases and makes provision about the calculation of the tax charge in relation to consideration other than rent.

Commencement Information

I85 Sch. 6 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 2 E+W DURATION OF LEASE AND TREATMENT OF OVERLAPPING LEASES

Lease for a fixed term E+W

2 E+W In applying any provision of this Act to a lease for a fixed term no account is to be taken of—

(a) any contingency as a result of which the lease may be terminated before the end of the fixed term, or

(b) any right of either party to terminate the lease or renew it.

Commencement Information

I86 Sch. 6 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Leases that continue after a fixed term E+W

3 (1) This paragraph applies to— E+W

(a) a lease granted for a fixed term and thereafter until terminated, or

(b) a lease granted for a fixed term that may continue beyond the fixed term by operation of law.

(2) For the purposes of this Act (except section 46 (notifiable transactions: exceptions)) a lease to which this paragraph applies is treated—

(a) in the first instance as if it were a lease for the original fixed term and no longer;

(b) if the lease continues after the end of that term, as if it were a lease for a fixed term one year longer than the original fixed term;

(c) if the lease continues after the end of the term resulting from the application of paragraph (b), as if it were a lease for a fixed term two years longer than the original fixed term,

and so on (but see sub-paragraph (5)).

(3) For the purposes of section 46 (notifiable transactions: exceptions) a lease to which this paragraph applies is treated as granted for a period equal to the original fixed term.

(4) Where—

(a) a lease is treated, by virtue of sub-paragraph (2), as continuing for a period longer than the original fixed term, and

(b) as a result additional tax is payable in respect of a land transaction or tax is payable in respect of a land transaction where none was payable,

the buyer must make a return or further return (including a self-assessment) in respect of the land transaction before the end of the period of 30 days beginning with the day after the end of the period for which the lease is treated as continuing.

(5) Where—

(a) a lease would, by virtue of sub-paragraph (2), be treated as continuing for a period (or further period) of one year, but

(b) it actually terminates at a time during that one year period,

the lease is to be treated as continuing under sub-paragraph (2) only until it terminates; and sub-paragraph (4) applies accordingly.

(6) This paragraph is subject to paragraphs 4 and 8 (rent under a continuing lease to be treated as rent under a new lease).

Commencement Information

I87 Sch. 6 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Leases that continue after a fixed term: grant of a new lease E+W

4 (1) This paragraph applies where— E+W

(a) (ignoring this paragraph) paragraph 3 would apply to treat a lease (““the original lease””) as if it were a lease for a fixed term one year longer than the original fixed term,

(b) during that one year period the tenant under that lease is granted a new lease of the same or substantially the same premises,

(c) the term of the new lease begins during that one year period, and

(d) paragraph 8 (tenant holding over: new lease backdated to previous year) does not apply.

(2) Paragraph 3 does not apply to treat the lease as continuing after the original fixed term.

(3) The term of the new lease is treated for the purposes of this Act as beginning with the day after the end of the original fixed term.

(4) Any rent which, in the absence of this paragraph, would be payable under the original lease in respect of that one year period is to be treated as payable under the new lease (and paragraph 9(3) does not apply to that rent).

(5) Where the fixed term of a lease has previously been treated as extended (on one or more occasions) under paragraph 3, this paragraph applies as if references to the original fixed term were references to the previously extended fixed term.

Commencement Information

I88 Sch. 6 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Leases for an indefinite term E+W

5 (1) For the purposes of this Act (except section 46 (notifiable transactions: exceptions))— E+W

(a) a lease for an indefinite term is treated in the first instance as if it were a lease for a fixed term of a year;

(b) if the lease continues after the end of the term resulting from the application of paragraph (a), it is treated as if it were a lease for a fixed term of 2 years;

(c) if the lease continues after the end of the term resulting from the application of paragraph (b), it is treated as if it were a lease for a fixed term of 3 years,

and so on.

(2) But where—

(a) a lease is treated, by virtue of sub-paragraph (1) as if it were a lease for a fixed term of 2 or more years, and

(b) it actually terminates before the end of that fixed term,

the lease is to be treated as continuing under sub-paragraph (1) only until it terminates; and sub-paragraph (5) applies accordingly.

(3) For the purposes of section 46 (notifiable transactions: exceptions) a lease for an indefinite term is treated as granted for a period of less than 7 years.

(4) For the purposes of this Act, no account is to be taken of any other enactment deeming a lease for an indefinite term to be a lease for a different term.

(5) Where—

(a) a lease is treated, by virtue of sub-paragraph (1), as being for a fixed term,

(b) the lease continues after the end of that term and accordingly is treated as being for a longer fixed term, and

(c) as a result of the lease continuing, additional tax is payable in respect of a land transaction or tax is payable in respect of a land transaction where none was payable,

the buyer must make a return or further return (including a self-assessment) in respect of the land transaction before the end of the period of 30 days beginning with the day after the end of the longer fixed term for which the lease is treated as continuing.

(6) Where—

(a) a lease is treated, by virtue of sub-paragraph (1), as being for a fixed term of one year,

(b) the lease actually terminates before the end of that fixed term, and

(c) had the lease been granted for a fixed term ending on the date on which it actually terminates, less tax would have been chargeable than the amount assessed as such in the return made in respect of the grant of the lease,

the buyer may, within the period allowed for amendment of the return, amend it accordingly (for provision as to amendment of returns, see section 41 of TCMA).

Commencement Information

I89 Sch. 6 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Successive linked leases E+W

6 (1) For the purposes of this Act a series of linked leases are treated as a single lease— E+W

(a) granted at the time of the grant of the first lease in the series,

(b) for a term equal to the aggregate of the terms of all the leases, and

(c) in consideration of the rent payable under all of the leases.

(2) Two or more leases constitute ““a series of linked leases”” if they—

(a) are successive leases granted or treated as granted (whether at the same time or at different times) of the same or substantially the same premises, and

(b) are linked transactions.

(3) The grant of later leases in the series is accordingly disregarded for the purposes of this Act except section 51 (return or further return in consequence of later linked transaction).

Commencement Information

I90 Sch. 6 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Rent for overlap period in case of grant of further lease E+W

7 (1) This paragraph applies where— E+W

(a) the tenant under a lease (““the old lease””) surrenders it to the landlord and in consideration of that surrender the landlord grants a lease to the tenant of the same or substantially the same premises (“"the new lease””),

(b) the tenant under a lease (““the old lease””) of premises to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (security of tenure for business, professional and other tenants) applies, makes a request for a new tenancy (“"the new lease””) which is then executed,

(c) on termination of a lease (““the head lease””) a sub-tenant is granted a lease (“"the new lease””) of the same or substantially the same premises as those comprised in the sub-tenant's original lease (““the old lease””) in pursuance of—

(i) an order of a court on a claim for relief against re-entry or forfeiture, or

(ii) a contractual entitlement arising in the event of the head lease being terminated, or

(d) a person who has guaranteed the obligations of a tenant under a lease that has been terminated (““the old lease””) is granted a lease of the same or substantially the same premises (“"the new lease””) in pursuance of the guarantee.

(2) For the purposes of this Act, the rent payable under the new lease in respect of any period falling within the overlap period is treated as reduced by the amount of the taxable rent that would have been payable in respect of that period under the old lease (but it cannot be treated as being reduced to a negative amount).

(3) For the purposes of sub-paragraph (2)—

(a) the ““overlap period”” is the period between the date of the grant of the new lease and what would have been the end of the term of the old lease had it not been terminated;

(b) rent is ““taxable”” if or to the extent that it is taken into account in determining the tax chargeable in respect of the acquisition of the old lease.

Modifications etc. (not altering text)

C2 Sch. 6 para. 7 applied in part (with modifications) (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 9

Commencement Information

I91 Sch. 6 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tenant holding over: new lease backdated to previous year E+W

8 (1) This paragraph applies where— E+W

(a) the tenant under a lease (““the old lease””) continues in occupation after the date on which, under its terms, the lease terminates (““the contractual termination date””),

(b) the tenant is granted a lease of the same or substantially the same premises (“"the new lease””),

(c) the new lease is granted on a date falling more than one year after the contractual termination date, and

(d) the term of the new lease is expressed to begin on a date falling within the period —

(i) beginning with the contractual termination date, and

(ii) ending with the latest anniversary of that date falling before the date on which the new lease is granted,

(““the whole years of holdover””).

(2) The term of the new lease is treated for the purposes of this Act as beginning with the date on which it is expressed to begin.

(3) The rent payable under the new lease in respect of the period—

(a) beginning with the date on which the new lease is expressed to begin, and

(b) ending at the end of the whole years of holdover,

is treated for the purposes of this Act as reduced by the amount of taxable rent payable in respect of the holdover tenancy for that period (but it cannot be treated as being reduced to a negative amount).

(4) The holdover tenancy is treated for the purposes of this Act as a lease for a fixed term ending at the end of the whole years of holdover.

(5) For the purposes of this paragraph—

(a) “"holdover tenancy”” means—

(i) the old lease if it continues beyond the contractual termination date (whether by virtue of the lease being granted for a fixed term and thereafter until terminated or by operation of law), or

(ii) any other tenancy of the same or substantially the same premises by virtue of which the tenant under the old lease continues in occupation after the contractual termination date;

(b) rent is ““taxable”” if or to the extent that it is taken into account in determining the tax chargeable in respect of the acquisition of the holdover tenancy.

Modifications etc. (not altering text)

C3 Sch. 6 para. 8 applied in part (with modifications) by S.I. 2018/126, reg. 9A (as inserted (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) (Amendment) Regulations 2018 (S.I. 2018/401), regs. 1(2), 2)

Commencement Information

I92 Sch. 6 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 3 E+W RENT AND OTHER CONSIDERATION

Rent E+W

9 (1) For the purposes of this Act, a single sum expressed to be payable in respect of rent and other matters but not apportioned is to be treated as entirely rent. E+W

(2) Sub-paragraph (1) is without prejudice to the application of paragraph 4 of Schedule 4 (chargeable consideration: just and reasonable apportionment) where separate sums are expressed to be payable in respect of rent and other matters.

(3) For the purposes of this Act, “"rent”” does not include any chargeable consideration for the grant of a lease that is payable in respect of a period before the grant of the lease.

Commencement Information

I93 Sch. 6 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

Variable or uncertain rent E+W

10 (1) This paragraph applies where the amount of rent payable under a lease— E+W

(a) varies in accordance with provision in the lease, or

(b) is contingent, uncertain or unascertained.

(2) As regards rent payable in respect of any period before the end of the fifth year of the term of the lease—

(a) this Act applies as in relation to other chargeable consideration, and

(b) accordingly sections 19 and 20 apply if the amount is contingent, uncertain or unascertained.

(3) As regards rent payable in respect of any period after the end of the fifth year of the term of the lease, the annual amount of rent is assumed, in every case, to be the equal to the highest amount of rent payable in respect of any period of 12 consecutive months in the first 5 years of the term.

(4) In determining that amount—

(a) disregard paragraphs 7(2) and 8(3) (where further lease granted, deemed reduction of rent for overlap period), and

(b) if necessary, take into account any amounts determined in accordance with sub-paragraph (2)(b).

(5) This paragraph is subject to paragraph 12 (adjustment where rent ceases to be uncertain).

(6) For the purposes of this paragraph and paragraph 12, the cases where the amount of rent payable under a lease is uncertain or unascertained include cases where there is a possibility of that amount being varied under—

(a) section 12, 13 or 33 of the Agricultural Holdings Act 1986 (c. 5) (provisions relating to increases, reductions and other variations of rent), or

(b) Part 2 of the Agricultural Tenancies Act 1995 (c. 8) (rent review under farm business tenancy).

(7) For the purposes of this Act, no account is to be taken of any provision for rent to be adjusted in line with the retail prices index, consumer prices index or any other similar index used to express a rate of inflation.

Commencement Information

I94 Sch. 6 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

First rent review in final quarter of fifth year E+W

11 E+W Where—

(a) a lease contains provision under which the rent may be adjusted,

(b) under that provision the first (or only) such adjustment—

(i) is to an amount that (before that adjustment) is uncertain, and

(ii) has effect from a date (the ““review date””) that is expressed as falling 5 years after a specified date, and

(c) the specified date falls within the period of 3 months before the beginning of the term of the lease,

this Act applies as if references to the first 5 years of the term of the lease were to the period beginning with the start of the term and ending with the review date and references to the fifth year of the term of the lease are to be read accordingly.

Commencement Information

I95 Sch. 6 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

Adjustment of tax where rent determined on reconsideration date E+W

12 (1) Where, in the case of a land transaction relating to a lease— E+W

(a) section 19 or 20 (contingent, uncertain or unascertained consideration) applies to the land transaction by virtue of paragraph 10, and

(b) the reconsideration date is reached,

the buyer in the transaction must, on the reconsideration date, determine the rent paid or payable in respect of the first 5 years of the term of the lease.

(2) Paragraphs 13 and 14 make provision for the adjustment of tax payable in respect of a land transaction (and of any transaction linked to such a transaction) as a result of such a determination.

(3) For the purposes of this paragraph and paragraphs 13 and 14, the reconsideration date is —

(a) the date falling at the end of the fifth year of the term of the lease, or

(b) any earlier date on which the amount of rent payable in respect of the first 5 years of the term of the lease ceases to be uncertain.

(4) For the purposes of sub-paragraph (3)(b) and paragraph 13(2), the amount of rent payable ceases to be uncertain when—

(a) in the case of contingent rent, the contingency occurs or it becomes clear that it will not occur;

(b) in the case of uncertain or unascertained rent, the amount becomes ascertained.

Commencement Information

I96 Sch. 6 para. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3

Underpayment of tax where rent determined on reconsideration date E+W

13 (1) If, as a result of determining on the reconsideration date the rent paid or payable in respect of the first 5 years of the term of the lease— E+W

(a) a land transaction becomes notifiable, or

(b) additional tax is payable in respect of a land transaction or tax is payable where none was payable,

the buyer must make a return or further return (including a self-assessment) in respect of the land transaction before the end of the period of 30 days beginning with the reconsideration date.

(2) Where—

(a) a return is made under sub-paragraph (1) as a result of determining the rent paid or payable in respect of the first 5 years of the term of the lease on the date falling at the end of the fifth year of that term,

(b) when the return is made, the rent so paid or payable remains uncertain, and

(c) no later than the end of the period of 12 months beginning with the filing date for the return, that rent ceases to be uncertain,

the buyer must amend the return in accordance with section 41 of TCMA.

Commencement Information

I97 Sch. 6 para. 13 in force at 1.4.2018 by S.I. 2018/34, art. 3

Overpayment of tax where rent determined on reconsideration date E+W

14 (1) If, as a result of determining on the reconsideration date the rent paid or payable in respect of the first 5 years of the term of the lease, less tax is payable in respect of a land transaction than has already been paid— E+W

(a) the buyer may, within the period allowed for amendment of the return, amend it accordingly;

(b) after the end of that period, the buyer may (if the return is not so amended) make a claim for repayment of the amount overpaid in accordance with Chapter 7 of Part 3 of TCMA as modified by sub-paragraph (2).

(2) In its application to a claim to which sub-paragraph (1)(b) applies, Chapter 7 of Part 3 of TCMA applies as if for section 78 there were substituted—

“78 Time limit for making claims

A claim under section 63 to which paragraph 14(1)(b) of Schedule 6 to LTTA applies must be made before the later of the end of—

(a) the period of 4 years beginning with the day after the filing date for the tax return to which the land transaction tax already paid relates, or

(b) the period of 12 months beginning with the reconsideration date (within the meaning of paragraph 12(3) of that Schedule).”

Commencement Information

I98 Sch. 6 para. 14 in force at 1.4.2018 by S.I. 2018/34, art. 3

Reverse premiums E+W

15 (1) In the case of the grant, assignment or surrender of a lease a reverse premium does not count as chargeable consideration. E+W

(2) A “"reverse premium”” means—

(a) in relation to the grant of a lease, a premium moving from the landlord to the tenant;

(b) in relation to the assignment of a lease, a premium moving from the assignor to the assignee;

(c) in relation to the surrender of a lease, a premium moving from the tenant to the landlord.

Commencement Information

I99 Sch. 6 para. 15 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tenants' obligations etc. that do not count as chargeable consideration E+W

16 (1) In the case of a grant of a lease none of the following counts as chargeable consideration — E+W

(a) any undertaking by the tenant to repair, maintain or insure the leased premises;

(b) any undertaking by the tenant to pay any amount in respect of services, repairs, maintenance or insurance or the landlord's costs of management;

(c) any other obligation of the tenant that is not such as to affect the rent that a tenant would be prepared to pay in the open market;

(d) any guarantee of the payment of rent or the performance of any other obligation of the tenant under the lease;

(e) any penal rent, or increased rent in the nature of a penal rent, payable in respect of the breach of any obligation of the tenant under the lease;

(f) any liability of the tenant for costs under section 14(2) of the Leasehold Reform Act 1967 (c. 88) or section 60 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (costs to be borne by person exercising statutory rights to be granted lease);

(g) any other obligation of the tenant to bear the landlord's reasonable costs or expenses of, or incidental to, the grant of the lease;

(h) any obligation under the lease to transfer to the landlord, on the termination of the lease, payment entitlements granted to the tenant under the [F27 basic payment scheme (that is, the scheme of income support for farmers in pursuance of Regulation (EU) No 1307/2013)] in respect of land subject to the lease.

(2) Where sub-paragraph (1) applies in relation to an obligation, a payment made in discharge of the obligation does not count as chargeable consideration.

(3) The release of an obligation mentioned in sub-paragraph (1) does not count as chargeable consideration in relation to the surrender of the lease.

Textual Amendments

F27 Words in Sch. 6 para. 16(1)(h) substituted (3.4.2019) by The Welsh Tax Acts (Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/833), regs. 1(3), 2

Commencement Information

I100 Sch. 6 para. 16 in force at 1.4.2018 by S.I. 2018/34, art. 3

Surrender of existing lease in return for new lease E+W

17 (1) Where a lease is granted in consideration of the surrender of an existing lease between the same parties— E+W

(a) the grant of the new lease does not count as chargeable consideration for the surrender, and

(b) the surrender does not count as chargeable consideration for the grant of the new lease.

(2) Paragraph 5 (exchanges) of Schedule 4 (chargeable consideration) does not apply in such a case.

Commencement Information

I101 Sch. 6 para. 17 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignment of lease: assumption of obligations by assignee E+W

18 E+W In the case of an assignment of a lease the assumption by the assignee of the obligation—

(a) to pay rent, or

(b) to perform or observe any other undertaking of the tenant under the lease,

does not count as chargeable consideration for the assignment.

Commencement Information

I102 Sch. 6 para. 18 in force at 1.4.2018 by S.I. 2018/34, art. 3

Loan or deposit in connection with grant or assignment of lease E+W

19 (1) Where, under arrangements made in connection with the grant of a lease— E+W

(a) the tenant, or any person connected with or acting on behalf of the tenant, pays a deposit, or makes a loan, to any person, and

(b) the repayment of all or part of the deposit or loan is contingent on anything done or omitted to be done by the tenant, or on the death of the tenant,

the amount of the deposit or loan (disregarding any repayment) is to be taken for the purposes of this Act to be consideration other than rent given for the grant of the lease.

(2) Where, under arrangements made in connection with the assignment of a lease—

(a) the assignee, or any person connected with or acting on behalf of the assignee, pays a deposit, or makes a loan, to any person, and

(b) the repayment of all or part of the deposit or loan is contingent on anything done or omitted to be done by the assignee, or on the death of the assignee,

the amount of the deposit or loan (disregarding any repayment) is to be taken for the purposes of this Act to be consideration other than rent given for the assignment of the lease.

(3) Sub-paragraph (1) or (2) does not apply in relation to a deposit if the amount that would otherwise fall within the sub-paragraph in question in relation to the grant or assignment of the lease is not more than twice the relevant maximum rent.

(4) The relevant maximum rent is—

(a) in relation to the grant of a lease, the highest amount of rent payable in respect of any period of 12 consecutive months in the first 5 years of the term of the lease;

(b) in relation to the assignment of a lease, the highest amount of rent payable in respect of any period of 12 consecutive months falling within the first 5 years of the term remaining outstanding as at the date of the assignment.

(5) In determining the highest amount of rent for the purposes of sub-paragraph (4)—

(a) disregard paragraphs 7(2) and 8(3) (where further lease granted, deemed reduction of rent for overlap period), and

(b) if necessary, take into account any amounts determined in accordance with paragraph 10(2)(b) (determining contingent, uncertain or unascertained rent).

(6) Tax is not chargeable by virtue of this paragraph if it would be chargeable only as a result of the application of paragraph 34 (which excludes the zero rate band in cases where the relevant rent attributable to non-residential property is not less than £1,000 a year) to an amount of chargeable consideration determined under sub-paragraph (1) or (2).

Commencement Information

I103 Sch. 6 para. 19 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 4 E+W AGREEMENTS FOR LEASE, ASSIGNMENTS AND VARIATIONS

Agreement for lease E+W

20 (1) Where— E+W

(a) an agreement for a lease is entered into, and

(b) the agreement is substantially performed without having been completed,

the agreement is treated for the purposes of this Act as if it were the grant of a lease in accordance with the agreement (““the notional lease””), beginning with the date of substantial performance.

(2) The effective date of the transaction is the date of substantial performance of the agreement.

(3) For the purposes of this paragraph the agreement is completed by the grant of a lease (““the actual lease””) in substantial conformity with the agreement.

(4) Where the actual lease is subsequently granted the notional lease is treated for the purposes of this Act as if it were a lease granted—

(a) on the date of substantial performance of the agreement,

(b) for a term beginning with that date and ending at the end of the term of the actual lease, and

(c) in consideration of the total rent payable over that term and any other consideration given for the agreement or the actual lease.

(5) Where sub-paragraph (4) applies the grant of the actual lease is disregarded for the purposes of this Act except section 51 (return or further return in consequence of later linked transaction).

(6) For the purposes of section 51—

(a) the grant of the notional lease and the grant of the actual lease are linked (whether or not they would be linked by virtue of section 8),

(b) the tenant under the actual lease (rather than the tenant under the notional lease) is liable for any tax or additional tax chargeable in respect of the notional lease as a result of sub-paragraph (4), and

(c) the reference in section 51(2) to ““the buyer in the earlier transaction”” is to be read, in relation to the notional lease, as a reference to the tenant under the actual lease.

(7) Where—

(a) sub-paragraph (1) applies, and

(b) within the period of 12 months beginning with the date of substantial performance of the agreement, the agreement is (to any extent) rescinded or annulled, or is for any other reason not carried into effect, and

(c) in consequence, the return made in respect of the agreement is amended,

the tax paid by virtue of that sub-paragraph must (to that extent) be repaid by WRA.

(8) For the purposes of the application of section 14(1) (substantial performance) to this paragraph and paragraph 21 any agreement for lease is to be treated as a contract.

Commencement Information

I104 Sch. 6 para. 20 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignment of agreement for lease E+W

21 (1) This paragraph applies where a person (““P””) assigns P's interest as tenant under an agreement for lease. E+W

(2) Where this paragraph applies Schedule 2 (transactions entered into before completion of contract) does not apply.

(3) If the assignment occurs without the agreement having been substantially performed, section 10 (contract and transfer) has effect as if—

(a) the agreement were with the assignee (““A””) and not P, and

(b) the consideration given by A for entering into the agreement included any consideration given by A for the assignment.

(4) If the assignment occurs after the agreement has been substantially performed—

(a) the assignment is a separate land transaction, and

(b) the effective date of that transaction is the date of the assignment.

(5) Where there are successive assignments, this paragraph has effect in relation to each one of them.

Commencement Information

I105 Sch. 6 para. 21 in force at 1.4.2018 by S.I. 2018/34, art. 3

Cases where assignment of lease treated as grant of lease E+W

22 (1) This paragraph applies where the grant of a lease is relieved from tax by virtue of any of the provisions specified in sub-paragraph (4). E+W

(2) The first assignment of the lease that is not relieved from tax by virtue of any of the provisions specified in sub-paragraph (4), and in relation to which the assignee does not acquire the lease as a bare trustee of the assignor, is treated for the purposes of this Act as if it were the grant of a lease by the assignor—

(a) for a term equal to the unexpired term of the lease referred to in sub-paragraph (1), and

(b) on the same terms as those on which the assignee holds the lease after the assignment.

(3) Sub-paragraph (2) does not apply where an assignment of a lease, but for the application of that sub-paragraph, would be relieved from tax by virtue of Schedule 11 (alternative finance investment bonds).

(4) The provisions are—

(a) Schedule 9 (sale and leaseback relief);

(b) paragraphs 13 and 15 of Schedule 11 (alternative finance investment bond relief);

(c) Schedule 16 (group relief);

(d) Schedule 17 (reconstruction and acquisition relief);

(e) Schedule 18 (charities relief);

(f) paragraph 1 of Schedule 20 (relief for certain acquisitions involving public bodies);

[F28 (g) Schedule 21A (relief for special tax sites).]

(5) This paragraph does not apply where the relief in question is group relief, reconstruction or acquisition relief [F29 , charities relief or relief for special tax sites] and is withdrawn as a result of a disqualifying event occurring before the effective date of the assignment.

(6) For the purposes of sub-paragraph (5), “"disqualifying event”” means—

(a) in relation to the withdrawal of group relief, the event falling within paragraph 8(2)(a) of Schedule 16 (buyer ceasing to be a member of the same group as the seller) as read with paragraph 9 of that Schedule;

(b) in relation to the withdrawal of reconstruction or acquisition relief, the change of control of the acquiring company mentioned in paragraph 5(2) of Schedule 17 or, as the case may be, the event mentioned in paragraph 7(2) or (3) of that Schedule;

(c) in relation to the withdrawal of charities relief, a disqualifying event as defined in paragraph 2(4) or 5(2)(b) of Schedule 18;

[F30 (d) in relation to the withdrawal of relief for special tax sites under Schedule 21A, the last day in the control period on which the qualifying land ceases to be used exclusively in a qualifying manner in circumstances where the exceptions in sub-paragraphs (3), (4) and (5) of paragraph 10 of that Schedule do not apply.]

[F31 (7) In sub-paragraph (6)(d), “control period”, “qualifying land” and “qualifying manner” are to be interpreted in accordance with Schedule 21A.]

Textual Amendments

F28 Sch. 6 para. 22(4)(g) inserted (26.11.2024) by The Land Transaction Tax (Relief for Special Tax Sites) (Wales) Regulations 2024 (S.I. 2024/1193), regs. 1(2), 2(4)(a)

F29 Words in Sch. 6 para. 22(5) substituted (26.11.2024) by The Land Transaction Tax (Relief for Special Tax Sites) (Wales) Regulations 2024 (S.I. 2024/1193), regs. 1(2), 2(4)(b)

F30 Sch. 6 para. 22(6)(d) inserted (26.11.2024) by The Land Transaction Tax (Relief for Special Tax Sites) (Wales) Regulations 2024 (S.I. 2024/1193), regs. 1(2), 2(4)(c)

F31 Sch. 6 para. 22(7) inserted (26.11.2024) by The Land Transaction Tax (Relief for Special Tax Sites) (Wales) Regulations 2024 (S.I. 2024/1193), regs. 1(2), 2(4)(d)

Modifications etc. (not altering text)

C4 Sch. 6 para. 22 applied in part (with modifications) (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 10

Commencement Information

I106 Sch. 6 para. 22 in force at 1.4.2018 by S.I. 2018/34, art. 3

Assignment of lease E+W

23 (1) Where a lease is assigned, anything that but for the assignment would be required or authorised to be done by or in relation to the assignor under or by virtue of— E+W

(a) section 47 (contingency ceases and consideration is ascertained: duty to make return),

(b) section 51 (return or further return in consequence of later linked transaction),

(c) paragraph 3 or 5 of this Schedule (return or further return required where fixed term or indefinite term lease continues), or

(d) paragraphs 12, 13 and 14 of this Schedule (adjustment where rent ceases to be uncertain),

must, if the event giving rise to the adjustment or return occurs after the effective date of the assignment, be done instead by or in relation to the assignee.

(2) So far as necessary for giving effect to sub-paragraph (1) anything previously done by or in relation to the assignor is to be treated as if it had been done by or in relation to the assignee.

(3) This paragraph does not apply if the assignment is treated as the grant of a lease by the assignor (see paragraph 22).

Commencement Information

I107 Sch. 6 para. 23 in force at 1.4.2018 by S.I. 2018/34, art. 3

Reduction of rent or term or other variation of lease E+W

24 (1) Where a lease is varied so as to reduce the amount of the rent, the variation is treated for the purposes of this Act as an acquisition of a chargeable interest by the tenant. E+W

(2) Where any consideration in money or money's worth (other than an increase in rent) is given by the tenant for any variation of a lease, other than a variation of the amount of the rent or of the term of the lease, the variation is treated for the purposes of this Act as an acquisition of a chargeable interest by the tenant.

(3) Where a lease is varied so as to reduce the term, the variation is treated for the purposes of this Act as an acquisition of a chargeable interest by the landlord.

Commencement Information

I108 Sch. 6 para. 24 in force at 1.4.2018 by S.I. 2018/34, art. 3

Increase of rent treated as grant of new lease: variation of lease in first 5 years E+W

25 (1) Where a lease is varied so as to increase the amount of rent as from a date before the end of the fifth year of the term of the lease, the variation is treated for the purposes of this Act as if it were the grant of a lease in consideration of the additional rent made payable by it. E+W

(2) Sub-paragraph (1) does not apply to an increase of rent in pursuance of—

(a) a provision contained in the lease before it was varied, or

(b) a provision mentioned in paragraph 10(6)(a) or (b) (variations of certain agricultural leases).

Modifications etc. (not altering text)

C5 Sch. 6 para. 25 modified (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 11

Commencement Information

I109 Sch. 6 para. 25 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 5 E+W CALCULATION OF TAX CHARGEABLE

Residential leases, non-residential leases and mixed leases E+W

26 E+W For the purposes of this Part of this Schedule, a transaction is—

(a) an acquisition of a residential lease if—

(i) it is the acquisition of a lease or other chargeable interest relating to a lease, the main subject-matter of which consists entirely of residential property, or

(ii) where the acquisition is one of a number of linked transactions, the main subject-matter of each transaction consists entirely of residential property;

(b) an acquisition of a non-residential lease if—

(i) it is the acquisition of a lease or other chargeable interest relating to a lease, the main subject-matter of which consists entirely of land which is not residential property, or

(ii) where the acquisition is one of a number of linked transactions, the main subject-matter of each transaction consists entirely of land which is not residential property;

(c) an acquisition of a mixed lease if—

(i) it is the acquisition of a lease or other chargeable interest relating to a lease, the main subject-matter of which includes land which is not residential property, or

(ii) where the acquisition is one of a number of linked transactions, the main subject-matter of any of the transactions includes land which is not residential property.

Commencement Information

I110 Sch. 6 para. 26 in force at 1.4.2018 by S.I. 2018/34, art. 3

No tax chargeable in respect of rent: residential leases E+W

27 (1) In the case of an acquisition of a residential lease, no tax is chargeable in respect of so much of the chargeable consideration as consists of rent. E+W

(2) The Welsh Ministers may by regulations amend this paragraph so as to substitute sub-paragraph (1) with a calculation of tax chargeable in respect of so much of the chargeable consideration as consists of rent in the case of an acquisition of a residential lease.

(3) Regulations under sub-paragraph (2)—

(a) must specify the method of calculation (including the method applicable to a case where the acquisition is one of a number of linked transactions each of which being the acquisition of a residential lease), and

(b) may make such other supplemental, incidental or consequential modifications of any enactment (including this Act) as the Welsh Ministers consider necessary or expedient.

(4) If regulations are made under sub-paragraph (2), the Welsh Ministers must by regulations specify the tax bands and percentage tax rates for each band applicable to the chargeable consideration which consists of rent.

(5) Regulations under sub-paragraph (4) must specify—

(a) a tax band for which the applicable tax rate is 0% (““the RL zero rate band””),

(b) two or more tax bands above the RL zero rate band,

(c) the tax rate for each band above the RL zero rate band so that the rate for each band is higher than the rate for the band below it, and

(d) a date on which the tax bands and tax rates apply in relation to transactions with an effective date on or after that date.

(6) Regulations under sub-paragraph (4) may specify—

(a) different tax bands and tax rates in respect of different categories of acquisition of a residential lease;

(b) different dates under sub-paragraph (5)(d) in respect of each specified tax band or tax rate.

Commencement Information

I111 Sch. 6 para. 27 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tax rates and bands: rent element of non-residential and mixed leases E+W

28 (1) The Welsh Ministers must by regulations specify the tax bands and the percentage tax rates for each band applicable to chargeable consideration which consists of rent in cases of the acquisition of a non-residential lease or mixed lease. E+W

(2) Regulations under sub-paragraph (1) must specify—

(a) a tax band for which the applicable tax rate is 0% (““the NRL zero rate band””),

(b) two or more tax bands above the NRL zero rate band,

(c) the tax rate for each band above the NRL zero rate band so that the rate for each band is higher than the rate for the band below it, and

(d) a date on which the tax bands and tax rates apply in relation to transactions with an effective date on or after that date.

(3) Regulations under sub-paragraph (1) may specify—

(a) different tax bands and tax rates in respect of different categories of acquisition of a non-residential lease or mixed lease;

(b) different dates under sub-paragraph (2)(d) in respect of each specified tax band or tax rate.

Commencement Information

I112 Sch. 6 para. 28 in force at 18.10.2017 by S.I. 2017/953, art. 2(g)(i)

Calculation of tax chargeable in respect of rent: non-residential and mixed leases E+W

29 E+W In the case of the acquisition of a non-residential lease or mixed lease, the amount of tax chargeable on so much of the chargeable consideration as consists of rent is to be calculated as follows (unless paragraph 30 (linked transactions) applies).

• Step 1 Calculate the net present value (the ““NPV””) of the rent payable over the term of the lease (see paragraph 31).

• Step 2 For each tax band applicable to the acquisition, multiply so much of the NPV as falls within the band by the tax rate for that band.

• Step 3 Calculate the sum of the amounts reached under Step 2. The result is the amount of tax chargeable in respect of rent.

Commencement Information

I113 Sch. 6 para. 29 in force at 1.4.2018 by S.I. 2018/34, art. 3

Calculation of tax chargeable in respect of rent: linked transactions E+W

30 E+W Where the acquisition of a non-residential lease or mixed lease is one of a number of linked transactions for which the chargeable consideration consists of or includes rent, the amount of tax chargeable in respect of the rent is to be calculated as follows.

• Step 1 Calculate the total of the net present values (the ““TNPV””) of the rent payable over the terms of all the linked leases (see paragraph 31).

• Step 2 For each tax band applicable to the acquisition, multiply so much of the TNPV as falls within the band by the tax rate for that band.

• Step 3 Calculate the sum of the amounts reached under Step 2. The result is the total tax chargeable in respect of rent.

• Step 4 Divide the NPV of the rent payable over the term of the lease in question by the TNPV.

• Step 5 Multiply the total tax chargeable in respect of rent by the fraction reached under Step 4. The result is the amount of tax chargeable in respect of rent for the lease in question.

Commencement Information

I114 Sch. 6 para. 30 in force at 1.4.2018 by S.I. 2018/34, art. 3

Net present value E+W

31 E+W The NPV of the rent payable over the term of a lease is calculated by applying the following formula—

Figure 8 where—

r_i is the rent payable in respect of year i,

i is the first, second, third etc. year of the term of the lease,

n is the term of the lease, and

T is the temporal discount rate (see paragraph 32).

Commencement Information

I115 Sch. 6 para. 31 in force at 1.4.2018 by S.I. 2018/34, art. 3

Temporal discount rate E+W

32 E+W For the purposes of paragraph 31 the ““temporal discount rate”” is 3.5% or such other rate as the Welsh Ministers may by regulations specify.

Commencement Information

I116 Sch. 6 para. 32 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tax chargeable in respect of consideration other than rent: general E+W

33 (1) Where in the case of an acquisition of a lease there is chargeable consideration other than rent, the provisions of this Act apply in relation to that consideration as in relation to other chargeable consideration (but see paragraphs 34 and 35). E+W

(2) Tax chargeable under this Part of this Schedule in respect of rent is in addition to any tax chargeable under any provision of this Act in respect of consideration other than rent.

Commencement Information

I117 Sch. 6 para. 33 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tax chargeable in respect of consideration other than rent: no zero rate band for non-residential leases E+W

34 (1) This paragraph applies in the case of an acquisition of a non-residential lease where— E+W

(a) there is chargeable consideration other than rent, and

(b) section 27 (amount of tax chargeable: transactions which are not linked) or 28 (amount of tax chargeable: linked transactions) applies to the acquisition.

(2) If the relevant rent is at least the specified amount, the zero rate band does not apply in relation to the consideration other than rent and, accordingly, any case which would have fallen within that band is treated as falling within the next tax band.

Commencement Information

I118 Sch. 6 para. 34 in force at 1.4.2018 by S.I. 2018/34, art. 3

Tax chargeable in respect of consideration other than rent: mixed leases E+W

35 (1) This paragraph applies in the case of an acquisition of a mixed lease where— E+W

(a) there is chargeable consideration other than rent, and

(b) the relevant rent attributable, on a just and reasonable apportionment, to the land which is not residential property is at least the specified amount.

(2) For the purpose of determining the amount of tax chargeable in relation to the consideration other than rent, the transaction (or where it is one of a number of linked transactions, that set of transactions) is treated as if it were two separate but linked transactions (or two separate sets of linked transactions which are themselves linked) namely—

(a) one whose subject-matter consists of all the land that is residential property (and section 28 (amount of tax chargeable: linked transactions) applies accordingly), and

(b) one whose subject-matter consists of all the land that is not residential property (and that section as modified by paragraph 34 applies accordingly).

(3) For that purpose, the chargeable consideration attributable to each of those separate transactions (or sets of linked transactions) is the chargeable consideration so attributable on a just and reasonable basis.

Commencement Information

I119 Sch. 6 para. 35 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relevant rent E+W

36 (1) In paragraphs 34 and 35— E+W

(a) “"the relevant rent”” means—

(i) the annual rent in relation to the transaction in question, or

(ii) if that transaction is one of a number of linked transactions for which the chargeable consideration consists of or includes rent, the total of the annual rents in relation to all of those transactions;

(b) “"the specified amount”” means an amount of relevant rent specified by the Welsh Ministers by regulations.

(2) In sub-paragraph (1)(a) “"the annual rent”” means—

(a) the average annual rent over the term of the lease, or

(b) if—

(i) different amounts of rent are payable for different parts of the term, and

(ii) those amounts (or any of them) are ascertainable at the effective date of the transaction,

the average annual rent over the term for which the highest ascertainable rent is payable.

Commencement Information

I120 Sch. 6 para. 36(1)(a)(2) in force at 1.4.2018 by S.I. 2018/34, art. 3

I121 Sch. 6 para. 36(1)(b) in force at 18.10.2017 for specified purposes by S.I. 2017/953, art. 2(g)(ii)

I122 Sch. 6 para. 36(1)(b) in force at 1.4.2018 in so far as not already in force by S.I. 2018/34, art. 3

Power to amend or repeal paragraphs 34 to 36 E+W

37 E+W The Welsh Ministers may by regulations amend or repeal paragraphs 34 to 36.

Commencement Information

I123 Sch. 6 para. 37 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 41(1))

SCHEDULE 7 E+W PARTNERSHIPS

PART 1 E+W INTRODUCTORY

Overview E+W

1 E+W This Schedule makes provision about the application of this Act and TCMA in relation to partnerships.

Commencement Information

I124 Sch. 7 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

2 E+W This Schedule is arranged as follows—

(a) Part 2 makes general provision about the treatment of partnerships;

(b) Part 3 makes provision about ordinary transactions involving a partnership;

(c) Part 4 makes provision about transactions involving transfers to a partnership from a partner or certain other persons;

(d) Part 5 makes provision about transactions involving transfers from a partnership to a partner or certain other persons;

(e) Part 6 makes provision about transactions between partnerships and about transactions involving a partnership consisting wholly of bodies corporate;

(f) Part 7 makes provision about transfers to or from a partnership where the chargeable consideration includes rent;

(g) Part 8 makes provision about transfers of interest in, and transactions involving, property investment partnerships;

(h) Part 9 makes provision about the application to certain transactions involving partnerships of provisions of this Act relating to exemptions and reliefs, of certain provisions of TCMA and about the notification of such transactions;

(i) Part 10 defines expressions used in this Schedule.

Commencement Information

I125 Sch. 7 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 2 E+W GENERAL PROVISIONS

Partnerships E+W

3 E+W In this Act, a “"partnership”” means—

(a) a partnership within the Partnership Act 1890 (c. 39);

(b) a limited partnership registered under the Limited Partnerships Act 1907 (c. 24);

(c) a limited liability partnership formed under the Limited Liability Partnerships Act 2000 (c. 12);

(d) a firm or entity of similar character to any of those mentioned above formed under the law of a country or territory outside the United Kingdom.

Commencement Information

I126 Sch. 7 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Chargeable interests treated as held by partners etc. E+W

4 (1) For the purposes of this Act— E+W

(a) a chargeable interest held by or on behalf of a partnership is treated as held by or on behalf of the partners, and

(b) a land transaction entered into for the purposes of a partnership is treated as entered into by or on behalf of the partners,

and not by or on behalf of the partnership as such.

(2) Sub-paragraph (1) applies despite a partnership being regarded as a legal person, or as a body corporate, under the law of the country or territory under which it is formed.

Commencement Information

I127 Sch. 7 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisition of interest in partnership not chargeable except as specially provided E+W

5 E+W The acquisition of an interest in a partnership is not a chargeable transaction despite the partnership property including land, except as provided by—

(a) paragraph 18 (transfer of interest pursuant to earlier arrangements);

(b) paragraph 34 (transfer of interest in property-investment partnership).

Commencement Information

I128 Sch. 7 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Continuity of partnerships E+W

6 E+W For the purposes of this Act, a partnership is treated as the same partnership despite a change in membership if any person who was a member before the change remains a member after the change.

Commencement Information

I129 Sch. 7 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Partnership not to be regarded as a unit trust scheme etc. E+W

7 E+W For the purposes of this Act, a partnership is not to be regarded as a unit trust scheme or an open-ended investment company.

Commencement Information

I130 Sch. 7 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 3 E+W ORDINARY PARTNERSHIP TRANSACTIONS

Introduction E+W

8 E+W This Part of this Schedule applies to land transactions entered into as buyers by or on behalf of the members of a partnership, other than transactions within Parts 4 to 8 of this Schedule.

Commencement Information

I131 Sch. 7 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Responsibility of partners E+W

9 (1) Anything required or authorised to be done under this Act or TCMA by or in relation to the buyer in the transaction must be done by or in relation to all the responsible partners. E+W

(2) The responsible partners in relation to a transaction are—

(a) the persons who are partners at the effective date of the transaction, and

(b) any person who becomes a member of the partnership after the effective date of the transaction.

(3) This paragraph has effect subject to paragraph 10 (representative partners).

Commencement Information

I132 Sch. 7 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

Representative partners E+W

10 (1) Anything required or authorised to be done under this Act or TCMA in connection with the transaction by or in relation to the responsible partners may instead be done by or in relation to any representative partner or partners. E+W

(2) This includes making the declaration required by section 53 (declaration that return is complete and correct).

(3) A “"representative partner”” means a partner nominated by a majority of the partners to act as the representative of the partnership for the purposes of this Act.

(4) Any such nomination, or the revocation or such a nomination, has effect only after notice of the nomination, or revocation, has been given to WRA.

Commencement Information

I133 Sch. 7 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

Joint and several liability of responsible partners E+W

11 (1) Where the responsible partners are liable to pay— E+W

(a) tax or late payment interest on that tax,

(b) an amount under section 55 of TCMA (recovery of excessive repayment) or late payment interest on that amount, or

(c) a penalty under Part 5 of TCMA or late payment interest on that penalty,

the liability is a joint and several liability of those partners.

(2) No amount may be recovered under sub-paragraph (1)(a) or (b) from a person who did not become a responsible partner until after the effective date of the transaction in respect of which the tax is payable.

(3) No amount may be recovered under sub-paragraph (1)(c) from a person who did not become a partner until after the relevant time.

(4) The relevant time is—

(a) in relation to so much of a penalty as is payable in respect of any day, or to late payment interest on so much of a penalty as is so payable, the beginning of that day;

(b) in relation to any other penalty, or to late payment interest on the penalty, the time when the act or omission occurred that caused the penalty to become payable.

(5) In this paragraph, “"late payment interest”” means late payment interest under Part 6 of TCMA.

Commencement Information

I134 Sch. 7 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 4 E+W TRANSACTIONS INVOLVING TRANSFERS TO A PARTNERSHIP

Introduction E+W

12 E+W In this Part of this Schedule—

(a) paragraphs 13 to 17 make provisions about the treatment of certain land transactions involving the transfer of a chargeable interest to a partnership, and

(b) paragraphs 18 and 19 provide for certain events following such transactions to be treated as land transactions.

Commencement Information

I135 Sch. 7 para. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest to a partnership: general E+W

13 (1) This paragraph applies where— E+W

(a) a partner transfers a chargeable interest to the partnership,

(b) a person transfers a chargeable interest to a partnership in return for an interest in the partnership, or

(c) a person connected with—

(i) a partner, or

(ii) a person who becomes a partner as a result of or in connection with the transfer,

transfers a chargeable interest to the partnership.

(2) This paragraph applies whether the transfer is in connection with the formation of the partnership or is a transfer to an existing partnership.

(3) The chargeable consideration for the transaction is taken to be equal to—

Figure 9 where—

MV is the market value of the chargeable interest transferred, and

SLP is the sum of the lower proportions.

(4) Paragraph 14 provides for determining the sum of the lower proportions.

(5) Part 7 applies if the whole or part of the chargeable consideration for the transaction is rent.

(6) Paragraphs 9 to 11 (responsibility of partners) have effect in relation to a transaction to which this paragraph applies, but the responsible partners are—

(a) those who were partners immediately before the transfer and who remain partners after the transfer, and

(b) any person becoming a partner as a result of, or in connection with, the transfer.

(7) This paragraph has effect subject to any election under paragraph 36.

Commencement Information

I136 Sch. 7 para. 13 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest to a partnership: sum of the lower proportions E+W

14 E+W The sum of the lower proportions in relation to a transaction to which paragraph 13 applies is determined as follows—

• Step 1 Identify the relevant owner or owners (see paragraph 15).

• Step 2 For each relevant owner, identify the corresponding partner or partners (see paragraph 16). If there is no relevant owner with a corresponding partner, the sum of the lower proportions is zero.

• Step 3 For each relevant owner, find the proportion of the chargeable interest to which the owner was entitled immediately before the transaction. Apportion that proportion between any one or more of the relevant owner's corresponding partners.

• Step 4 Find the lower of the following (““the lower proportion””) for each corresponding partner—

  (a)

  the proportion of the chargeable interest attributable to the partner (see paragraph 17);

  (b)

  the partner's partnership share immediately after the transaction.

• Step 5 Add together the lower proportions of each corresponding partner. The result is the sum of the lower proportions.

Commencement Information

I137 Sch. 7 para. 14 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relevant owner E+W

15 (1) For the purposes of paragraph 14 (see Step 1), a person is a relevant owner if— E+W

(a) immediately before the transaction, the person was entitled to a proportion of the chargeable interest, and

(b) immediately after the transaction, the person is a partner or is connected with a partner.

(2) For the purposes of paragraph 14 and this paragraph, persons who are entitled to a chargeable interest as beneficial joint tenants are taken to be entitled to the chargeable interest as beneficial tenants in common in equal shares.

Commencement Information

I138 Sch. 7 para. 15 in force at 1.4.2018 by S.I. 2018/34, art. 3

Corresponding partner E+W

16 (1) For the purposes of paragraph 14 (see Step 2), a person is a corresponding partner in relation to a relevant owner if, immediately after the transaction— E+W

(a) the person is a partner, and

(b) the person is the relevant owner or is an individual connected with the relevant owner.

(2) For the purpose of sub-paragraph (1)(b), a company is to be treated as an individual connected with the relevant owner if it—

(a) holds property as trustee, and

(b) is connected with the relevant owner only because of section 1122(6) of the Corporation Tax Act 2010 (c. 4) (as it has effect with the omission of subsection (6)(c) to (e)).

Commencement Information

I139 Sch. 7 para. 16 in force at 1.4.2018 by S.I. 2018/34, art. 3

Proportion of chargeable interest attributable to corresponding partner E+W

17 E+W For the purposes of paragraph 14 (Step 4), the proportion of the chargeable interest attributable to a corresponding partner is—

(a) if the partner is a corresponding partner in relation to only one relevant owner, the proportion (if any) of the chargeable interest apportioned to that partner (at Step 3) in respect of that owner;

(b) if the partner is a corresponding partner in relation to more than one relevant owner, the sum of the proportions (if any) of the chargeable interest apportioned to that partner (at Step 3) in respect of each of those owners.

Commencement Information

I140 Sch. 7 para. 17 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of partnership interest pursuant to tax avoidance arrangements E+W

18 (1) This paragraph applies where— E+W

(a) there is a transfer of a chargeable interest to a partnership (““the land transfer””);

(b) the land transfer falls within paragraph 13(1);

(c) there is subsequently a transfer of an interest in the partnership (““the partnership transfer””);

(d) the partnership transfer is made—

(i) if the land transfer falls within paragraph 13(1)(a) or (b), by the person who makes the land transfer;

(ii) if the land transfer falls within paragraph 13(1)(c), by the partner concerned;

(e) the partnership transfer is made pursuant to arrangements which are, or form part of, tax avoidance arrangements that were in place at the time of the land transfer;

(f) the partnership transfer is not (apart from this paragraph) a chargeable transaction.

(2) For the purposes of this Act, the partnership transfer—

(a) is taken to be a land transaction, and

(b) is a chargeable transaction.

(3) The partners are taken to be the buyers in the transaction.

(4) The chargeable consideration for the transaction is taken to be equal to a proportion of the market value, as at the date of the transaction, of the interest transferred by the land transfer.

(5) That proportion is—

(a) if the person making the partnership transfer is not a partner immediately after the partnership transfer, that person's partnership share immediately before that transfer;

(b) if the person is a partner immediately after the partnership transfer, the difference between the person's partnership share before and after that transfer.

(6) The partnership transfer and the land transfer are taken to be linked transactions.

(7) Paragraphs 9 to 11 (responsibility of partners) have effect in relation to the partnership transfer, but the responsible partners are—

(a) those who were partners immediately before the transfer and who remain partners after the transfer, and

(b) any person becoming a partner as a result of, or in connection with, the transfer.

(8) In this paragraph, “"tax avoidance arrangements”” has the meaning given by section 31.

Modifications etc. (not altering text)

C6 Sch. 7 para. 18 modified (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 7

Commencement Information

I141 Sch. 7 para. 18 in force at 1.4.2018 by S.I. 2018/34, art. 3

Withdrawal of money etc. from partnership after transfer of chargeable interest E+W

19 (1) This paragraph applies where— E+W

(a) there is a transfer of a chargeable interest to a partnership (““the land transfer””);

(b) the land transfer falls within paragraph 13(1);

(c) during the period of 3 years beginning with the effective date of the land transfer, a qualifying event within sub-paragraph (2) occurs;

(d) the qualifying event is, or forms part of, a tax avoidance arrangement;

(e) at the time of the qualifying event, an election has not been made in respect of the land transfer under paragraph 36.

(2) A qualifying event is—

(a) a withdrawal from the partnership of money or money's worth which does not represent income profit, by the relevant person—

(i) withdrawing capital from the relevant person's capital account,

(ii) reducing the relevant person's interest in the partnership, or

(iii) ceasing to be a partner, or

(b) in a case where the relevant person has made a loan to the partnership—

(i) the repayment (to any extent) by the partnership of the loan, or

(ii) a withdrawal by the relevant person from the partnership of money or money's worth which does not represent income profit.

(3) For the purposes of sub-paragraph (2), the relevant person is—

(a) where the land transfer falls within 13(1)(a) or (b), the person who makes the land transfer, and

(b) where the land transfer falls within paragraph 13(1)(c), the partner concerned or a person connected with that partner.

(4) For the purposes of this Act, the qualifying event—

(a) is taken to be a land transaction, and

(b) is a chargeable transaction.

(5) The partners are taken to be the buyers under the transaction.

(6) Paragraphs 9 to 11 (responsibility of partners) have effect in relation to the transaction.

(7) The chargeable consideration for the transaction is taken to be—

(a) in a case falling within sub-paragraph (2)(a), equal to the value of the money or money's worth withdrawn from the partnership;

(b) in a case falling within sub-paragraph (2)(b)(i), equal to the amount repaid;

(c) in a case falling within sub-paragraph (2)(b)(ii), equal to so much of the value of the money or money's worth withdrawn from the partnership as does not exceed the amount of the loan.

(8) But the chargeable consideration determined under sub-paragraph (7) is not to exceed the market value, as at the effective date of the land transfer, of the chargeable interest transferred by the land transfer, reduced by any amount previously chargeable to tax.

(9) Where—

(a) a qualifying event gives rise to a charge under this paragraph, and

(b) the same event gives rise to a charge under paragraph 34 (transfer of interest in property investment partnership),

the amount of the charge under this paragraph is reduced (but not below zero) by the amount of the charge under that paragraph.

(10) In this paragraph, “"tax avoidance arrangement”” has the meaning given by section 31.

Modifications etc. (not altering text)

C7 Sch. 7 para. 19 modified (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 8

Commencement Information

I142 Sch. 7 para. 19 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 5 E+W TRANSACTIONS INVOLVING TRANSFERS FROM A PARTNERSHIP

Introduction E+W

20 E+W This Part of this Schedule makes provision about the treatment of certain land transactions involving the transfer of a chargeable interest from a partnership.

Commencement Information

I143 Sch. 7 para. 20 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest from a partnership: general E+W

21 (1) This paragraph applies where a chargeable interest is transferred— U.K.

(a) from a partnership to a person who is or has been one of the partners, or

(b) from a partnership to a person connected with a person who is or has been one of the partners.

(2) The chargeable consideration for the transaction is (subject to paragraph 30) taken to be equal to—

Figure 10 where—

MV is the market value of the interest transferred, and

SLP is the sum of the lower proportions.

(3) Paragraph 22 provides for determining the sum of the lower proportions.

(4) Part 7 applies if the whole or part of the chargeable consideration for the transaction is rent.

(5) For the purposes of this paragraph, property that was partnership property before the partnership was dissolved or otherwise ceased to exist is to be treated as remaining partnership property until it is distributed.

(6) This paragraph has effect subject to any election under paragraph 36.

Commencement Information

I144 Sch. 7 para. 21 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest from a partnership: sum of the lower proportions E+W

22 E+W The sum of the lower proportions in relation to a transaction to which paragraph 21 applies is determined as follows—

• Step 1 Identify the relevant owner or owners (see paragraph 23).

• Step 2 For each relevant owner, identify the corresponding partner or partners (see paragraph 24). If there is no relevant owner with a corresponding partner, the sum of the lower proportions is zero.

• Step 3 For each relevant owner, find the proportion of the chargeable interest to which that owner is entitled immediately after the transaction. Apportion that proportion between any one or more of the relevant owner's corresponding partners.

• Step 4 Find the lower of the following (““the lower proportion””) for each corresponding partner—

  (a)

  the proportion of the chargeable interest attributable to the partner (see paragraph 25);

  (b)

  the partnership share attributable to the partner (see paragraphs 26 and 27).

• Step 5 Add together the lower proportions of each corresponding partner. The result is the sum of the lower proportions.

Commencement Information

I145 Sch. 7 para. 22 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relevant owner E+W

23 (1) For the purposes of paragraph 22 (see Step 1), a person is a relevant owner if— E+W

(a) immediately after the transaction, that person is entitled to a proportion of the chargeable interest, and

(b) immediately before the transaction, that person was a partner or connected with a partner.

(2) For the purposes of paragraph 22 and this paragraph, persons who are entitled to a chargeable interest as beneficial joint tenants are to be taken to be entitled to the chargeable interest as beneficial tenants in common in equal shares.

Commencement Information

I146 Sch. 7 para. 23 in force at 1.4.2018 by S.I. 2018/34, art. 3

Corresponding partner E+W

24 (1) For the purposes of paragraph 22 (see Step 2), a person is a corresponding partner in relation to a relevant owner if, immediately before the transaction— E+W

(a) the person was a partner, and

(b) the person was the relevant owner or was an individual connected with the relevant owner.

(2) For the purpose of sub-paragraph (1)(b), a company is to be treated as an individual connected with the relevant owner if it—

(a) holds property as trustee, and

(b) is connected with the relevant owner only because of section 1122(6) of the Corporation Tax Act 2010 (c. 4) (as it has effect with the omission of subsection (6)(c) to (e)).

Commencement Information

I147 Sch. 7 para. 24 in force at 1.4.2018 by S.I. 2018/34, art. 3

Proportion of chargeable interest attributable to corresponding partner E+W

25 E+W For the purposes of paragraph 22 (see Step 4), the proportion of the chargeable interest attributable to a corresponding partner is—

(a) if the partner is a corresponding partner in relation to only one relevant owner, the proportion (if any) of the chargeable interest apportioned to that partner (at Step 3) in respect of that owner;

(b) if the partner is a corresponding partner in relation to more than one relevant owner, the sum of the proportions (if any) of the chargeable interest apportioned to that partner (at Step 3) in respect of each of those owners.

Commencement Information

I148 Sch. 7 para. 25 in force at 1.4.2018 by S.I. 2018/34, art. 3

Partnership share attributable to corresponding partner: effective date of transfer before 20 October 2003 E+W

26 (1) This paragraph applies for the purposes of paragraph 22 (see Step 4) where the effective date of the transfer of the relevant chargeable interest to the partnership was before 20 October 2003. E+W

(2) Where this paragraph applies, the partnership share attributable to a corresponding partner is to be determined, as follows—

• Step 1 Find the partner's actual partnership share on the relevant date. The relevant date—

  (a)

  if the partner was a partner on 19 October 2003, is that date;

  (b)

  if the partner became a partner after that date, is the date on which the partner became a partner.

• Step 2 Add to that partnership share any increases in the partner's partnership share which—

  (a)

  occur in the period beginning with the day after the relevant date and ending immediately before the transaction to which paragraph 22 applies, and

  (b)

  count for this purpose (see sub-paragraph (5)).

  The result is the increased partnership share.

• Step 3 Deduct from the increased partnership share any decreases in the partner's partnership share which occur in the period beginning with the day after the relevant date and ending immediately before the transaction to which paragraph 22 applies. The result is the partnership share attributable to the partner.

(3) If the effect of applying Step 3 would be to reduce the partnership share attributable to the partner below zero, the partnership share attributable to the partner is zero.

(4) If the partner ceased to be a partner before 19 October 2003, the partnership share attributable to the partner is zero.

(5) An increase counts for the purpose of Step 2 only if the instrument by which the transfer was effected has been stamped with ad valorem stamp duty.

(6) In this paragraph and paragraph 27, the relevant chargeable interest is—

(a) the chargeable interest which ceases to be partnership property as a result of the transaction to which paragraph 22 applies, or

(b) where the transaction to which paragraph 22 applies is the creation of a chargeable interest, the chargeable interest out of which that interest is created.

Commencement Information

I149 Sch. 7 para. 26 in force at 1.4.2018 by S.I. 2018/34, art. 3

Partnership share attributable to corresponding partner: effective date of transfer on or after 20 October 2003 E+W

27 (1) This paragraph applies for the purposes of paragraph 22 (see Step 4) where the effective date of the transfer of the relevant chargeable interest to the partnership was on or after 20 October 2003. E+W

(2) Where this paragraph applies and neither of the conditions in sub-paragraph (3) is met, the partnership share attributable to the partner is zero.

(3) The conditions are—

(a) the instrument by which the transfer was effected has been stamped with ad valorem stamp duty;

(b) any land transaction tax or, as the case may be, stamp duty land tax payable in respect of the transfer has been paid.

(4) Where this paragraph applies, and one of the conditions in sub-paragraph (3) is met, the partnership share attributable to the partner is determined as follows—

• Step 1 Find the partner's actual partnership share on the relevant date. The relevant date—

  (a)

  if the partner was a partner on the effective date of the transfer of the relevant chargeable interest to the partnership, is that date;

  (b)

  if the partner became a partner after that date, is the date on which the partner became a partner.

• Step 2 Add to that partnership share any increases in the partner's partnership share which—

  (a)

  occur in the period beginning with the day after the relevant date and ending immediately before the transaction to which paragraph 22 applies, and

  (b)

  count for this purpose (see sub-paragraph (7)).

  The result is the increased partnership share.

• Step 3 Deduct from the increased partnership share any decreases in the partner's partnership share which occur in the period starting on the day after the relevant date and ending immediately before the transaction to which paragraph 22 applies. The result is the partnership share attributable to the partner.

(5) If the effect of applying Step 3 would be to reduce the partnership share attributable to the partner below zero, the partnership share attributable to the partner is zero.

(6) If the partner ceased to be a partner before the effective date of the transfer of the relevant chargeable interest to the partnership, the partnership share attributable to the partner is zero.

(7) An increase counts for the purpose of Step 2 only if—

(a) where the transfer which resulted in the increase took place on or before 22 July 2004, the instrument by which the transfer was effected has been stamped with ad valorem stamp duty;

(b) where the transfer which resulted in the increase took place after that date, any land transaction tax or, as the case may be, stamp duty land tax payable in respect of the transfer has been paid.

Commencement Information

I150 Sch. 7 para. 27 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 6 E+W OTHER PARTNERSHIP TRANSACTIONS

Introduction E+W

28 E+W This Part of this Schedule makes provision about—

(a) transactions involving a transfer from a partnership to a partnership, and

(b) transactions where the partnership consists entirely of bodies corporate.

Commencement Information

I151 Sch. 7 para. 28 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest from a partnership to a partnership E+W

29 (1) This paragraph applies where— E+W

(a) there is a transfer of a chargeable interest from a partnership to a partnership, and

(b) the transfer is both—

(i) a transaction to which paragraph 13 (transfer of chargeable interest to a partnership) applies, and

(ii) a transaction to which paragraph 21 (transfer of chargeable interest from a partnership) applies.

(2) Paragraphs 13(3) and 21(2) do not apply.

(3) The chargeable consideration for the transaction is taken to be what it would have been if paragraph 13(3) had applied or, if greater, what it would have been if paragraph 21(2) had applied.

(4) Where the whole or part of the chargeable consideration for the transaction is rent—

(a) paragraph 31 does not apply;

(b) the tax chargeable in respect of so much of the chargeable consideration as consists of rent is taken to be the greater of—

(i) what the tax chargeable would have been if paragraph 31 applied in relation to a transaction to which paragraph 13 applies, or

(ii) what the tax chargeable would have been if paragraph 31 applied in relation to a transaction to which paragraph 21 applies;

(c) the disapplication of the zero rate band provided for by paragraph 34 of Schedule 6 has effect if it would have had effect if paragraph 31(6) of this Schedule had applied.

Commencement Information

I152 Sch. 7 para. 29 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest from a partnership consisting wholly of bodies corporate E+W

30 (1) This paragraph applies where— E+W

(a) there is a transaction to which paragraph 21 applies;

(b) immediately before the transaction all the partners are bodies corporate;

(c) the sum of the lower proportions is 75 or more.

(2) Paragraphs 21 and 31 have effect with the following modifications.

(3) Paragraph 21 has effect as if for sub-paragraphs (2) and (3) there were substituted—

“(2) The chargeable consideration for the transaction is taken to be equal to the market value of the interest transferred.”

(4) Paragraph 31(2) has effect as if for ““sub-paragraphs (3) to (6)”” there were substituted “ sub-paragraph (5) ”.

(5) Paragraph 31 has effect as if sub-paragraphs (3), (4), (6) and (7) were omitted.

Commencement Information

I153 Sch. 7 para. 30 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 7 E+W APPLICATION OF PARTS 5 AND 6 IN RELATION TO LEASES

Transfer of chargeable interest to or from a partnership: chargeable consideration including rent E+W

31 (1) This paragraph applies in relation to a transaction to which paragraph 13 or 21 applies where the whole or part of the chargeable consideration for the transaction is rent. E+W

(2) Part 5 of Schedule 6 (leases: calculation of tax chargeable) has effect with the modifications set out in sub-paragraphs (3) to (6).

(3) Paragraph 29 has effect as if—

(a) in Step 1, for ““the net present value (the ““NPV””) of the rent payable over the term of the lease”” there were substituted “ the relevant chargeable proportion of the net present value (the ““NPV””) of the rent payable over the term of the lease ”;

(b) in Step 2, for ““the NPV”” there were substituted “ the relevant chargeable proportion ”.

(4) Paragraph 30 has effect as if—

(a) in Step 1, for ““the total of the net present values (the ““TNPV””) of the rent payable over the terms of all the linked leases”” there were substituted “ the total of the relevant chargeable proportions of the net present values (the ““TNPV””) of the rent payable over the terms of all the leases ”;

(b) in Step 2, for ““the TNPV”” there were substituted “ the total of the relevant chargeable proportions ”;

(c) in Step 4, for ““the NPV”” substitute “ the relevant chargeable proportion ” and for ““the TNPV”” substitute “ the total of the relevant chargeable proportions ”.

(5) Paragraph 33(1) has effect as if for ““paragraphs 34 and 35”” there were substituted “ paragraphs 13 and 21 of Schedule 7 and paragraphs 34 and 35 of this Schedule ”.

(6) Paragraph 36(1)(a) has effect as if—

(a) in sub-paragraph (i) for ““the annual rent”” there were substituted “ the relevant chargeable proportion of the annual rent ”;

(b) in sub-paragraph (ii) for ““the total of the annual rents”” there were substituted “ the relevant chargeable proportion of the total of the annual rents ”.

(7) For the purposes of paragraphs 29, 30 and 36 of Schedule 6 as modified by this paragraph, the relevant chargeable proportion is—

Figure 11 where SLP is the sum of the lower proportions.

(8) The following paragraphs apply for determining the sum of the lower proportions—

(a) in the case of a transaction to which paragraph 13 applies, paragraph 14, and

(b) in the case of a transaction to which paragraph 21 applies, paragraph 22.

(9) In the case of a transaction to which paragraph 21 applies, this paragraph is subject to paragraph 30.

Commencement Information

I154 Sch. 7 para. 31 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 8 E+W TRANSFERS INVOLVING PROPERTY-INVESTMENT PARTNERSHIPS

Introduction E+W

32 E+W This Part of this Schedule makes provision—

(a) about certain transactions involving the transfer of an interest in a property-investment partnership, and

(b) for a property investment partnership to elect to disapply paragraph 13 in relation to certain land transactions.

Commencement Information

I155 Sch. 7 para. 32 in force at 1.4.2018 by S.I. 2018/34, art. 3

Meaning of property investment partnerships E+W

33 (1) In this Schedule, a ““property-investment partnership”” is a partnership whose sole or main activity is investing or dealing in chargeable interests (whether or not that activity involves the carrying out of construction operations on the land in question). E+W

(2) In sub-paragraph (1), “"construction operations”” has the same meaning as in Chapter 3 of Part 3 of the Finance Act 2004 (c. 12)(see section 74 of that Act).

(3) For the purposes of sub-paragraph (1), “"chargeable interests”” includes any interest which would be a chargeable interest but for the fact that it relates to land outside Wales.

Commencement Information

I156 Sch. 7 para. 33 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of interest in property-investment partnership E+W

34 (1) This paragraph applies where— E+W

(a) there is a transfer of an interest in a property-investment partnership, and

(b) the relevant partnership property includes a chargeable interest.

(2) For the purposes of this Act, the transfer—

(a) is taken to be a land transaction, and

(b) is a chargeable transaction.

(3) The buyer in the transaction is the person who acquires an increased partnership share or, as the case may be, becomes a partner in consequence of the transfer.

(4) The chargeable consideration for the transaction is taken to be equal to a proportion of the market value of the relevant partnership property.

(5) That proportion is—

(a) if the person acquiring the interest in the partnership was not a partner before the transfer, the person's partnership share immediately after the transfer;

(b) if the person was a partner before the transfer, the difference between that person's partnership share before and after the transfer.

(6) The “"relevant partnership property””, in relation to a Type A transfer of an interest in a partnership, is every chargeable interest held as partnership property immediately after the transfer, other than—

(a) any chargeable interest that was transferred to the partnership in connection with the transfer,

(b) a lease to which paragraph 35 (exclusion of market rent leases) applies, and

(c) any chargeable interest that is not attributable economically to the interest in the partnership that is transferred.

(7) The “"relevant partnership property””, in relation to a Type B transfer of an interest in a partnership, is every chargeable interest held as partnership property immediately after the transfer, other than—

(a) any chargeable interest that was transferred to the partnership in connection with the transfer,

(b) a lease to which paragraph 35 (exclusion of market rent leases) applies,

(c) any chargeable interest that is not attributable economically to the interest in the partnership that is transferred,

(d) any chargeable interest that was transferred to the partnership on or before 22 July 2004,

(e) any chargeable interest in respect of whose transfer to the partnership an election has been made under paragraph 36, and

(f) any other chargeable interest whose transfer to the partnership did not fall within paragraph 13(1).

(8) A Type A transfer is—

(a) a transfer that takes the form of arrangements entered into under which—

(i) the whole or part of a partner's interest as partner is acquired by another person (who may be an existing partner), and

(ii) consideration in money or money's worth is given by or on behalf of the person acquiring the interest, or

(b) a transfer that takes the form of arrangements entered into under which—

(i) a person becomes a partner,

(ii) the interest of an existing partner in the partnership is reduced or an existing partner ceases to be a partner, and

(iii) there is a withdrawal of money or money' worth from the partnership by the existing partner mentioned in paragraph (ii) (other than money or money's worth paid from the resources available to the partnership prior to the transfer).

(9) Any other transfer to which this paragraph applies is a Type B transfer.

(10) An interest in respect of the transfer of which this paragraph applies is to be treated as a chargeable interest for the purposes of paragraph 8(2) of Schedule 16 (group relief) to the extent that the relevant partnership property consists of a chargeable interest.

Commencement Information

I157 Sch. 7 para. 34 in force at 1.4.2018 by S.I. 2018/34, art. 3

Exclusion of market rent leases E+W

35 (1) A lease held as partnership property immediately after a transfer of an interest in the partnership is not relevant partnership property for the purposes of paragraph 34(6) or (7) if the following four conditions are met. E+W

(2) Condition 1 is that—

(a) no chargeable consideration other than rent has been given in respect of the grant of the lease, and

(b) no arrangements are in place at the time of the transfer for any chargeable consideration other than rent to be given in respect of the grant of the lease.

(3) Condition 2 is that the rent payable under the lease as granted was a market rent at the time of the grant.

(4) Condition 3 is that—

(a) the term of the lease is 5 years or less, or

(b) if the term of the lease is more than 5 years—

(i) the lease provides for the rent payable under it to be reviewed at least once in every 5 years of the term, and

(ii) the rent payable under the lease as a result of a review is required to be a market rent at the review date.

(5) Condition 4 is that there has been no change to the lease since it was granted which is such that, immediately after the change has effect, the rent payable under the lease is less than a market rent.

(6) The market rent of a lease at any time is the rent which the lease might reasonably be expected to fetch at that time in the open market.

(7) A review date is a date from which the rent determined as a result of a rent review is payable.

Commencement Information

I158 Sch. 7 para. 35 in force at 1.4.2018 by S.I. 2018/34, art. 3

Election by property-investment partnership to disapply paragraph 13 E+W

36 (1) Paragraph 13 does not apply to a transfer of a chargeable interest to a property-investment partnership if the buyer in the transaction elects for that paragraph not to apply. E+W

(2) Where an election under this paragraph is made in respect of a transaction—

(a) paragraph 21 (transfer of chargeable interest from a partnership: general) is also disapplied,

(b) the chargeable consideration for the transaction is taken to be the market value of the chargeable interest transferred, and

(c) the transaction falls within Part 3 (ordinary partnership transactions) of this Schedule.

(3) An election under this paragraph must be included in the return made in respect of the transaction, or in an amendment of that return (for provision as to amendment of returns, see section 41 of TCMA).

(4) The election is irrevocable so that the return may not be amended so as to withdraw the election.

(5) Where an election under this paragraph in respect of a transaction (the ““main transaction””) is made in an amendment of a return—

(a) the election has effect as if it had been made on the date on which the return was made, and

(b) any return in respect of an affected transaction may be amended (within the period allowed for amendment of that return) to take account of that election.

(6) In sub-paragraph (5), “"affected transaction”” in relation to the main transaction means a transaction—

(a) to which paragraph 34 (transfer of interest in property-investment partnership) applied, and

(b) with an effective date on or after the effective date of the main transaction.

Commencement Information

I159 Sch. 7 para. 36 in force at 1.4.2018 by S.I. 2018/34, art. 3

Partnership interests: application of provisions about exchange E+W

37 (1) Where section 16 (exchanges) applies to the acquisition of an interest in a property-investment partnership in consideration of entering into a land transaction with an existing partner, the interest in the partnership is to be treated as a major interest in land, for the purposes of paragraph 5 of Schedule 4 if the relevant partnership property includes a major interest in land. E+W

(2) In sub-paragraph (1), “"relevant partnership property”” has the meaning given by paragraphs 34(6) or (7) (as appropriate, and as read with paragraph 35).

(3) Where this paragraph applies, paragraph 6 of Schedule 4 (partition etc.: disregard of existing interest) does not apply.

Commencement Information

I160 Sch. 7 para. 37 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 9 E+W APPLICATION OF EXEMPTIONS, RELIEFS, PROVISIONS OF TCMA AND NOTIFICATION PROVISIONS

Introduction E+W

38 E+W In this Part of this Schedule—

(a) paragraph 39 makes provision about the application of exemptions and reliefs to transactions to which this Schedule applies;

(b) paragraphs 40 and 41 make provision about the application of group relief to certain transactions mentioned in Part 4 of this Schedule;

(c) paragraph 42 makes provision about the application of charities relief to certain transfers of interest in a partnership;

(d) paragraph 43 makes provision about the application of certain provisions of TCMA to partnerships;

(e) paragraph 44 makes provision about the notification of certain transfers of interest in a partnership.

Commencement Information

I161 Sch. 7 para. 38 in force at 1.4.2018 by S.I. 2018/34, art. 3

Application of exemptions and reliefs E+W

39 (1) Paragraph 1 of Schedule 3 (exemption of transactions for which there is no chargeable consideration) does not apply to transactions to which paragraph 13, 18, 21 or 34 applies. E+W

(2) But (subject to paragraphs 40 and 42) this Schedule has effect subject to any other provision affording exemption or relief from tax.

Commencement Information

I162 Sch. 7 para. 39 in force at 1.4.2018 by S.I. 2018/34, art. 3

Application of group relief E+W

40 (1) Schedule 16 (group relief) applies to— E+W

(a) a transaction to which paragraph 13 applies, and

(b) a transaction that is a chargeable transaction by virtue of paragraph 18,

with the following modifications.

(2) Paragraph 8 has effect as if—

(a) in sub-paragraph (2)(a), for ““the buyer”” there were substituted “ a partner who was a partner at the effective date of the relieved transaction (““the relevant partner””) ”;

(b) for sub-paragraph (2)(b) there were substituted—

“(b) at the time the relevant partner ceases to be a member of the same group as the seller (“"the relevant time””), a chargeable interest is held by or on behalf of the members of the partnership and that chargeable interest—

(i) was acquired by or on behalf of the partnership under the relieved transaction, or

(ii) is derived from a chargeable interest so acquired,

and has not subsequently been acquired at market value under a chargeable transaction for which group relief was available but was not claimed.”;

(c) in sub-paragraph (4), for the words from ““the transferee company”” to the end there were substituted “ or on behalf of the partnership and to the proportion in which the relevant partner is entitled at the relevant time to share in the income profits of the partnership ”;

(d) in sub-paragraph (5), the definition of ““relevant associated company”” were omitted.

(3) Paragraphs 9 to 14 have effect as if for ““the buyer”” (each time it occurs) there were substituted “ the relevant partner ”.

Commencement Information

I163 Sch. 7 para. 40 in force at 1.4.2018 by S.I. 2018/34, art. 3

Sum of the lower portions: connected company E+W

41 (1) This paragraph applies where in calculating the sum of the lower proportions in relation to a transaction (in accordance with paragraph 14)— E+W

(a) a company (““the connected company””) would have been a corresponding partner of a relevant owner (““the original owner””) but for the fact that, by virtue of paragraph 16(1)(b), Step 2 includes connected persons only if they are individuals, and

(b) the connected company and the original owner are members of the same group.

(2) The charge in respect of the transaction is to be reduced to the amount that would have been payable had the connected company been a corresponding partner of the original owner for the purposes of calculating the sum of the lower proportions.

(3) The provisions of Schedule 16 apply to relief under sub-paragraph (2) as to group relief under paragraph 2(1) of that Schedule, but—

(a) as if paragraph 4(3)(a) were omitted,

(b) as if in paragraph 8(2)(a) for ““the buyer”” there were substituted “ a partner who was, at the effective date of the transaction, a partner and a member of the same group as the transferor (““the relevant partner””) ”, and

(c) with the other modifications specified in paragraph 40.

Commencement Information

I164 Sch. 7 para. 41 in force at 1.4.2018 by S.I. 2018/34, art. 3

Application of charities relief E+W

42 (1) Schedule 18 (charities relief) applies to the transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 18 or 34 with the following modifications. E+W

(2) Paragraph 1(b) has effect as if for ““a buyer in a land transaction”” there were substituted “ a transferee under a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 18 or 34 of Schedule 7, ”.

(3) Paragraph 2 has effect as if—

(a) in sub-paragraph (1), for ““a buyer in a land transaction”” there were substituted “ a transferee under a transfer of an interest in a partnership by virtue of paragraph 18 or 34 of Schedule 7 ”;

(b) in sub-paragraph (1)(a), for ““if C intends to hold the subject-matter of the transaction”” there were substituted “ if every chargeable interest held as partnership property immediately after the transfer is held ”;

(c) sub-paragraph (1)(b) were omitted;

(d) in sub-paragraph (2), for ““C holds the subject-matter of the transaction”” there were substituted “ a chargeable interest held as partnership property is held ”;

(e) after sub-paragraph (2) there were inserted—

“(2A) There is a transfer of an interest in a partnership for the purposes of this Schedule if there is such a transfer for the purposes of Schedule 7 (see paragraph 48 of that Schedule).

(2B) Paragraph 45(1) of Schedule 7 (meaning of references to partnership property) applies for the purposes of this Schedule as it applies for the purposes of that Schedule.”;

(f) in sub-paragraph (4), for ““a buyer in a land transaction”” there were substituted “ a transferee under a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 18 or 34 of Schedule 7 ”;

(g) in sub-paragraph (4)(b), for ““the subject-matter of the transaction”” there were substituted “ any chargeable interest held as partnership property immediately after the transaction ”.

(4) Paragraph 3 has effect as if—

(a) for ““a land transaction”” there were substituted “ a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 18 or 34 of Schedule 7 ”;

(b) for ““the buyer”” there were substituted “ the transferee ”.

(5) Paragraph 4 has effect as if—

(a) in sub-paragraph (1)(a), for ““a land transaction”” were substituted “ a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 18 or 34 of Schedule 7 ”;

(b) for sub-paragraph (4) there were substituted—

“(4) At the time of the disqualifying event the partnership property includes a chargeable interest—

(a) that was held as partnership property immediately after the relieved transaction, or

(b) that is derived from an interest held as partnership property at that time.”;

(c) for sub-paragraph (6) there were substituted—

“(6) An “"appropriate proportion”” means an appropriate proportion having regard to—

(a) the chargeable interests held as partnership property immediately after the relieved transaction and the chargeable interests held as partnership property at the time of the disqualifying event, and

(b) the extent to which any chargeable interest held as partnership property at that time becomes used or held for purposes other than qualifying charitable purposes.”

Commencement Information

I165 Sch. 7 para. 42 in force at 1.4.2018 by S.I. 2018/34, art. 3

Modifications of TCMA in relation to partnerships E+W

43 (1) TCMA applies in relation to land transaction tax in respect of a land transaction entered into as buyers by or on behalf of the members of a partnership with the following modifications. E+W

(2) Section 58 (conditions for making WRA assessments) has effect as if subsection (2)(c) were omitted.

(3) Section 59 (time limits for WRA assessments) has effect as if in subsection (7) in the definition of ““related person””, paragraph (b) were omitted.

(4) Section 79 (the claimant: partnerships) has effect as if there were substituted for it—

“79 The claimant: partnerships in relation to land transactions

(1) This section is about the application of sections 63 and 63A in a case where—

(a) (in a case falling within section 63(1)(a)) the person paid the amount in question in the capacity of a partner in a partnership (within the meaning of paragraph 3 of Schedule 7 to LTTA),

(b) (in a case falling within section 63(1)(b)) the assessment was made on, or the determination related to the liability of, the person in such a capacity, or

(c) (in a case falling within section 63A(1)) the buyer in the land transaction is a person acting in such a capacity.

(2) In such a case, only a representative partner within the meaning of paragraph 10 of Schedule 7 to LTTA may make a claim under section 63 or 63A in respect of the amount in question.”

(5) Section 80 (assessment of claimant in connection with claim) has effect as if in subsection (2), for ““any relevant person (as defined in section 79(3))”” there were substituted “ a responsible partner within the meaning of paragraph 9 of Schedule 7 to LTTA ”.

(6) Section 91 (requiring information and documents in relation to a partnership) has effect as if—

(a) for subsection (1) there were substituted—

“(1) This section applies in relation to a partnership within the meaning of paragraph 3 of Schedule 7 to LTTA.”;

(b) in subsection (2)—

(i) in the opening words, for ““one of the partners”” (in both places) there were substituted “ one of the responsible partners ”;

(ii) in paragraphs (a)(iii) and (c), for ““at least one of the partners”” there were substituted “ the representative partner, or where there is no representative partner, to at least one of the responsible partners ”;

(c) after subsection (2) there were inserted—

“(3) ““Responsible partner”” and ““representative partner”” have the meanings given by paragraphs 9 and 10 of Schedule 7 to LTTA.”

(7) Section 100 (taxpayer notices following a tax return) has effect as if for subsection (6) there were substituted—

“(6) Where any responsible partner in a partnership has made a tax return, this section has effect as if that return had been made by each of the responsible partners.

(6A) ““Partnership”” and ““responsible partner”” have the meanings given by paragraphs 3 and 9 of Schedule 7 to LTTA.”

Commencement Information

I166 Sch. 7 para. 43 in force at 1.4.2018 by S.I. 2018/34, art. 3

Notification of transfer of partnership interest E+W

44 (1) A transaction which is a chargeable transaction by virtue of paragraph 18 or 34 (transfer of partnership interest) is a notifiable transaction only if the chargeable consideration for the transaction exceeds the zero rate threshold. E+W

(2) The chargeable consideration for a transaction exceeds the zero rate threshold if it includes—

(a) any amount in respect of which tax is chargeable at a rate of more than 0%, or

(b) any amount in respect of which tax would be so chargeable but for a relief.

Commencement Information

I167 Sch. 7 para. 44 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 10 E+W INTERPRETATION

Partnership property and partnership share E+W

45 (1) Any reference in this Schedule to partnership property is to an interest or right held by or on behalf of a partnership, or the members of a partnership, for the purposes of the partnership business. E+W

(2) Any reference in this Schedule to a person's partnership share at any time is to the proportion in which the person is entitled at that time to share in the income profits of the partnership.

Commencement Information

I168 Sch. 7 para. 45 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of a chargeable interest E+W

46 E+W References in this Schedule to a transfer of a chargeable interest include—

(a) the creation of a chargeable interest,

(b) the variation of a chargeable interest, and

(c) the surrender or release of a chargeable interest.

Commencement Information

I169 Sch. 7 para. 46 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of chargeable interest to a partnership E+W

47 E+W For the purposes of this Schedule, there is a transfer of a chargeable interest to a partnership in any case where a chargeable interest becomes partnership property.

Commencement Information

I170 Sch. 7 para. 47 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of interest in a partnership E+W

48 E+W For the purposes of this Schedule, where a person acquires or increases a partnership share there is a transfer of an interest in the partnership (to that partner and from the other partners).

Commencement Information

I171 Sch. 7 para. 48 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transfer of a chargeable interest from a partnership E+W

49 E+W For the purposes of this Schedule, there is a transfer of a chargeable interest from a partnership in any case where—

(a) a chargeable interest that was partnership property ceases to be partnership property, or

(b) a chargeable interest is granted or created out of partnership property and the interest is not partnership property.

Commencement Information

I172 Sch. 7 para. 49 in force at 1.4.2018 by S.I. 2018/34, art. 3

Market value of leases E+W

50 (1) This paragraph applies in relation to a lease for the purposes of this Schedule if— E+W

(a) the grant of the lease is or was a transaction to which paragraph 13 applies or applied (or a transaction to which paragraph 13 would have applied if that paragraph had been in force at the time of the grant), or

(b) the grant of the lease is a transaction to which paragraph 21 applies.

(2) In determining the market value of the lease, an obligation of the tenant under the lease is to be taken into account if (but only if)—

(a) it is an obligation such as is mentioned in paragraph 16(1) of Schedule 6 (tenant's obligations that do not count as chargeable consideration), or

(b) it is an obligation to make a payment to a person.

Commencement Information

I173 Sch. 7 para. 50 in force at 1.4.2018 by S.I. 2018/34, art. 3

Connected persons E+W

51 (1) Section 1122 of the Corporation Tax Act 2010 (c. 4) (connected persons) has effect for the purposes of this Schedule. E+W

(2) As applied by sub-paragraph (1), that section has effect with the omission of subsection (7) (partners connected with each other).

(3) As applied by sub-paragraph (1) for the purposes of paragraphs 15, 16, 23 and 24, that section has effect with the omission of subsection (6)(c) to (e) (trustee connected with settlement).

Commencement Information

I174 Sch. 7 para. 51 in force at 1.4.2018 by S.I. 2018/34, art. 3

Arrangements E+W

52 E+W In this Schedule, “"arrangements”” has the meaning given by section 31(3).

Commencement Information

I175 Sch. 7 para. 52 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 42(1))

SCHEDULE 8 U.K. TRUSTS

Overview U.K.

1 (1) This Schedule makes provision about the application of this Act and TCMA in relation to trusts. U.K.

(2) This Schedule is arranged as follows—

(a) paragraph 2 defines key terms;

(b) paragraph 3 makes provision about transactions involving bare trusts;

(c) paragraphs 4 to 10 make provision about transactions involving settlements and the responsibilities of trustees of a settlement;

(d) paragraph 11 makes provision about the treatment of the interests of beneficiaries under certain trusts.

Commencement Information

I176 Sch. 8 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Key terms U.K.

2 (1) In this Schedule, a “"bare trust”” means a trust under which property is held by a person as trustee— U.K.

(a) for a person who is absolutely entitled as against the trustee, or who would be so entitled but for being aged under 18 or lacking capacity (within the meaning of the Mental Capacity Act 2005 (c. 9)) to administer and manage the person's property and affairs, or

(b) for two or more persons who are or would be jointly so entitled,

and includes a case in which a person holds property as nominee for another.

(2) The reference in sub-paragraph (1) to a person being absolutely entitled as against the trustee is a reference to a case where the person has the exclusive right, subject only to satisfying any outstanding charge, lien or other right of the trustee—

(a) to resort to the property for payment of duty, taxes, costs or other outgoings, or

(b) to direct how the property is to be dealt with.

(3) In this Schedule, a “"settlement”” means a trust that is not a bare trust.

Commencement Information

I177 Sch. 8 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Bare trusts E+W

3 (1) Where a person (““T””) acquires a chargeable interest or an interest in a partnership as bare trustee, this Act applies as if the interest were vested in, and the acts of T in relation to it were the acts of, the person or persons for whom T is trustee. U.K.

(2) But sub-paragraph (1) does not apply in relation to the grant of a lease.

(3) Where a lease is granted to a person as bare trustee, that person is to be treated for the purposes of this Act, as it applies in relation to the grant of the lease, as buyer of the whole of the interest acquired.

(4) Where a lease is granted by a person as bare trustee, that person is to be treated for the purposes of this Act, as it applies in relation to the grant of the lease, as seller of the whole of the interest disposed of.

Commencement Information

I178 Sch. 8 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisition by trustees of settlement E+W

4 U.K. Where persons acquire a chargeable interest or an interest in a partnership as trustees of a settlement, they are to be treated for the purposes of this Act, as it applies in relation to that acquisition, as buyers of the whole of the interest acquired (including the beneficial interest).

Commencement Information

I179 Sch. 8 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Consideration for exercise of power of appointment or discretion E+W

5 (1) Sub-paragraph (2) applies where a chargeable interest is acquired by virtue of— U.K.

(a) the exercise of a power of appointment, or

(b) the exercise of a discretion vested in trustees of a settlement.

(2) Any consideration given for the person in whose favour the appointment was made or the discretion was exercised becoming an object of the power or discretion is to be treated as consideration for the acquisition of the interest.

Commencement Information

I180 Sch. 8 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Reallocation of trust property as between beneficiaries E+W

6 U.K. Where—

(a) the trustees of a settlement reallocate trust property in such a way that a beneficiary acquires an interest in certain trust property and ceases to have an interest in other trust property, and

(b) the beneficiary consents to ceasing to have an interest in that other property,

the fact that the beneficiary gives consent does not mean that there is chargeable consideration for the acquisition.

Commencement Information

I181 Sch. 8 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Responsibility of trustees of settlement E+W

7 (1) Where the trustees of a settlement are liable to pay— U.K.

(a) tax or late payment interest on that tax,

(b) an amount under section 55 of TCMA (recovery of excessive repayment) or late payment interest on that amount, or

(c) a penalty under Part 5 of TCMA or late payment interest on that penalty,

the payment, penalty or interest may be recovered (but only once) from any one or more of the responsible trustees.

(2) No amount may be recovered by virtue of sub-paragraph (1)(c) from a person who did not become a responsible trustee until after the relevant time.

(3) The responsible trustees, in relation to a land transaction, are the persons who are trustees at the effective date of the transaction and any person who subsequently becomes a trustee.

(4) The relevant time is—

(a) in relation to so much of a penalty as is payable in respect of any day, or to late payment interest on so much of a penalty as is so payable, the beginning of that day;

(b) in relation to any other penalty, or to late payment interest on the penalty, the time when the act or omission occurred that caused the penalty to become payable.

(5) In this paragraph, “"late payment interest”” means late payment interest under Part 6 of TCMA.

Commencement Information

I182 Sch. 8 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relevant trustees for purposes of return etc. E+W

8 (1) A return in relation to a land transaction may be made or given by any one or more of the trustees who are the responsible trustees in relation to the transaction. U.K.

(2) The trustees by whom such a return is made are referred to in this Schedule as “"the relevant trustees””.

(3) The declaration required by section 53 (declaration that return is complete and correct) must be made by all the relevant trustees.

Commencement Information

I183 Sch. 8 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relevant trustees: enquiries and assessments E+W

9 (1) If WRA issues a notice of enquiry under section 43 of TCMA into the return— U.K.

(a) the notice must be issued to each of the relevant trustees whose identity is known to WRA;

(b) the powers of WRA under Part 4 of TCMA to require information and documents for the purposes of the enquiry are exercisable separately (and differently) in relation to each of the relevant trustees;

(c) any of the relevant trustees may apply under section 51 of TCMA for a direction that a closure notice be issued (and all of them are entitled to be parties to the application);

(d) any closure notice under section 50 of TCMA must be issued to each of the relevant trustees whose identity is known to WRA.

(2) A WRA determination under section 52 of TCMA relating to the transaction must be made against all of the relevant trustees and is not effective against any of them unless notice of it is given to each of them whose identity is known to WRA.

(3) A WRA assessment under section 54 or 55 of TCMA relating to the transaction must be made in respect of all of the relevant trustees and is not effective in respect of any of them unless notice of it is issued under section 61 of TCMA to each of them whose identity is known to WRA.

Commencement Information

I184 Sch. 8 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relevant trustees: appeals and reviews E+W

10 (1) The agreement of all the relevant trustees is required if a settlement agreement relating to the transaction is to be entered into under section 184 of TCMA. U.K.

(2) A notice of request under section 173 of TCMA may be given by any of the relevant trustees.

(3) Where WRA undertakes a review of an appealable decision relating to the transaction following such a request made by some (but not all) of the relevant trustees—

(a) notice of the review must be issued by WRA to each of the other relevant trustees whose identity is known to WRA;

(b) any of the other relevant trustees may be a party to the review if they notify WRA in writing;

(c) notice of WRA's conclusions under section 176(5), (6) or (7) of TCMA must be issued to each of the relevant trustees whose identity is known to WRA;

(d) section 177 of TCMA (effect of conclusions of review) applies in relation to all of the relevant trustees.

(4) In the case of an appeal under Part 8 of TCMA relating to the transaction—

(a) the appeal may be brought by any of the relevant trustees;

(b) notice of the appeal must be issued by WRA to each of the relevant trustees who are not bringing the appeal and whose identity is known to WRA;

(c) any of the relevant trustees are entitled to be parties to the appeal;

(d) the tribunal's determination under section 181 of TCMA binds all the relevant trustees.

Commencement Information

I185 Sch. 8 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

Interests of beneficiaries under certain trusts E+W

11 (1) Sub-paragraphs (2) and (3) apply where property is held in trust under the law of Scotland, or of a country or territory outside the United Kingdom, on terms such that, if the trust had effect under the law of England and Wales, a beneficiary would be regarded as having an equitable interest in the trust property. U.K.

(2) The beneficiary is to be treated for the purpose of this Act as having an equitable interest in the trust property despite the fact that no such interest is recognised by the law of Scotland or, as the case may be, the country or territory outside the United Kingdom.

(3) An acquisition of the interest of a beneficiary under the trust is to be treated as involving the acquisition of an interest in the trust property.

Commencement Information

I186 Sch. 8 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 30(1))

SCHEDULE 9 E+W SALE AND LEASEBACK RELIEF

The relief E+W

1 E+W The leaseback element of a sale and leaseback arrangement is relieved from tax if the qualifying conditions are met.

Commencement Information

I187 Sch. 9 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Sale and leaseback arrangements E+W

2 E+W A sale and leaseback arrangement is an arrangement under which—

(a) a person (““A””) transfers or grants to another person (““B””) a major interest in land (the ““sale””), and

(b) out of that interest B grants a lease to A (the ““leaseback””).

Commencement Information

I188 Sch. 9 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Qualifying conditions E+W

3 (1) The qualifying conditions are— E+W

(a) that the sale transaction is entered into wholly or partly in consideration of the leaseback transaction being entered into,

(b) that the only other consideration (if any) for the sale is the payment of money (whether in sterling or another currency) or the assumption, satisfaction or release of a debt (or both),

(c) that the sale is not a transfer of rights within the meaning of section 12 (contract providing for transfer to third party: effect of transfer of rights) or a pre-completion transaction within the meaning of Schedule 2 (pre-completion transactions), and

(d) where A and B are both bodies corporate at the effective date of the leaseback transaction, that they are not members of the same group for the purposes of group relief (see Schedule 16) at that date.

(2) In sub-paragraph (1)(b), “"debt”” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date.

Commencement Information

I189 Sch. 9 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 30(1))

SCHEDULE 10 E+W ALTERNATIVE PROPERTY FINANCE RELIEFS

PART 1 E+W INTRODUCTORY

Overview E+W

1 (1) This Schedule makes provision for relief in the case of certain land transactions connected to alternative property finance arrangements. E+W

(2) The Schedule is arranged as follows—

(a) Part 2 sets out the circumstances in which certain transactions are relieved from tax;

(b) Part 3 sets out the circumstances where relief is not available;

(c) Part 4 makes provision for an interest held by a financial institution in certain circumstances to be treated as an exempt interest;

(d) Part 5 defines certain terms for the purposes of this Schedule.

Commencement Information

I190 Sch. 10 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 2 E+W THE RELIEFS

Land sold to financial institution and leased to a person E+W

2 (1) This paragraph applies where arrangements are entered into between a person (““P””) and a financial institution under which— E+W

(a) the institution purchases a major interest in land or an undivided share of a major interest in land (““the first transaction””),

(b) where the interest purchased is an undivided share, the major interest is held on trust for the institution and P as beneficial tenants in common,

(c) the institution (or the person holding the land on trust as mentioned in paragraph (b)) grants to P out of the major interest a lease (if the major interest is freehold) or a sub-lease (if the major interest is leasehold) (““the second transaction””), and

(d) the institution and P enter into an agreement under which P has a right to require the institution or its successor in title to transfer to P (in one transaction or a series of transactions) the whole interest purchased by the institution under the first transaction.

(2) The first transaction is relieved from tax if the seller is—

(a) P, or

(b) another financial institution by whom the interest was acquired under arrangements of the kind mentioned in sub-paragraph (1) entered into between it and P.

(3) The second transaction is relieved from tax if the provisions of this Act and TCMA relating to the first transaction are complied with (including any requirement to pay tax chargeable on the first transaction).

(4) A transfer to P that results from the exercise of the right mentioned in sub-paragraph (1)(d) (““a further transaction””) is relieved from tax if—

(a) the provisions of this Act and TCMA relating to the first and second transactions are complied with, and

(b) at all times between the second transaction and the further transaction—

(i) the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and

(ii) the lease or sub-lease granted under the second transaction is held by P.

(5) The agreement mentioned in sub-paragraph (1)(d) is not to be treated—

(a) as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred to P (and accordingly section 14(1) does not apply), nor

(b) as a distinct land transaction by virtue of section 15 (options and rights of pre-emption).

(6) A further transaction that is relieved from tax by virtue of sub-paragraph (4) is not a notifiable transaction unless it involves the transfer to P of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction.

Modifications etc. (not altering text)

C8 Sch. 10 para. 2 restricted (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 5

Commencement Information

I191 Sch. 10 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Land sold to financial institution and re-sold to a person E+W

3 (1) This paragraph applies where arrangements are entered into between a person (““P””) and a financial institution under which— E+W

(a) the institution—

(i) purchases a major interest in land (““the first transaction””), and

(ii) sells that interest to P (““the second transaction””), and

(b) P grants the institution a legal mortgage (as defined in section 205(1)(xvi) of the Law of Property Act 1925 (c. 20)) over that interest.

(2) The first transaction is relieved from tax if the seller is—

(a) P, or

(b) another financial institution by whom the interest was acquired under other arrangements of the kind mentioned in paragraph 2(1) entered into between it and P.

(3) The second transaction is relieved from tax if the financial institution complies with the provisions of this Act and TCMA relating to the first transaction and, where that includes a requirement to pay tax chargeable on the first transaction, the tax so chargeable must be based on chargeable consideration that is not less than the market value of the interest and, in the case of the grant of a lease at a rent, the market rent.

(4) For the purposes of sub-paragraph (3), the market rent of a lease at any time is the rent which the lease might reasonably be expected to fetch at that time in the open market.

Commencement Information

I192 Sch. 10 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

References to P where P is an individual who has died E+W

4 E+W References in paragraphs 2 and 3 to P are to be read, in relation to times after P has died, as references to P's personal representatives.

Commencement Information

I193 Sch. 10 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 3 E+W CIRCUMSTANCES WHERE ARRANGEMENTS NOT RELIEVED

No relief where group relief, acquisition relief or reconstruction relief available on first transaction E+W

5 E+W Paragraphs 2 and 3 do not apply to arrangements in relation to which group relief, acquisition relief or reconstruction relief is available on the first transaction (even if such a relief is subsequently withdrawn).

Commencement Information

I194 Sch. 10 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Land sold to financial institution and leased to a person: arrangements to transfer control of institution E+W

6 (1) Paragraph 2 does not apply to alternative finance arrangements if those arrangements, or any connected arrangements, include arrangements for a person to acquire control of the relevant financial institution. E+W

(2) That includes arrangements for a person to acquire control of the relevant financial institution only if one or more conditions are met (such as an event occurring or the carrying out of an act).

(3) In this paragraph—

• “"alternative finance arrangements”” (“"trefniadau cyllid eraill”") means the arrangements referred to in paragraph 2(1);

• “"connected arrangements”” (“"trefniadau cysylltiedig”") means any arrangements entered into in connection with the making of alternative finance arrangements (including arrangements involving one or more persons who are not parties to the alternative finance arrangements);

• “"relevant financial institution”” (“"sefydliad ariannol perthnasol”") means the financial institution which enters into the alternative finance arrangements.

(4) Section 1124 of the Corporation Tax Act 2010 (c. 4) applies for the purposes of determining who has control of the relevant financial institution.

Commencement Information

I195 Sch. 10 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 4 E+W EXEMPT INTEREST

Interest held by financial institution an exempt interest E+W

7 (1) An interest held by a financial institution as a result of the first transaction within the meaning of paragraph 2(1)(a) is an exempt interest (but see the following). E+W

(2) The interest ceases to be an exempt interest if—

(a) the lease mentioned in paragraph 2(1)(c) ceases to have effect, or

(b) the right under paragraph 2(1)(d) ceases to have effect or becomes subject to a restriction.

(3) The interest is not an exempt interest if group relief, acquisition relief or reconstruction relief is available on the first transaction (even if such a relief is subsequently withdrawn).

(4) Despite sub-paragraph (1), the interest is not an exempt interest in respect of—

(a) the first transaction itself, or

(b) a further transaction within the meaning of paragraph 2(4).

Commencement Information

I196 Sch. 10 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 5 E+W INTERPRETATION

Meaning of ““financial institution”” E+W

8 E+W In this Schedule, “"financial institution”” means—

(a) a financial institution within the meaning of section 564B of the Income Tax Act 2007 (c. 3) (alternative finance arrangements: meaning of ““financial institution””) other than a person referred to in subsection (1)(d) of that section (persons with permission to enter into credit agreements and contracts for hire of goods);

(b) a person with permission under Part 4A of the Financial Services and Markets Act 2000 (c. 8) to carry on the regulated activity specified in Article 63F(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (entering into regulated home purchase plans as home purchase providers).

Commencement Information

I197 Sch. 10 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Meaning of ““arrangements”” E+W

9 E+W In this Schedule, “"arrangements”” includes any agreement, understanding, scheme, transaction or series of any of those things (whether or not legally enforceable).

Commencement Information

I198 Sch. 10 para. 9 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 30(1))

SCHEDULE 11 E+W RELIEF FOR ALTERNATIVE FINANCE INVESTMENT BONDS

PART 1 E+W INTRODUCTORY

Overview E+W

1 (1) This Schedule makes provision for relief in the case of certain land transactions connected to alternative finance investment bonds. E+W

(2) The Schedule is arranged as follows—

(a) this Part includes definitions of key terms (paragraph 2);

(b) Part 2 provides that certain events relating to an alternative finance investment bond are not to be treated as chargeable transactions (paragraph 3) and provides for exceptions to that (paragraph 4);

(c) Part 3 sets out the general conditions which apply to the operation of the reliefs provisions in Part 4;

(d) Part 4 provides for relief for certain transactions (paragraphs 13 and 15) as well as making provision about withdrawal of relief (paragraph 14) and circumstances where relief is not available (paragraph 17);

(e) Part 5 sets out how to apply the relief provisions in cases where the underlying asset is replaced by another asset (paragraph 18) and imposes a duty on WRA to notify the Chief Land Registrar when a charge registered under this Schedule is discharged (paragraph 19).

Commencement Information

I199 Sch. 11 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Interpretation E+W

2 E+W In this Schedule—

• “"alternative finance investment bond”” (“"bond buddsoddi cyllid arall”") means arrangements to which section 564G of the Income Tax Act 2007 (c. 3) (investment bond arrangements) applies;

• “"arrangements”” (“"trefniadau”") includes any agreement, understanding, scheme, transaction or series of any of those things (whether or not legally enforceable);

• “"bond assets”” (“"asedau bond”"), “"bond-holder”” (“"deiliad bond”"), “"bond-issuer”” (“"dyroddwr bond”") and “"capital”” (“"cyflafaf”") have the meaning given by section 564G of the Income Tax Act 2007 (c. 3);

• “"prescribed”” (“"rhagnodedig”") means prescribed in regulations made by the Welsh Ministers;

• “"qualifying interest”” (“"buddiant cymwys”") means a major interest in land other than a lease for a term of 21 years or less.

Commencement Information

I200 Sch. 11 para. 2 in force at 18.10.2017 by S.I. 2017/953, art. 2(e)(i)

PART 2 E+W ISSUE, TRANSFER AND REDEMPTION OF RIGHTS UNDER BOND NOT TO BE TREATED AS CHARGEABLE TRANSACTION

Bond-holder not to be treated as having an interest in the bond assets E+W

3 E+W For the purposes of this Act—

(a) the bond-holder under an alternative finance investment bond is not treated as having an interest in the bond assets;

(b) the bond-issuer under such a bond is not treated as a trustee of the bond assets.

Commencement Information

I201 Sch. 11 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Bond-holder treated as having an interest if control of underlying asset acquired E+W

4 (1) Paragraph 3 does not apply if control of the underlying asset is acquired by— E+W

(a) a bond-holder, or

(b) a group of connected bond-holders.

(2) A bond-holder (““BH””), or a group of connected bond-holders, acquires control of the underlying asset if—

(a) the rights of bond-holders under an alternative finance investment bond include the right of management and control of the bond assets, and

(b) BH, or the group, acquires sufficient rights to enable BH, or the members of the group acting jointly, to exercise management and control of the bond assets to the exclusion of any other bond-holders.

(3) But sub-paragraph (1) does not operate to disapply paragraph 3 in either of the following cases.

(4) The first case is where—

(a) at the time that the rights were acquired BH (or all of the connected bond-holders) did not know and had no reason to suspect that the acquisition enabled the exercise of the right of management and control of the bond assets, and

(b) as soon as reasonably practicable after BH (or any of the bond-holders) becomes aware that the acquisition enables that exercise, BH transfers (or some or all of the bond-holders) transfer sufficient rights for that exercise no longer to be possible.

(5) The second case is where BH—

(a) underwrites a public offer of rights under the bond, and

(b) does not exercise the right of management and control of the bond assets.

(6) In this paragraph, “"underwrite””, in relation to an offer of rights under a bond, means to agree to make payments of capital under the bond in the event that other persons do not make those payments.

Commencement Information

I202 Sch. 11 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 3 E+W CONDITIONS FOR OPERATION OF RELIEFS ETC.

Introduction E+W

5 E+W This Part of this Schedule defines conditions 1 to 7 for the purposes of paragraphs 13 to 16 and 18.

Commencement Information

I203 Sch. 11 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 1 E+W

6 E+W Condition 1 is that one person (““A””) and another (““B””) enter into arrangements under which—

(a) A transfers to B a qualifying interest in land (““the first transaction””), and

(b) A and B agree that when the interest ceases to be held by B as mentioned in paragraph 7(b), B will transfer the interest to A.

Commencement Information

I204 Sch. 11 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 2 E+W

7 E+W Condition 2 is that—

(a) B, as bond-issuer, enters into an alternative finance investment bond (whether before or after entering into the arrangements mentioned in condition 1), and

(b) the interest in land to which the arrangements mentioned in condition 1 relate is held by B as a bond asset.

Commencement Information

I205 Sch. 11 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 3 E+W

8 (1) Condition 3 is that, for the purpose of generating income or gains for the alternative finance investment bond— E+W

(a) B and A enter into a leaseback agreement, or

(b) such other condition or conditions as may be prescribed is or are met.

(2) For the purposes of condition 3, B and A enter into a leaseback agreement if B grants to A, out of the interest transferred to B—

(a) a lease (if the interest transferred is freehold), or

(b) a sub-lease (if the interest transferred is leasehold).

Commencement Information

I206 Sch. 11 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 4 E+W

9 (1) Condition 4 is that, before the end of the period of 120 days beginning with the effective date of the first transaction, B provides WRA with the prescribed evidence that a satisfactory legal charge has been entered in the register of title kept under section 1 of the Land Registration Act 2002 (c. 9). E+W

(2) A charge is satisfactory for the purposes of condition 4 if it—

(a) is a first charge on the interest transferred to B,

(b) is in favour of WRA, and

(c) is for the total of—

(i) the amount of tax which would (apart from paragraph 13) be chargeable on the first transaction if the chargeable consideration for that transaction had been the market value of the interest on the effective date of that transaction, and

(ii) any interest and penalties which would for the time being be payable on or in relation to that amount of tax, if the tax had been payable (but not paid) in respect of the first transaction.

Commencement Information

I207 Sch. 11 para. 9(1) in force at 18.10.2017 for specified purposes by S.I. 2017/953, art. 2(e)(ii)

I208 Sch. 11 para. 9(1) in force at 1.4.2018 in so far as not already in force by S.I. 2018/34, art. 3

I209 Sch. 11 para. 9(2) in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 5 E+W

10 E+W Condition 5 is that the total of the payments of capital made to B before the termination of the bond is not less than 60% of the market value of the interest in the land on the effective date of the first transaction.

Commencement Information

I210 Sch. 11 para. 10 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 6 E+W

11 E+W Condition 6 is that B holds the interest in the land as a bond asset until the termination of the bond.

Commencement Information

I211 Sch. 11 para. 11 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition 7 E+W

12 E+W Condition 7 is that—

(a) before the end of the period of 30 days beginning with the date on which the interest in the land ceases to be held as a bond asset, the interest is transferred by B to A (““the second transaction””), and

(b) the second transaction is given effect not more than 10 years (or such other period as may be prescribed) after the first transaction.

Commencement Information

I212 Sch. 11 para. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 4 E+W RELIEF FOR CERTAIN TRANSACTIONS

Relief for the first transaction E+W

13 (1) The first transaction is relieved from tax if each of conditions 1 to 3 is met before the end of the period of 30 days beginning with the effective date of that transaction. E+W

(2) Where the qualifying interest in land is replaced as the bond asset by an interest in other land, sub-paragraph (1) is subject to paragraph 18 (replacement of asset).

(3) Sub-paragraph (1) is also subject to paragraph 17 (no relief where bond-holder acquires control of underlying asset).

Commencement Information

I213 Sch. 11 para. 13 in force at 1.4.2018 by S.I. 2018/34, art. 3

Withdrawal of relief for the first transaction E+W

14 (1) Relief under paragraph 13 is withdrawn if— E+W

(a) the qualifying interest in land is transferred by B to A without conditions 5 and 6 having been met,

(b) the period mentioned in (or prescribed under) paragraph 12(b) expires and any one of those conditions has not been met, or

(c) at any time it becomes apparent for any other reason that any one of conditions 5 to 7 cannot or will not be met.

(2) Relief under paragraph 13 is also withdrawn if condition 4 is not met.

(3) Where relief under paragraph 13 is withdrawn the amount of tax chargeable on the first transaction is the tax that would have been chargeable but for the relief if the chargeable consideration for the transaction had been the market value of the qualifying interest on the effective date of the transaction.

Commencement Information

I214 Sch. 11 para. 14 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relief for the second transaction E+W

15 (1) The second transaction is relieved from tax if— E+W

(a) each of conditions 1 to 7 is met, and

(b) the provisions of this Act and TCMA in relation to the first transaction are complied with.

(2) Where the qualifying interest in land is replaced as the bond asset by an interest in other land, sub-paragraph (1) is subject to paragraph 18 (replacement of asset).

(3) Sub-paragraph (1) is also subject to paragraph 17 (no relief where bond-holder acquires control of underlying asset).

Modifications etc. (not altering text)

C9 Sch. 11 para. 15 restricted (1.4.2018) by The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 (S.I. 2018/126), regs. 1(2), 6

Commencement Information

I215 Sch. 11 para. 15 in force at 1.4.2018 by S.I. 2018/34, art. 3

Discharge of charge when conditions for relief met E+W

16 E+W If, after the effective date of the second transaction, B provides WRA with the prescribed evidence that each of conditions 1 to 3 and 5 to 7 has been met, the land ceases to be subject to the charge registered in pursuance of condition 4.

Commencement Information

I216 Sch. 11 para. 16 in force at 18.10.2017 for specified purposes by S.I. 2017/953, art. 2(e)(iii)

I217 Sch. 11 para. 16 in force at 1.4.2018 in so far as not already in force by S.I. 2018/34, art. 3

Relief not available where bond-holder acquires control of underlying asset E+W

17 (1) Relief provided under paragraph 13 or 15 (including where the relief is provided under either paragraph as modified by paragraph 18) is not available if control of the underlying asset is acquired by— E+W

(a) the bond-holder, or

(b) a group of connected bond-holders.

(2) A bond-holder (““BH””), or a group of connected bond-holders, acquires control of the underlying asset if—

(a) the rights of bond-holders under an alternative finance investment bond include the right of management and control of the bond assets, and

(b) BH, or the group, acquires sufficient rights to enable BH, or the members of the group acting jointly, to exercise management and control of the bond assets to the exclusion of any other bond-holders.

(3) If BH, or the group, acquires control of the underlying asset before the end of the period of 30 days beginning with the effective date of the first transaction, the effect of sub-paragraph (1) is that paragraph 13 does not apply to that transaction.

(4) If BH, or the group, acquires control of the underlying asset after the end of that period and conditions 1 to 3 have been met, the effect of sub-paragraph (1) is that any relief under paragraph 13 is treated as withdrawn under paragraph 14.

(5) But sub-paragraph (1) does not prevent the reliefs being available in either of the following cases.

(6) The first case is where—

(a) at the time that the rights were acquired BH (or all of the connected bond-holders) did not know and had no reason to suspect that the acquisition enabled the exercise of the right of management and control of the bond assets, and

(b) as soon as reasonably practicable after BH (or any of the bond-holders) becomes aware that the acquisition enables that exercise, BH transfers (or some or all of the bond-holders transfer) sufficient rights for that exercise no longer to be possible.

(7) The second case is where BH—

(a) underwrites a public offer of rights under the bond, and

(b) does not exercise the right of management and control of the bond assets.

(8) In this paragraph, “"underwrite””, in relation to an offer of rights under a bond, means to agree to make payments of capital under the bond in the event that other persons do not make those payments.

Commencement Information

I218 Sch. 11 para. 17 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 5 E+W SUPPLEMENTARY

Replacement of asset E+W

18 (1) Paragraphs 13 to 16 apply with the modifications set out in sub-paragraph (2) or (as the case may be) (3) if— E+W

(a) conditions 1 to 3 and 7 are met in relation to an interest in land (““the original land””),

(b) B ceases to hold the original land as a bond asset (and accordingly, transfers it to A) before the termination of the alternative finance investment bond,

(c) A and B enter into further arrangements satisfying condition 1 relating to an interest in other land (““the replacement land””), and

(d) the value of the interest in the replacement land at the time it is transferred from A to B is greater than or equal to the market value of the interest in the original land on the effective date of the first transaction relating to the original land.

(2) In relation to the original land, condition 6 does not need to be met if conditions 1, 2, 3, 6 and 7 (as modified by sub-paragraph (3)) are met in relation to the replacement land.

(3) In relation to the replacement land—

(a) condition 5 applies as if the reference to the interest in land were a reference to the interest in the original land, and

(b) condition 7 applies as if the reference in paragraph 12(b) to the first transaction were a reference to the first transaction relating to the original land.

(4) If the replacement land is in Wales, the original land ceases to be subject to the charge registered in pursuance of condition 4 when—

(a) B provides WRA with the prescribed evidence that condition 7 is met in relation to the original land, and

(b) condition 4 is met in relation to the replacement land.

(5) If the replacement land is not in Wales, the original land ceases to be subject to the charge registered in pursuance of condition 4 when B provides WRA with the prescribed evidence that—

(a) condition 7 is met in relation to the original land, and

(b) each of conditions 1 to 3 is met in relation to the replacement land.

(6) This paragraph also applies where the replacement land is replaced by further replacement land; and in that event—

(a) references to the original land (except those in sub-paragraph (3)) are to be read as references to the replacement land, and

(b) references to the replacement land are to be read as references to the further replacement land.

Commencement Information

I219 Sch. 11 para. 18(1)-(3)(4)(b)(6) in force at 1.4.2018 by S.I. 2018/34, art. 3

I220 Sch. 11 para. 18(4)(a)(5) in force at 18.10.2017 for specified purposes by S.I. 2017/953, art. 2(e)(iv)

I221 Sch. 11 para. 18(4)(a)(5) in force at 1.4.2018 in so far as not already in force by S.I. 2018/34, art. 3

WRA to notify Registrar of discharge of charge E+W

19 (1) Where a charge is discharged in accordance with paragraph 16 or 18(4) or (5), WRA must notify the Chief Land Registrar of the discharge in accordance with land registration rules (within the meaning of the Land Registration Act 2002 (c. 9)). E+W

(2) WRA must do so within the period of 30 days beginning with the date on which B provides the evidence in question.

Commencement Information

I222 Sch. 11 para. 19 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 30(1))

SCHEDULE 12 E+W RELIEF FOR INCORPORATION OF LIMITED LIABILITY PARTNERSHIP

The relief E+W

1 E+W A transaction by which a chargeable interest is transferred by a person (“"the transferor””) to a limited liability partnership in connection with its incorporation is relieved from tax if conditions A to C are met.

Commencement Information

I223 Sch. 12 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition A E+W

2 E+W Condition A is that the effective date of the transaction is not more than one year after the date of incorporation of the limited liability partnership.

Commencement Information

I224 Sch. 12 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition B E+W

3 E+W Condition B is that at the relevant time the transferor—

(a) is a partner in a partnership comprised of all the persons who are, or are to be, members of the limited liability partnership (and no-one else), or

(b) holds the chargeable interest as nominee or bare trustee for one or more of the partners in such a partnership.

Commencement Information

I225 Sch. 12 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Condition C E+W

4 E+W Condition C is that—

(a) the proportions of the chargeable interest to which the persons mentioned in paragraph 3(a) are entitled immediately after the transfer are the same as those to which they were entitled at the relevant time, or

(b) none of the differences in those proportions has arisen as part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax.

Commencement Information

I226 Sch. 12 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Interpretation E+W

5 (1) In this Schedule— E+W

• “"limited liability partnership”” (“"partneriaeth atebolrwydd cyfyngedig”") means a limited liability partnership formed under the Limited Liability Partnerships Act 2000 (c. 12);

• “"the relevant time”” (“"yr adeg berthnasol”") means—

  (a)

  where the transferor acquired the chargeable interest after the incorporation of the limited liability partnership, immediately after the transferor acquired it, and

  (b)

  in any other case, immediately before the limited liability partnership's incorporation.

(2) In paragraph 4(b), “"arrangements”” includes any scheme, agreement or understanding, whether or not legally enforceable.

Commencement Information

I227 Sch. 12 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 30(1))

SCHEDULE 13 E+W RELIEF FOR ACQUISITIONS INVOLVING MULTIPLE DWELLINGS

Overview E+W

1 E+W This Schedule makes provision about relief available for acquisitions involving multiple dwellings.

Commencement Information

I228 Sch. 13 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

2 E+W This Schedule is arranged as follows—

(a) paragraph 3 identifies the transactions to which this Schedule applies,

(b) paragraph 4 defines key terms,

(c) paragraph 5 provides for the amount of tax chargeable,

(d) paragraphs 6 and 7 make further provision about how the tax is calculated, and

(e) paragraph 8 provides for certain buildings which are yet to be constructed or adapted to be treated as dwellings for the purposes of this Schedule.

Commencement Information

I229 Sch. 13 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Transactions to which this Schedule applies E+W

3 (1) This Schedule applies to a relevant transaction. E+W

(2) A ““relevant transaction”” is a chargeable transaction that is—

(a) within sub-paragraph (3) or (4), and

(b) not excluded by sub-paragraph (5).

(3) A transaction is within this sub-paragraph if its main subject-matter consists of—

(a) an interest in at least two dwellings, or

(b) an interest in at least two dwellings and other property.

(4) A transaction is within this sub-paragraph if—

(a) its main subject-matter consists of—

(i) an interest in a dwelling, or

(ii) an interest in a dwelling and other property,

(b) it is one of a number of linked transactions, and

(c) the main subject-matter of at least one of the other linked transactions consists of —

(i) an interest in some other dwelling or dwellings, or

(ii) an interest in some other dwelling or dwellings and other property.

(5) A transaction is excluded by this sub-paragraph if—

(a) paragraph 10 (relief for transactions entered into by persons exercising collective rights) of Schedule 14 applies to it, or

(b) relief under Schedule 16 (group relief), Schedule 17 (reconstruction and acquisition relief) or Schedule 18 (charities relief) is available for it (even if such a relief is withdrawn).

(6) A reference in this Schedule to an interest in a dwelling is to any chargeable interest in or over a dwelling.

(7) But, in the case of a dwelling subject to a lease granted for an initial term of more than 21 years, any interest that is a superior interest in relation to the lease is not to be treated as an interest in a dwelling for the purposes of paragraphs 4 and 5.

(8) Sub-paragraph (7) does not apply where—

(a) the seller is a qualifying body within the meaning given by paragraph 9(3) of Schedule 15 (relief for certain acquisitions of residential properties by tenants),

(b) the transaction is a sale under a sale and leaseback arrangement within the meaning of paragraph 2 of Schedule 9 (sale and leaseback arrangements),

(c) that sale is the grant of a leasehold interest, and

(d) the leaseback element of that arrangement is relieved from tax under Schedule 9 (sale and leaseback relief).

Commencement Information

I230 Sch. 13 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Key terms E+W

4 (1) ““The consideration attributable to dwellings”” is— E+W

(a) for a single dwelling transaction, so much of the chargeable consideration for the transaction as is attributable to the dwelling;

(b) for a multiple dwelling transaction, so much of the chargeable consideration for the transaction as is attributable to the dwellings in total.

(2) ““The remaining consideration”” is the chargeable consideration for the transaction less the consideration attributable to dwellings.

(3) A relevant transaction is a ““single dwelling transaction”” if its main subject-matter consists of—

(a) an interest in a dwelling, or

(b) an interest in a dwelling and other property.

(4) A relevant transaction is a ““multiple dwelling transaction”” if its main subject-matter consists of—

(a) an interest in at least two dwellings, or

(b) an interest in at least two dwellings and other property.

(5) “"Attributable”” means attributable on a just and reasonable apportionment.

Commencement Information

I231 Sch. 13 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

The amount of tax chargeable E+W

5 (1) If relief under this Schedule is claimed for a relevant transaction, the amount of tax chargeable in respect of the transaction is the sum of— E+W

(a) the tax related to the consideration attributable to dwellings, and

(b) the tax related to the remaining consideration (if any).

(2) If the whole or part of the chargeable consideration for a relevant transaction is rent, sub-paragraph (1) has effect subject to Part 5 of Schedule 6 (leases: calculation of tax chargeable).

Commencement Information

I232 Sch. 13 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Determining the tax related to the consideration attributable to dwellings E+W

6 (1) For the purposes of paragraph 5(1)(a), ““the tax related to the consideration attributable to dwellings”” is determined as follows— E+W

• Step 1 Determine the amount of tax that would be chargeable under section 27 on the assumption that—

  (a)

  the chargeable transaction is a residential property transaction, and

  (b)

  the chargeable consideration were the fraction produced by dividing total dwellings consideration by total dwellings.

• Step 2 Multiply the amount determined at Step 1 by total dwellings.

• Step 3 If the relevant transaction is one of a number of linked transactions, go to Step 4. Otherwise, the amount found at Step 2 is the tax related to the consideration attributable to dwellings.

• Step 4 Multiply the amount found at Step 2 by—

  

  Figure 12 where—

  ““CD”” is the consideration attributable to dwellings for the relevant transaction, and

  ““TDC”” is total dwellings consideration.

(2) But if the amount found at Step 2 of sub-paragraph (1) is less than 1% of total dwellings consideration, for the purposes of paragraph 5(1)(a) ““the tax related to the consideration attributable to dwellings”” is an amount equal to 1% of the consideration attributable to dwellings.

(3) ”Total dwellings consideration” means—

(a) for a transaction that is not one of a number of linked transactions, the consideration attributable to dwellings for that transaction;

(b) for one of a number of linked transactions—

(i) the total of the consideration attributable to dwellings for that transaction and all the other linked transactions that are relevant transactions, plus

(ii) so much of the chargeable consideration for any of the linked transactions (whether or not relevant transactions) as is not included in the calculation under paragraph (i) but is attributable to the same dwellings by reference to which that calculation is made.

(4) “"Total dwellings”” means the total number of dwellings by reference to which total dwellings consideration is calculated.

(5) In the application of sub-paragraph (1), no account is to be taken of—

(a) section 72(9) (transfer of 6 or more separate dwellings treated as non-residential property), or

(b) paragraph 34 (tax chargeable for consideration other than rent: mixed leases) of Schedule 6 (leases).

(6) In the application of sub-paragraph (1), where a relevant transaction is a higher rates residential property transaction (as provided for in Schedule 5), the amount of tax that would be chargeable under section 27 is to be determined on that basis.

(7) The Welsh Ministers may by regulations amend sub-paragraph (2) so as to substitute for the percentages for the time being specified there, different percentages.

Commencement Information

I233 Sch. 13 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Determining the tax related to the remaining consideration E+W

7 (1) For the purposes of paragraph 5(1)(b), ““the tax related to the remaining consideration”” is the appropriate fraction of the amount of tax which (but for this Schedule) would be due in respect of the relevant transaction. E+W

(2) In sub-paragraph (1), “"the appropriate fraction”” means—

Figure 13 where—

““RC”” is the remaining consideration for the relevant transaction,

““TDC”” is total dwellings consideration, and

““TRC”” is total remaining consideration.

(3) The ““total remaining consideration”” is—

(a) for a transaction that is not one of a number of linked transactions, the remaining consideration for that transaction;

(b) for one of a number of linked transactions—

(i) the total of the chargeable consideration for all those transactions, less

(ii) total dwellings consideration.

Commencement Information

I234 Sch. 13 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Certain buildings not yet constructed or adapted to count as a dwelling E+W

8 (1) For the purposes of this Schedule, the main subject-matter of a transaction is to be taken to consist of or include an interest in a dwelling if— E+W

(a) substantial performance of a contract constitutes the effective date of that transaction by virtue of a relevant deeming provision,

(b) the main subject-matter of the transaction consists of or includes an interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a dwelling, and

(c) construction or adaptation of the building, or the part of a building, has not begun by the time the contract is substantially performed.

(2) In sub-paragraph (1)—

• “"contract”” (“"contract”") includes any agreement;

• ““relevant deeming provision””(““darpariaeth dybio berthnasol””) means any of—

  (a)

  section 10 (contract and transfer),

  (b)

  section 11 (contract providing transfer to third party),

  (c)

  paragraph 8(1) to (5) of Schedule 2 (assignment of rights: transferor treated as making a separate acquisition), or

  (d)

  paragraph 20 of Schedule 6 (agreement for lease);

• “"substantially performed”” (“"cyflawni'n sylweddol”") has the meaning given by section 14.

(3) Subsections (4) to (7) of section 72 (meaning of residential property) apply for the purposes of this paragraph as they apply for the purposes of subsection (1)(a) of that section.

Commencement Information

I235 Sch. 13 para. 8 in force at 1.4.2018 by S.I. 2018/34, art. 3

(as introduced by section 30(1))

SCHEDULE 14 E+W RELIEF FOR CERTAIN ACQUISITIONS OF DWELLINGS

PART 1 E+W INTRODUCTORY

Overview E+W

1 (1) This Schedule makes provision about reliefs available for certain acquisitions of dwellings. E+W

(2) This Schedule is arranged as follows—

(a) Part 2 provides relief for certain acquisitions by housebuilders, property traders and employers, and is arranged as follows—

(i) paragraph 2 provides for relief in the case of an acquisition of a dwelling by a housebuilder from an individual acquiring a new dwelling,

(ii) paragraph 3 provides for relief in the case of an acquisition of a dwelling by a property trader from an individual acquiring a new dwelling,

(iii) paragraph 4 provides for relief in the case of an acquisition of a dwelling by a property trader from an individual where a chain of transactions breaks down,

(iv) paragraph 5 provides for relief in the case of an acquisition of a dwelling by a property trader from personal representatives,

(v) paragraph 6 provides for relief in the case of an acquisition of a dwelling by a property trader in the case of relocation of employment,

(vi) paragraph 7 provides for relief in the case of an acquisition of a dwelling by an employer in the case of relocation of employment,

(vii) paragraph 8 makes provision about withdrawal of the reliefs available to property traders, and

(viii) paragraph 9 makes provision about the interpretation of words and phrases which apply to Part 2 of this Schedule;

(b) Part 3 provides relief for transactions entered into by a person or persons exercising collective rights.

Commencement Information

I236 Sch. 14 para. 1 in force at 1.4.2018 by S.I. 2018/34, art. 3

PART 2 E+W RELIEF FOR CERTAIN ACQUISITIONS OF DWELLINGS

Acquisition by housebuilder from individual acquiring new dwelling E+W

2 (1) Where a housebuilder acquires a dwelling (“"the old dwelling””) from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (3) for provision about partial relief). E+W

(2) The conditions are—

(a) that the individual (whether alone or with other individuals) acquires a new dwelling from the housebuilder,

(b) that the individual—

(i) occupied the old dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of its acquisition by the housebuilder, and

(ii) intends to occupy the new dwelling as the individual's only or main residence,

(c) that each acquisition is entered into in consideration of the other, and

(d) that the area of land acquired by the housebuilder does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired by the housebuilder exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(4) In this paragraph—

(a) references to the acquisition of the new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling,

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(c) references to the market value of the old dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Commencement Information

I237 Sch. 14 para. 2 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisition by property trader from individual acquiring new dwelling E+W

3 (1) Where a property trader acquires a dwelling (“"the old dwelling””) from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (4) for provision about partial relief). E+W

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals who acquire new dwellings from housebuilders,

(b) that the individual (whether alone or with other individuals) acquires a new dwelling from a housebuilder,

(c) that the individual—

(i) occupied the old dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of its acquisition by the property trader, and

(ii) intends to occupy the new dwelling as the individual's only or main residence,

(d) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the old dwelling,

(ii) to grant a lease or licence of the old dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and

(e) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Sub-paragraph (2)(d)(ii) does not apply to the grant of lease or licence to the individual for a period of no more than 6 months.

(4) Where the conditions in sub-paragraph (2)(a) to (d) are met but the area of land acquired by the property trader exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(5) In this paragraph—

(a) references to the acquisition of a new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling,

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(c) references to the market value of the old dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Commencement Information

I238 Sch. 14 para. 3 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisition by property trader from individual where chain of transactions breaks down E+W

4 (1) Where a property trader acquires a dwelling (“"the old dwelling””) from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (4) for provision about partial relief). E+W

(2) The conditions are—

(a) that the individual has made arrangements to sell the old dwelling and acquire another dwelling (““the second dwelling””),

(b) that the arrangements to sell the old dwelling fail,

(c) that the acquisition of the old dwelling is made for the purpose of enabling the individual's acquisition of the second dwelling to proceed,

(d) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in those circumstances,

(e) that the individual—

(i) occupied the old dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of its acquisition by the property trader, and

(ii) intends to occupy the second dwelling as the individual's only or main residence,

(f) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the old dwelling,

(ii) to grant a lease or licence of the old dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and

(g) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Sub-paragraph (2)(f)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than 6 months.

(4) Where the conditions in sub-paragraph (2)(a) to (f) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(5) In this paragraph—

(a) references to the acquisition of the second dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling,

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(c) references to the market value of the old dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Commencement Information

I239 Sch. 14 para. 4 in force at 1.4.2018 by S.I. 2018/34, art. 3

Relief for acquisition by property trader from personal representatives E+W

5 (1) Where a property trader acquires a dwelling from the personal representatives of a deceased individual, the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (3) for provision about partial relief). E+W

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from personal representatives of deceased individuals,

(b) that the deceased individual occupied the dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of the individual's death,

(c) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the dwelling,

(ii) to grant a lease or licence of the dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and

(d) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(b) references to the market value of the dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Commencement Information

I240 Sch. 14 para. 5 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisition by property trader in case of relocation of employment E+W

6 (1) Where a property trader acquires a dwelling from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (4) for provision about partial relief). E+W

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in connection with a change of residence resulting from relocation of employment,

(b) that the individual occupied the dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of the acquisition by the property trader,

(c) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,

(d) that the consideration for the acquisition does not exceed the market value of the dwelling,

(e) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the dwelling, or

(ii) to grant a lease or licence of the dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and

(f) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Sub-paragraph (2)(e)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than 6 months.

(4) Where the conditions in sub-paragraph (2)(a) to (e) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(5) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(b) references to the market value of the dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Commencement Information

I241 Sch. 14 para. 6 in force at 1.4.2018 by S.I. 2018/34, art. 3

Acquisition by employer in case of relocation of employment E+W

7 (1) Where an individual's employer acquires a dwelling from the individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (3) for provision about partial relief). E+W

(2) The conditions are—

(a) that the individual occupied the dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of the acquisition by the employer,

(b) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,

(c) that the consideration for the acquisition does not exceed the market value of the dwelling, and

(d) that the area of land acquired by the employer does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling,

(b) references to the market value of the dwelling and of the permitted area are, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area, and

(c) references to an individual's employer include a prospective employer.

Commencement Information

I242 Sch. 14 para. 7 in force at 1.4.2018 by S.I. 2018/34, art. 3

Withdrawal of reliefs available to property traders E+W

8 (1) Relief under paragraphs 3 (acquisition by property trader from individual acquiring new dwelling) and 4 (acquisition by property trader from individual where chain of transactions breaks down) is withdrawn if the property trader— E+W

(a) spends more than the permitted amount on refurbishment of the old dwelling,

(b) grants a lease or licence of the old dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling.

(2) Sub-paragraph (1)(b) does not apply to the grant of lease or licence to the individual acquiring the new dwelling or the second dwelling for a period of no more than 6 months.

(3) Relief under paragraph 5 (relief for acquisition by property trader from personal representatives) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the dwelling,

(b) grants a lease or licence of the dwelling, or