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

Type Act of Senedd Cymru

Publication 2017-05-24

Last updated 2026-02-13

State In force

Jurisdiction Wales

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(3) If WRA thinks it appropriate to do so, it may—

(a) agree to the request made under subsection (1), or

(b) agree to—

(i) a different expected end date than that requested under subsection (1)(a);

(ii) a different variation of a condition than that requested under subsection (1)(b).

(4) Where WRA makes a decision under this section it must issue a notice to the buyer setting out the decision and the reasons for it.

Failure to comply with WRA’s agreement to defer

63

(1) If WRA thinks that the buyer—

(a) has failed to comply with a condition imposed under section 58(6)(c) or varied under section 62, or

(b) has, in relation to the deferral request or a request made under section 62(1)—

(i) provided false or misleading information, or

(ii) withheld information,

the deferral request is to be treated as if it had never been made (and section 57 of this Act and section 157 of TCMA apply accordingly).

(2) In such a case WRA must issue a notice to the buyer stating that deferral request is to be treated as if it had never been made and setting out the consequences of that.

Regulations about deferral of tax

64

(1) The Welsh Ministers may by regulations—

(a) make provision for the deferral of tax in cases where the deferred consideration consists of rent (within the meaning given in Schedule 6);

(b) make provision applying this Chapter (with such modifications as may be specified in the regulations) to cases where the consideration to which a deferral request relates, or any element of that consideration, consists of—

(i) the carrying out of works of construction, improvement or repair of a building or other works to enhance the value of land, or

(ii) the provision of services (other than the carrying out of such works);

(c) make provision for WRA to make variations under section 62 without the buyer giving notice of a request under subsection (1) of that section (whether by agreement with the buyer or by imposition).

(2) Regulations under subsection (1) may make such modifications of this Act as the Welsh Ministers consider necessary or expedient.

CHAPTER 4 — REGISTRATION OF LAND TRANSACTIONS

Registration of land transactions

65

(1) The Chief Land Registrar (““the Registrar””) may not register, record or otherwise reflect in an entry made in the register of title maintained by the Registrar a notifiable land transaction or a document effecting or evidencing such a transaction unless a WRA certificate is produced with the application to register, record or otherwise reflect the transaction.

(2) A ““WRA certificate”” is a certificate issued by WRA stating that a return has been made in respect of the transaction.

(3) But subsection (1) does not apply in so far as—

(a) the notifiable land transaction or a document effecting or evidencing that transaction is required to be registered, recorded or otherwise reflected in an entry made in the register of title without any application to register;

(b) the entry registers, records or otherwise reflects an interest or right other than the chargeable interest acquired by the buyer in the land transaction.

(4) This section does not apply to—

(a) a contract which is to be treated as a land transaction by virtue of—

(i) section 10(4) (contract and transfer), or

(ii) section 11(3) (contract providing for transfer to third party);

(b) a notional or additional notional transaction within the meaning given in Schedule 2;

(d) a variation of a lease which is to be treated as a land transaction by virtue of paragraph 24(1) or 25(1) of that Schedule.

(5) The Welsh Ministers may by regulations make provision about WRA certificates.

(6) Regulations made under subsection (5) may in particular—

(a) make provision as to the conditions that must be met before a certificate is issued;

(b) make provision about the issue of duplicate certificates;

(7) The Registrar—

(a) must allow WRA to inspect any certificates produced under this section, and

(b) may enter into arrangements for affording WRA other information and facilities for verifying that the requirements of this Act have been complied with.

PART 7 — GENERAL ANTI-AVOIDANCE RULE

General anti-avoidance rule

66

After section 81 of TCMA (contract settlements), insert—

(81A) (1) This Part makes provision for counteracting tax advantages arising from artificial tax avoidance arrangements, including provision— (a) about the meaning of ““tax avoidance arrangement””, ““artificial”” and ““tax advantage”” (sections 81B to 81D); (b) about WRA's power to make adjustments to counteract tax advantages and the steps to be taken by WRA in connection with such adjustments (sections 81E to 81G). (2) The rules in this Part are collectively to be known as “"the general anti-avoidance rule””. (81B) (1) For the purposes of this Part, an arrangement is a ““tax avoidance arrangement”” if the obtaining of a tax advantage for any person is the main purpose, or one of the main purposes, of a taxpayer entering into the arrangement. (2) In determining whether the main purpose, or one of the main purposes, of an arrangement is the obtaining of a tax advantage regard may in particular be had to the amount of devolved tax that would have been chargeable in the absence of the arrangement. (3) In this Part— (a) an “"arrangement”” includes any transaction, scheme, action, operation, agreement, grant, understanding, promise, undertaking, event or any series of any of those things (whether legally enforceable or not); (b) references to an arrangement are to be read as including— (i) a series of arrangements, and (ii) any part or stage of an arrangement comprised of more than one part or stage; (c) “"taxpayer”” means a person liable to devolved tax or who would be liable but for the tax avoidance arrangement in question. (81C) (1) For the purposes of this Part, a tax avoidance arrangement is ““artificial”” if the entering into or carrying out of it is not a reasonable course of action in relation to the provisions of Welsh tax legislation applying to the arrangements. (2) In determining whether the tax avoidance arrangement is artificial, regard may in particular be had— (a) to any genuine economic or commercial substance to the arrangement (other than the obtaining of a tax advantage); (b) as to whether the arrangement results in an amount of tax chargeable that it is reasonable to assume was not the anticipated result when the relevant provision of Welsh tax legislation was enacted. (3) But an arrangement is not artificial if, at the time it was entered into or carried out— (a) the arrangement was consistent with generally prevailing practice, and (b) WRA had indicated its acceptance of that practice. (4) Where a tax avoidance arrangement forms part of any other arrangements, regard must also be had to those other arrangements in determining whether the tax avoidance arrangement is artificial. (5) In this section, “"Welsh tax legislation”” means— (a) the Welsh Tax Acts, and (b) any subordinate legislation (within the meaning of section 21 of the Interpretation Act 1978 (c. 30)) made under those Acts. (81D) For the purposes of this Part— - “"tax”” (“"treth”") means any devolved tax; - “"tax advantage”” (“"mantais drethiannol”") means— 1. relief or increased relief from tax, 2. repayment or increased repayment of tax, 3. avoidance or reduction of a charge to tax, 4. deferral of a payment of tax or advancement of a repayment of tax, and 5. avoidance of an obligation to deduct or account for tax. (81E) (1) WRA may make such adjustments as it considers just and reasonable to counteract a tax advantage that would (ignoring this Part) arise from an artificial tax avoidance arrangement. (2) An adjustment may be made in respect of the devolved tax in question or any other devolved tax. (3) An adjustment must be made— (a) where the adjustment relates to a tax return in respect of which an enquiry is in progress, by amending the return in a closure notice issued under section 50; (b) otherwise by means of a WRA assessment. (4) WRA may not make an adjustment unless it has complied with the requirements of sections 81F and 81G. (81F) (1) WRA may issue a notice (a ““proposed counteraction notice””) to a taxpayer if WRA considers— (a) that a tax advantage has arisen to a person from an artificial tax avoidance arrangement, and (b) that the tax advantage should be counteracted by means of an adjustment under section 81E. (2) A proposed counteraction notice must— (a) specify the tax avoidance arrangement and the tax advantage, (b) explain why WRA considers that a tax advantage has arisen from an artificial tax avoidance arrangement, (c) set out the adjustment that WRA proposes to make in order to counteract the tax advantage, (d) specify any amount that the taxpayer will be required to pay in accordance with the proposed WRA assessment, and (e) inform the taxpayer— (i) that a final counteraction notice is to be issued after the expiry of the period of 45 days beginning with the day on which the proposed counteraction notice is issued, (ii) that the taxpayer may request that WRA extend that 45 day period, and (iii) that the taxpayer may make written representations to WRA at any time before the final counteraction notice is issued. (81G) (1) WRA must, after the expiry of the 45 day period mentioned in section 81F(2)(e)(i) or such longer period as WRA has agreed to, issue a notice (a ““final counteraction notice””) to the taxpayer. (2) A final counteraction notice must state whether the tax advantage arising from the tax avoidance arrangement is to be counteracted by means of an adjustment under section 81E. (3) In determining whether the tax advantage is to be counteracted WRA must have regard to any written representations made by the taxpayer. (4) If a final counteraction notice states that a tax advantage is to be counteracted by means of an adjustment the notice must also— (a) specify the adjustment required to give effect to the counteraction, (b) where the adjustment relates to a tax return in respect of which an enquiry is in progress, specify the amendment of the return which is to be included in the closure notice issued under section 50 when WRA reaches it conclusions in the enquiry, (c) where paragraph (b) does not apply— (i) be accompanied by the WRA assessment which gives effect to the adjustment, or (ii) where a WRA assessment giving effect to the adjustment has been made, specify that assessment, and (d) specify any amount that the taxpayer— (i) will be required to pay as a result of the amendment specified under paragraph (b), or (ii) is required to pay in accordance with the WRA assessment mentioned in paragraph (c). (5) If a final counteraction notice states that a tax advantage is not to be counteracted it must state the reasons for WRA's decision. (81H) In proceedings before a court or the tribunal in connection with the general anti-avoidance rule, it is for WRA to show— (a) that there is an artificial tax avoidance arrangement, and (b) that the adjustments made (or to be made) to counteract the tax advantage arising from the arrangement are just and reasonable. (81I) (1) The general anti-avoidance rule has effect in relation to any tax avoidance arrangement entered into on or after the date on which this Part comes into force. (2) Where a tax avoidance arrangement forms part of any other arrangements entered into before that day, those other arrangements are to be ignored for the purposes of section 81C(4) unless the result of having regard to those other arrangements would be to determine that the tax avoidance arrangement was not artificial.

PART 8 — INTERPRETATION AND FINAL PROVISIONS

Interpretation

Meaning of tax

67

Except as otherwise provided, in this Act, “"tax”” means land transaction tax.

Meaning of major interest in land

68

References in this Act to a ““major interest”” in land are to—

(a) an estate in fee simple absolute, or

(b) a term of years absolute,

whether subsisting at law or in equity.

Meaning of subject-matter and main subject-matter

69

Except as otherwise provided, references in this Act to the subject-matter of a land transaction are to the chargeable interest acquired (the ““main subject-matter””), together with any interest or right appurtenant or pertaining to it that is acquired with it.

Meaning of market value

70

For the purposes of this Act, ““market value”” is to be determined as for the purposes of the Taxation of Chargeable Gains Act 1992 (c. 12) (see sections 272 to 274 of that Act).

Meaning of effective date of transaction

71

Except as otherwise provided, the effective date of a land transaction for the purposes of this Act is the date of completion.

Meaning of residential property

72

(1) In this Act, “"residential property”” means—

(a) a building that is used or suitable for use as one or more dwellings, or is in the process of being constructed or adapted for such use;

(b) land that is or forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land);

(c) an interest in or right over land that subsists for the benefit of a building within paragraph (a) or of land within paragraph (b).

(2) Accordingly, “"non-residential property”” means any property that is not residential property.

(3) But see the rule in subsection (9) in the case of a transaction involving 6 or more dwellings.

(4) For the purposes of subsection (1), a building used for any of the following purposes is used as a dwelling—

(a) residential accommodation for school pupils;

(b) residential accommodation for students, other than accommodation falling with subsection (5)(b);

(d) an institution that is the sole or main residence of at least 90% of its residents and does not fall within any of paragraphs (a) to (f) of subsection (5).

(5) For the purposes of subsection (1), a building used for any of the following purposes is not used as a dwelling—

(a) a home or other institution providing residential accommodation for children;

(b) a hall of residence for students in further or higher education;

(c) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder;

(d) a hospital or hospice;

(e) a prison or similar establishment;

(f) a hotel or similar establishment.

(6) Where a building is used for a purpose specified in subsection (5), no account is to be taken for the purposes of subsection (1)(a) of its suitability for any other use.

(7) Where a building that is not in use is suitable for use for at least one of the purposes specified in subsection (4) and at least one of those specified in subsection (5)—

(a) if there is one such use for which it is most suitable, or if the uses for which it is most suitable are all specified in the same subsection, no account is to be taken for the purposes of subsection (1)(a) of its suitability for any other use,

(b) otherwise, the building is to be treated for those purposes as suitable for use as a dwelling.

(8) In this section, “"building”” includes part of a building.

(9) Where 6 or more dwellings are the subject of a single transaction involving the transfer of a major interest in, or the grant of a lease over, them, then, for the purposes of this Act as it applies in relation to that transaction, those dwellings are treated as being non-residential property.

(10) The Welsh Ministers may by regulations amend this section.

Meaning of dwelling

73

References in this Act to a ““dwelling”” are to residential property comprising a single dwelling.

References to connected persons

74

(1) Section 1122 of the Corporation Tax Act 2010 (c. 4) (connected persons) applies for the purposes of any reference in this Act to a person being connected with another person.

(2) But see the particular provision made in the following provisions—

(a) section 23(3)(b) (exceptions to deemed market value rule in transactions with connected companies);

(b) paragraphs 16(2)(b) and 24(2)(b) of Schedule 7 (partnership transactions: determining the corresponding partners);

(c) paragraph 51 of that Schedule (partnerships: application of section 1122 of the Corporation Tax Act 2010 (c. 4) to Schedule 7 generally);

(d) paragraph 5(5) of Schedule 16 (group relief: joint venture companies);

(e) paragraph 6(3) of that Schedule (group relief: mortgage arrangements).

Other definitions

75

In this Act—

“"child”” (“"plentyn**”") means a person under the age of 18;

“"consumer prices index”” (“"mynegai prisiau defnyddwyr**”") means the all items consumer prices index published by the Statistics Board;

“"enactment”” (“"deddfiad**”") means an enactment (whenever enacted or made) which is, or is contained in—an Act of Parliament,an Act or a Measure of the National Assembly for Wales, orsubordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)) made under—an Act of Parliament, oran Act or a Measure of the National Assembly for Wales;

“"land”” (“"tir**”") includes—buildings and structures;land covered by water;

“"registered social landlord”” (“"landlord cymdeithasol cofrestredig**”") means a body registered as a social landlord in a register maintained under section 1(1) of the Housing Act 1996 (c. 52);

“"retail prices index”” (“"mynegai prisiau manwerthu**”") means the United Kingdom General Index of Retail Prices published by the Statistics Board under section 21 of the Statistics and Registration Service Act 2007 (c. 18);

“"TCMA”” (“"DCRhT**”") means the Tax Collection and Management (Wales) Act 2016 (anaw 6);

“"Wales”” (“"Cymru**”") has the meaning given by section 158(1) of the Government of Wales Act 2006 (c. 32).

Amendments to the Tax Collection and Management (Wales) Act 2016

Amendments to TCMA

76

Schedule 23 makes amendments to TCMA.

Independent review

Independent review of land transaction tax

77

(1) The Welsh Ministers must make arrangements for an independent review of land transaction tax to be completed before the expiry of the period of 6 years beginning with the day on which this subsection comes into force.

(2) Following the completion of the review, the Welsh Ministers must publish a report of it.

(3) The arrangements mentioned in subsection (1) may include—

(a) payment of expenses incurred by a person in carrying out (or assisting in carrying out) the review;

(b) provision of assistance (including financial assistance) to such a person;

Final provisions

Power to make consequential etc. provision

78

(1) The Welsh Ministers may by regulations make such incidental, consequential, supplemental, transitional, transitory or saving provision as they think appropriate for the purposes of, or in connection with, or for giving full effect to, any provision made by or under this Act.

(2) Regulations under this section may amend, revoke or repeal any enactment (including any provision made by or under this Act).

(3) If a statutory instrument contains regulations under this section which the Welsh Ministers consider makes provision which may have the effect mentioned in subsection (4), the instrument may not be made unless a draft has been laid before, and approved by a resolution of, the National Assembly for Wales.

(4) The effect is that, in respect of a land transaction—

(a) the amount of tax chargeable is more than the amount which would be chargeable if the regulations are not made, or

(b) tax is chargeable where none would be chargeable if the regulations are not made.

Regulations

79

(1) Any power to make regulations under this Act—

(a) must be exercised by statutory instrument, and

(b) includes power to make different provision for different purposes.

(2) A statutory instrument containing regulations made under any of the following provisions may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the National Assembly for Wales—

(a) section 5(4) (exempt interests);

(b) section 18(2) (chargeable consideration);

(d) section 30(6) (reliefs);

(e) section 33(7) (companies);

(f) section 34(6) (unit trusts);

(g) section 35(1) (open-ended investment companies);

(h) section 36(8) (co-ownership authorised contractual schemes);

(i) section 41(2) (partnerships);

(j) section 42(2) (trusts);

(k) section 46(10) (thresholds for notifiable transactions);

(l) section 47(5) (late payment interest start date);

(m) section 49(5) (late payment interest start date);

(n) section 52(1) (period within which returns must be made);

(o) section 64(1) (regulations about deferral of tax);

(p) section 72(10) (residential property);

(q) paragraph 7 of Schedule 3 (exempt transactions);

(r) paragraph 27(2) of Schedule 6 (charging tax on rent element of residential leases);

(s) paragraph 32 of that Schedule (temporal discount rate for leases);

(t) paragraph 36(1)(b) of that Schedule (specified amount of relevant rent);

(u) paragraph 37 of that Schedule (power to amend or repeal paragraphs 34 to 36);

(v) paragraph 6(7) of Schedule 13 (multiple dwellings relief: minimum percentage of tax attributable to dwellings);

(w) paragraph 3 of Schedule 17 (acquisition relief: proportion of tax relieved).

(3) Any other statutory instrument containing regulations made under this Act (except an instrument mentioned in subsection (4)) is subject to annulment in pursuance of a resolution of the National Assembly for Wales.

(4) Subsection (3) does not apply to a statutory instrument containing any of the following—

(a) regulations made under section 24(1) or paragraph 27(4) or 28(1) of Schedule 6 (regulations about tax rates and bands);

(b) regulations made under section 78 to which subsection (3) of that section applies.

Crown application

80

(1) This Act binds the Crown.

(2) But see paragraph 2 of Schedule 3 (which exempts land transactions from charge where the buyer is a specified Crown body).

(3) And nothing in Chapter 2 of Part 6 (liability for and payment of tax) affects the operation of sections 8 and 9 of the Crown Private Estates Act 1862 (c. 37).

(4) Subsection (1) does not make the Crown liable to prosecution for an offence.

Coming into force

81

(1) This Part (except section 76 and Schedule 23) comes into force on the day after the day on which this Act receives Royal Assent.

(2) The remaining provisions of this Act come into force on such day as the Welsh Ministers may appoint by order made by statutory instrument.

(3) An order under subsection (2) may appoint different days for different purposes.

Short title

82

The short title of this Act is the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017.

SCHEDULE 1

The Schedules to this Act are arranged as follows—

SCHEDULE 2

PART 1 — INTRODUCTION AND KEY CONCEPTS

Overview

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).

(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.

Application of this Schedule

2

(1) This Schedule applies where—

(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).

Meaning of “pre-completion transaction”

3

(1) A transaction is a pre-completion transaction if—

(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.

Other key terms

4

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

(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.

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

5

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

PART 2 — PRE-COMPLETION TRANSACTIONS WHICH ARE ASSIGNMENTS OF RIGHTS

Pre-completion transactions which are assignments of rights

6

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.

Assignments of rights: application of rules about completion and consideration

7

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

(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.

Assignment of rights: transferor treated as making separate acquisition

8

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

(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;

(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.

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

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.

(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.

Assignment of rights relating to part only of original contract

10

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.

Assignment of rights: references to “the seller”

11

(1) This paragraph applies where—

(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);

(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).

PART 3 — PRE-COMPLETION TRANSACTIONS WHICH ARE FREE-STANDING TRANSFERS

Pre-completion transactions which are free-standing transfers

12

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

Free-standing transfers: consideration and substantial performance

13

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

(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.

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

14

(1) This paragraph applies where—

(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);

(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);

(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

(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.

PART 4 — THE MINIMUM CONSIDERATION RULE

The minimum consideration rule

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.

(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

(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).

The first minimum amount

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.

(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—the transferee under that transaction, orthe 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);

The second minimum amount

17

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

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

$$CP - CR$Figure 1 where—CP is the total amount of consideration given by the party for the acquisition of the chargeable interest or as consideration for a pre-completion transaction;CR is the total of any amounts of consideration given to the party by another relevant party (or other relevant parties) as consideration for the acquisition of the chargeable interest or as consideration for the pre-completion transaction,and if CR is greater than CP then the net amount of consideration given by the relevant party is taken to be zero.$

(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).

PART 5 — RELIEFS

Relief for transferor: assignment of rights

18

(1) This paragraph applies where—

(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).

Relief for original buyer: qualifying subsales

19

(1) This paragraph applies if—

(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—

$$OC - QS$Figure 2 where—OC is the amount that the consideration would be apart from this sub-paragraph, andQS is so much of OC as is referable to the subject-matter of the qualifying subsale,and OC may be reduced more than once if there is more than one qualifying subsale.$

(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.

PART 6 — INTERPRETATION AND INDEX

Interpretation

20

In this Schedule—

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

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

Index of expressions defined in this Schedule

21

The following Table lists expressions defined or otherwise explained in this Schedule.

SCHEDULE 3

No chargeable consideration

1

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

Acquisitions by the Crown

2

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;

(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.

Transactions in connection with divorce etc.

3

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 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 such an order or decree as mentioned in paragraph (a);

(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.

Transactions in connection with dissolution of civil partnership etc.

4

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);

(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.

Assents and appropriations by personal representatives

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.

(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.

Variation of testamentary dispositions etc.

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.

(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.

Power to add, remove or vary exemptions

7

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;

SCHEDULE 4

Money or money’s worth

1

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.

Value added tax

2

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.

Postponed consideration

3

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.

Just and reasonable apportionment

4

(1) For the purposes of this Act, consideration attributable—

(a) to two or more land transactions,

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

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.

Exchanges

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.

(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—

$$MV TMV$Figure 3 where—MV is the market value of the subject-matter of the acquisition for which the chargeable consideration is being determined, andTMV is the total market value of the subject-matter of all the relevant acquisitions.$

(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.

Partition etc.: disregard of existing interest

6

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.

Valuation of non-monetary consideration

7

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.

Debt as consideration

8

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

(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.

Cases where conditions for exemption not fully met

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.

(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.

Conversion of amounts in foreign currency

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.

(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).

Carrying out of works

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—

(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).

Provision of services

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.

(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).

Land transaction entered into by reason of employment

13

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.

Indemnity given by buyer

14

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.

Buyer bearing inheritance tax liability

15

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.

Buyer bearing capital gains tax liability

16

(1) Where—

(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)).

Costs of enfranchisement

17

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.

Arrangements involving public or educational bodies

18

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

(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””),

(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);

(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

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

(a) the main transfer,

(b) any transfer of surplus land, or

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

SCHEDULE 5

PART 1 — INTRODUCTORY

Overview

1

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

(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.

PART 2 — BUYER IS AN INDIVIDUAL: SINGLE DWELLING TRANSACTIONS

Introductory

2

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.

Higher rates residential property transactions

3

(1) A chargeable transaction is a higher rates residential property transaction if—

(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

(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

(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), ...

(b) paragraph 8 (replacement of main residence exception) and,

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

4

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.

Buyer has a major interest in other dwelling

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