Legalize / United Kingdom / Public General Act

Finance Act 2003

Type Public General Act

Publication 2003-07-10

Last updated 2025-03-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(a) subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded, and

(b) subsections (2) to (7) of section 172 of the Finance Act 2013 apply as they apply for the purposes of Part 3 of that Act.

Trades involving making a dwelling available to the public

5B

(1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in relation to which the conditions in sub-paragraph (2) are met.

(2) The conditions are that—

(a) the higher threshold interest is acquired with the intention that it will be exploited as a source of income in the course of a qualifying trade, and

(b) reasonable commercial plans have been formulated to carry out that intention without delay (except so far as delay may be justified by commercial considerations or cannot be avoided).

(3) “Qualifying trade”, in relation to a higher threshold interest, means a trade that—

(a) is carried on on a commercial basis and with a view to profit, and

(b) involves, in its normal course, offering the public the opportunity to make use of, stay in or otherwise enjoy the dwelling as customers of the trade on at least 28 days in any calendar year.

(4) For the purposes of sub-paragraph (3), persons are not considered to have the opportunity to make use of, stay in or otherwise enjoy a dwelling unless the areas that they have the opportunity to make use of, stay in or otherwise enjoy include a significant part of the interior of the dwelling.

(5) The size (relative to the size of the whole dwelling), nature and function of any relevant area or areas in a dwelling are taken into account in determining whether they form a significant part of the interior of the dwelling.

Financial institutions acquiring dwellings in the course of lending

5C

(1) Sub-paragraph (2) applies to a chargeable transaction if the purchaser is a financial institution carrying on a business that involves the lending of money.

(2) Paragraph 3 does not apply to the chargeable transaction so far as its subject-matter consists of a higher threshold interest that is acquired in the course of that business—

(a) for the purpose of resale in the course of the business and,

(b) in connection with those lending activities.

Dwellings for occupation by certain employees etc of a relievable business

5D

(1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in relation to which the conditions in sub-paragraph (2) are met. Those conditions can only be met if the purchaser, or a relevant group member, carries on or is to carry on a relievable business.

(2) The conditions are that—

(a) the interest is acquired for the purpose of making the dwelling available to one or more qualifying employees or qualifying partners for use as living accommodation, and

(b) the dwelling is to be made available as mentioned in paragraph (a) for purposes that are solely or mainly purposes of the relievable business.

(3) For the purposes of the relief under this paragraph it does not matter whether or not the individuals mentioned in sub-paragraph (2)(a) are identified at the time of the chargeable transaction.

(4) “Relievable business” means a trade or property rental business that is run on a commercial basis and with a view to profit.

(5) In this paragraph references to making a dwelling available to a qualifying employee or qualifying partner include making it available to persons who are to share the accommodation with a qualifying employee or qualifying partner as that individual's family.

(6) Where the purchaser is a company, “relevant group member” means a company which is a member of the same group of companies as the purchaser for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief).

More about the condition in paragraph 5D(2)(a)

5E

(1) In a case where the person carrying on the relievable business mentioned in paragraph 5D(1) carries it on in partnership with one or more other persons, “qualifying partner” means any individual who is a member of the partnership.

(2) “Qualifying employee” means an individual employed for the purposes of the relievable business.

(3) In a case falling within sub-paragraph (1), the condition in paragraph 5D(2)(a) is taken not to be met if the individuals, or a class of individuals, to whom it is proposed to make the dwelling available for use as living accommodation include, or are likely to include, a member of the partnership who is (or will at the relevant time be) entitled to a 10% or greater share—

(a) in the income profits of the partnership, or

(b) in any company beneficially entitled to the higher threshold interest mentioned in paragraph 5D(1), or

(4) In addition, the condition in paragraph 5D(2)(a) is taken not to be met if the individuals, or a class of individuals, to whom it is proposed to make the dwelling available for use as living accommodation include, or are likely to include, an individual employed for the purposes of the relievable business in question who is (or will at the relevant time be)—

(a) entitled to a 10% or greater share—

(i) in the income profits of the relievable business, or

(ii) in any company that is beneficially entitled to the higher threshold interest, or

(iii) in that higher threshold interest, or

(b) employed to provide excluded domestic services.

(5) The reference in sub-paragraph (4)(b) to an individual employed to provide excluded domestic services is to an individual the duties of whose employment include the provision of services in connection with the (actual or intended) occupation, by an individual to whom sub-paragraph (6) applies, of the dwelling mentioned in paragraph 5D(2)(a) (“the relevant dwelling”), or a linked dwelling.

(6) This sub-paragraph applies to any individual who is connected with a person who is or is to be beneficially entitled to the higher threshold interest.

(7) The following are “linked” dwellings for the purposes of sub-paragraph (5)—

(a) if the conditions in section 116(2) of the Finance Act 2013 are met in relation to the relevant dwelling and another dwelling, that other dwelling;

(b) a dwelling that is linked to the relevant dwelling, as described in section 117(1) of the Finance Act 2013.

(8) For the purposes of sub-paragraphs (3)(c) and (4)(a) persons who are entitled to a chargeable interest as beneficial joint tenants (or, in Scotland, as joint owners) are taken to be entitled to the chargeable interest as beneficial tenants in common (or, in Scotland, as owners in common) in equal shares.

(9) Section 147 of the Finance Act 2013 (meaning of “10% or greater share in a company”) applies for the purposes of this paragraph as for the purposes of section 146 of that Act.

(10) In this paragraph references to employment include the holding of an office.

Farmhouses

5F

(1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in or over a dwelling—

(a) that is, or is to be, a farmhouse, and

(b) in relation to which the conditions in sub-paragraph (3) are met.

(2) The reference in sub-paragraph (1) to a dwelling that “is or is to be a farmhouse” is to a dwelling that forms part of land that is to be occupied, or to continue to be occupied, for the purposes of a qualifying trade of farming.

(3) The conditions are that—

(a) the dwelling is to be occupied for the purposes of that trade by a qualifying farm worker,

(b) reasonable commercial plans have been formulated under which such occupation is either to continue from the effective date of the chargeable transaction or to begin without delay (except so far as delay may be justified by commercial considerations or cannot be avoided), and

(c) occupation of the farmhouse by a qualifying farm worker is then expected to continue as part of the normal way in which the trade is, or is to be, carried on.

(4) In sub-paragraph (3) “qualifying farm worker” means an individual who occupies the dwelling for the purposes of the trade mentioned in that sub-paragraph and has a substantial involvement—

(a) in the day-to-day work of the trade, or

(b) in the direction and control of the conduct of the trade.

(5) “Qualifying trade of farming” means a trade of farming that is carried on—

(a) on a commercial basis, and

(b) with a view to profit.

(6) A person occupying part of a dwelling is regarded as occupying the dwelling for the purposes of this paragraph.

(7) In this paragraph—

(a) “farming” has the same meaning as in the Corporation Tax Acts (see section 1125 of CTA 2010), except that in this paragraph “farming” includes market gardening;

(b) “market gardening” has the same meaning as in the Corporation Tax Acts (see section 1125(5) of CTA 2010).

Withdrawal of relief

5G

(1) Sub-paragraph (2) applies where relief under paragraph 5 has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) a requirement in sub-paragraph (3) is not met.

(3) The requirements are that—

(a) the higher threshold interest (if still held by the purchaser) is held exclusively for one or more of the purposes mentioned in paragraph 5(1),

(b) any chargeable interest derived from the higher threshold interest that may be held by the purchaser is held exclusively for one or more of those purposes, and

(c) (if the higher threshold interest or a chargeable interest derived from it is held by the purchaser) no non-qualifying individual is permitted to occupy any dwelling on the land.

(4) The requirements in sub-paragraph (3)(a) and (b) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the purposes for which the higher threshold interest was acquired to be carried out.

(5) Sub-paragraph (6) applies if a higher threshold interest was acquired for a purpose mentioned in paragraph 5(1) but at some time in the control period the activity in question (for instance, exploitation of the interest as mentioned in paragraph 5(1)(a))—

(a) has not yet begun, or

(b) has ceased.

(6) For the purposes of sub-paragraph (3), the interest is taken to be held for the purpose in question only if reasonable steps are being taken to ensure that the purpose in question is carried out.

(7) In this paragraph “non-qualifying individual” (in relation to the chargeable transaction mentioned in sub-paragraph (1)) has the meaning given by paragraph 5A.

5H

(1) This paragraph applies where relief under paragraph 5B (trades involving making a dwelling open to the public) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) a requirement in sub-paragraph (3) is not met.

(3) The requirements are that—

(a) the higher threshold interest (if still held by the purchaser), is being exploited as a source of income in the course of a qualifying trade, and

(b) any chargeable interest derived from that interest that may be held by the purchaser is being exploited as mentioned in paragraph (a).

(4) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the chargeable interest concerned to be exploited in the manner specified.

(5) Sub-paragraph (6) applies if at some time in the control period the higher threshold interest, or a chargeable interest derived from it—

(a) has not begun to be exploited as mentioned in sub-paragraph (3), or

(b) has ceased to be so exploited.

(6) The requirements in sub-paragraph (3) are treated as being met if reasonable steps are being taken to ensure that the chargeable interest in question begins to be exploited as mentioned in that sub-paragraph, or that such exploitation of the interest is resumed.

5I

(1) This paragraph applies where relief under paragraph 5C (financial institutions acquiring dwellings in the course of lending) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if any requirement in sub-paragraph (3) is not met at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) (but see sub-paragraphs (4) and (5)).

(3) The requirements are that—

(a) the purchaser continues to be a financial institution carrying on a business that involves the lending of money, and

(b) the interest is held for the purpose of resale in the course of the business.

(4) The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—

(a) the higher threshold interest, or

(b) a chargeable interest that is derived from the higher threshold interest.

(5) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.

5J

(1) This paragraph applies where relief under paragraph 5D (dwellings for occupation by certain employees etc) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if any requirement in sub-paragraph (3) is not met at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) (but see sub-paragraphs (4) and (5)).

(3) The requirements are that—

(a) the purchaser, or a relevant group member (as defined in paragraph 5D(6)), carries on a relievable business,

(b) the dwelling is made available as mentioned in paragraph 5D(2)(a), and

(4) The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—

(a) the higher threshold interest, or

(b) a chargeable interest that is derived from the higher threshold interest.

(5) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.

(6) Sub-paragraph (7) applies if at some time in the control period the dwelling—

(a) has not begun to be made available as mentioned in sub-paragraph (3)(b) and (c), or

(b) has ceased to be so made available.

(7) The requirements in paragraphs (b) and (c) of sub-paragraph (3) are treated as being met if reasonable steps are being taken to ensure that the dwelling will begin to be, or will return to being, available as mentioned in those paragraphs.

5K

(1) This paragraph applies where relief under paragraph 5F (farmhouses) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) the requirements in sub-paragraph (3) are not met (but see sub-paragraphs (4) and (5)).

(3) The requirements are that—

(a) the land mentioned in paragraph 5F(2) is occupied for the purposes of a qualifying trade of farming, and

(b) the dwelling is occupied for the purposes of that trade by a qualifying farm worker.

(4) The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—

(a) the higher threshold interest, or

(b) a chargeable interest that is derived from the higher threshold interest.

(5) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.

(6) Sub-paragraph (7) applies if at some time in the control period a requirement in sub-paragraph (3)—

(a) has not begun to be met, or

(b) has ceased to be met.

(7) The requirement is treated as being met if reasonable steps are being taken to ensure that the requirement begins to be met, or is again met.

Modifications for cases involving alternative finance arrangements

6A

(1) This paragraph applies where—

(a) section 71A (land sold to financial institution and leased to person), section 72 (land in Scotland sold to financial institution and leased to person) or section 73 (land sold to financial institution and re-sold to person) applies, and

(b) the major interest in land purchased under the first transaction consists of or includes a higher threshold interest.

(2) In this paragraph “the first transaction” means—

(a) where section 71A applies, the transaction mentioned in section 71A(1)(a);

(b) where section 72 applies, the transaction mentioned in section 72(1)(a);

(3) The condition in paragraph 3(3) is treated as being met with respect to the first transaction only if that condition is met with respect to the second transaction.

(4) If the second transaction would qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) , 5F(1) and 5FA (disregarding the exemptions in sections 71A(3), 72(3) and 73(3) and assuming, for this purpose, that the subject-matter of the second transaction is a higher threshold interest), the first transaction is taken to qualify for relief under the same provision (and accordingly paragraph 3 does not apply in relation to the first transaction).

(5) The first transaction does not qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) , 5F(1) or 5FA except in accordance with sub-paragraph (4).

(6) In this paragraph “the second transaction” has the same meaning as in section 71A, 72 or 73 (as the case requires).

6B

(1) This paragraph applies where section 72A (land in Scotland sold to financial institution and person in common) applies and the major interest in land purchased under the transaction mentioned in section 72A(1)(a) (“the first transaction”) consists of or includes a higher threshold interest.

(2) In determining whether or not the first transaction meets the condition in paragraph 3(3) it is to be assumed that the financial institution referred to in section 72A(1) is not one of the persons acquiring the major interest in land under that transaction.

(3) Paragraphs 5 to 5F have effect in relation to the first transaction as they would have effect if the financial institution were not a purchaser under that transaction.

Paragraphs 6A and 6B: application where transaction is split under paragraph 2(3)

6C

(1) Where paragraph 6A or 6B (“the modifying paragraph”) applies and the first transaction (within the meaning of that paragraph) is treated under paragraph 2(3) as two separate chargeable transactions, references in the modifying paragraph to the first transaction include those separate transactions.

(2) If the subject-matter of the second transaction (within the meaning of paragraph 6A) includes a chargeable interest other than a higher threshold interest, that fact is ignored in determining for the purposes of paragraph 6A—

(a) whether that transaction meets the condition in paragraph 3(3), or

(b) whether it would qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) , 5F(1) and 5FA.

Alternative finance arrangements: withdrawal of relief

6D

(1) This paragraph applies where relief under paragraph 5 (businesses of letting, trading in or redeveloping properties) has been allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the first transaction (“the control period”) a relevant requirement is not met.

(3) The relevant requirements are that—

(a) any relevant interest (see sub-paragraphs (5) and (6)) held by the relevant person is held by that person exclusively for one or more of the purposes mentioned in paragraph 5(1), and

(b) (if a relevant interest is held by the relevant person) no non-qualifying individual is permitted to occupy any dwelling on the land concerned.

(4) For the purposes of sub-paragraph (3)(a) and (b) it does not matter whether the relevant interest is held by the relevant person—

(a) jointly or (in Scotland) in common, or

(b) otherwise.

(5) In relation to relief allowed in accordance with sub-paragraph 6A(4), “relevant interest” means any of the following—

(a) the interest acquired under the second transaction (within the meaning of paragraph 6A);

(b) any interest transferred to the relevant person as a result of the exercise of the right mentioned in section 71A(1)(d) or 72(1)(c);

(6) In relation to relief allowed in accordance with paragraph 6B(3), “relevant interest” means any of the following—

(a) the interest purchased under the first transaction (within the meaning of paragraph 6B);

(b) any interest transferred to the relevant person as a result of the exercise of the right mentioned in section 72A(1)(c);

(7) In this paragraph—

“non-qualifying individual” (in relation to the chargeable transaction mentioned in sub-paragraph (1)) has the meaning given by paragraph 5A;

“the relevant person” means the person (other than the financial institution) who entered into the arrangements in question as mentioned in section 71A(1), 72(1), 72A(1) or 73(1).

6E

(1) The requirement in paragraph 6D(3)(a) does not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect the interest in question to be held for the purpose for which the relevant person acquired that person's initial interest.

(2) Sub-paragraph (3) applies if the relevant person's initial interest was acquired by the relevant person for a purpose mentioned in paragraph 5(1), but at some time in the control period the activity in question (for instance, exploitation as mentioned in paragraph 5(1)(a))—

(a) has not begun in the case of a relevant interest, or

(b) has ceased in the case of a relevant interest.

(3) For the purposes of paragraph 6D(3)(a) the relevant interest is taken to be held for the purpose in question only if reasonable steps are being taken to ensure that the purpose in question is carried out.

(4) In this paragraph—

(a) “the control period”, “relevant interest” and “the relevant person” have the same meaning as in paragraph 6D;

(b) references to the relevant person's “initial interest” are to the interest mentioned in sub-paragraph (5)(a) or (6)(a) of paragraph 6D (as the case requires).

6F

(1) This paragraph applies where relief under paragraph 5B (trades involving making a dwelling open to the public) has been allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the first transaction (“the control period”) the requirement in sub-paragraph (3) is not met.

(3) The requirement is that the dwelling is being exploited as a source of income in the course of a qualifying trade.

(4) The requirement in sub-paragraph (3) does not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect the interest in question to be exploited as mentioned in that sub-paragraph.

(5) Sub-paragraph (6) applies if at some time in the control period that person—

(a) has not begun to exploit the interest as a source of income in the course of a relevant trade, or

(b) has ceased so to exploit it.

(6) The requirement in sub-paragraph (3) is treated as being met if reasonable steps are being taken to ensure that the relevant interest begins to be exploited as mentioned in that sub-paragraph, or that such exploitation of the interest is resumed.

(7) In this paragraph—

(a) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1), 72A(1) or 73(1);

(b) references to a major interest in land include an undivided share in a major interest in land.

6G

(1) This paragraph applies where relief under paragraph 5D (dwellings for occupation by certain employees etc) has been allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.

(2) The relief is withdrawn if at any time in the control period when the relevant person holds a relevant interest (whether jointly, or in common, or otherwise) any requirement in sub-paragraph (4) is not met.

(3) In sub-paragraph (2) “the control period” means the three years beginning with the effective date of the first transaction.

(4) The requirements are that—

(a) the relevant person, or a relevant group member, carries on a relievable business,

(b) the dwelling is made available as mentioned in paragraph 5D(2)(a), and

(c) the dwelling is made so available for purposes that are solely or mainly purposes of the relievable business mentioned in sub-paragraph (a).

(5) The requirements in sub-paragraph (4) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect those requirements to be met.

(6) Sub-paragraph (7) applies if at some time in the control period the relevant interest—

(a) has not begun to be made available as mentioned in sub-paragraph (4)(b) and (c), or

(b) has ceased to be so made available.

(7) The requirements in paragraphs (b) and (c) of sub-paragraph (4) are treated as being met if reasonable steps are being taken to ensure that the dwelling will begin to be, or will return to being, made available as mentioned in those paragraphs.

(8) Where the relevant person is a company, “relevant group member” means a company which is a member of the same group of companies as the relevant person for the purposes mentioned in paragraph 1(2) of Schedule 7.

(9) In this paragraph—

(a) “relevant interest” has the same meaning as in paragraph 6D;

(b) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1), 72A(1) or 73(1);

6H

(1) This paragraph applies where relief under paragraph 5F (farmhouses) has been allowed, in accordance with paragraph 6A(4) or 6B(3), in relation to the purchase of a major interest in land.

(2) The relief is withdrawn if at any time in the control period when the relevant person holds a relevant interest (whether jointly, or in common, or otherwise) any requirement in sub-paragraph (4) is not met.

(3) In sub-paragraph (2) “the control period” means the three years beginning with the effective date of the first transaction.

(4) The requirements are that—

(a) the land mentioned in paragraph 5F(2) is occupied for the purposes of a qualifying trade of farming, and

(b) the dwelling is occupied for the purposes of that trade by a qualifying farm worker.

(5) The requirements in sub-paragraph (4) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect those requirements to be met.

(6) Sub-paragraph (7) applies if at some time in the control period a requirement in sub-paragraph (4)—

(a) has not begun to be met, or

(b) has ceased to be met.

(7) The requirement is treated as being met if reasonable steps are being taken to ensure that the requirement begins to be met, or is again met.

(8) In this paragraph—

(a) “the relevant interest” has the same meaning as in paragraph 6D;

(b) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1), 72A(1) or 73(1);

Acquisition by property trader from individual acquiring new dwelling

3A

(1) This paragraph applies where—

(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 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,

(d) paragraph 9A (backdated lease granted to tenant holding over) does not apply.

(2) Paragraph 3 does not apply to treat the lease as continuing after the original term.

(3) The term of the new lease is treated for the purposes of this Part as beginning immediately after the original 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 1A of Schedule 5 does not apply to it).

(5) Where the fixed term of a lease has previously been extended (on one or more occasions) under paragraph 3, this paragraph applies as if references to the original term were references to the fixed term as previously so extended.

Meaning of “restricted shares”

Joint purchasers: partial relief

3A

(1) Sub-paragraphs (3) to (5) apply in any case where—

(a) there are two or more purchasers under a land transaction,

(b) the purchasers acquire the subject-matter of the transaction as tenants in common (or, in Scotland, as owners in common),

(d) no purchaser enters into the transaction for the purpose of the avoidance of tax under this Part (whether by that purchaser or another person).

(2) A charity (“C”) that is a purchaser under a land transaction is a “qualifying charity” in relation to the transaction if C intends to hold its undivided share of the subject-matter of the transaction for qualifying charitable purposes.

(3) The tax chargeable in respect of the transaction is reduced by the amount of the relief under sub-paragraph (4).

(4) The relief is equal to the relevant proportion of the tax that would have been chargeable in respect of the transaction without this Schedule.

(5) The “relevant proportion”, in the case of a qualifying charity, is the lower of P1 and P2, where—

P1 is the proportion of the subject-matter of the transaction that is acquired by all the qualifying charities that are purchasers under the transaction (in aggregate);

P2 is the proportion of the chargeable consideration for the transaction that is given by all the qualifying charities that are purchasers under the transaction (in aggregate).

Withdrawal of relief given under paragraph 3A

3B

(1) This paragraph applies where—

(a) relief has been given under paragraph 3A in respect of a transaction (“the relevant transaction”),

(b) a disqualifying event occurs in relation to a qualifying charity (“C”) which was a purchaser under the transaction, and

(2) The disqualifying event must occur—

(a) before the end of the period of 3 years beginning with the effective date of the transaction, or

(b) in pursuance of, or in connection with, arrangements made before the end of that period.

(3) At the time of the disqualifying event C must hold a chargeable interest that—

(a) was acquired by C under the relevant transaction, or

(b) is derived from an interest so acquired.

(4) There is a “disqualifying event” in relation to C if —

(a) C ceases to be established for charitable purposes only, or

(b) the chargeable interest acquired by C under the transaction, or any interest or right derived from that interest, is used or held by C otherwise than for qualifying charitable purposes.

(5) C's portion of the relief mentioned in sub-paragraph (1)(a), or an appropriate proportion of C's portion of that relief, is withdrawn and tax is chargeable in accordance with this paragraph.

(6) The amount chargeable is equal to C's portion of the relief or, as the case may be, the appropriate proportion of C's portion of the relief.

(7) C's portion of the relief depends on whether P1 or P2 was lower in the calculation under paragraph 3A(5).

(8) If P1 was lower, C's portion of the relief is equal to—

$$p1 P1 × R$where—p1 is the proportion of the subject-matter of the transaction that was acquired by C under the transaction;P1 has the same meaning as in paragraph 3A(5);$

(9) If P2 was lower, C's portion of the relief is equal to—

$$p2 P2 × R$where—p2 is the proportion of chargeable consideration for the transaction that was given by C;P2 has the same meaning as in paragraph 3A(5);$

(10) In sub-paragraphs (5) and (6) “appropriate proportion” means an appropriate proportion having regard to—

(a) what was acquired by C under the relevant transaction and what is held by C at the time of the disqualifying event, and

(b) the extent to which what is held by C at that time becomes used or held for purposes other than qualifying charitable purposes.

Partial relief: charity not fully meeting the “qualifying charity” condition

3C

(1) This paragraph applies where—

(a) a charity (“C”) is one of two or more purchasers acquiring the subject-matter of a land transaction (“the relevant transaction”) as tenants in common (or, in Scotland, as owners in common),

(b) C is not a qualifying charity in relation to the transaction,

(d) C intends to hold the greater part of its undivided share of the subject-matter of the transaction for qualifying charitable purposes.

(2) In such a case—

(a) paragraph 3A has effect as if C were a qualifying charity, but

(b) for the purposes of paragraph 3B (withdrawal of relief under paragraph 3A) “disqualifying event” includes any additional disqualifying transaction.

(3) The following are “additional disqualifying transactions” if they are not made in furtherance of the charitable purposes of C—

(a) any transfer by C of a major interest in the whole or any part of the chargeable interest acquired by C under the relevant transaction;

(b) any grant by C at a premium of a low-rental lease of the whole or any part of that chargeable interest.

(4) Paragraph 3(3) (meaning of “at a premium” and “low-rental”) applies for the purposes of sub-paragraph (3)(b) as it applies for the purposes of paragraph 3(2)(b)(ii).

(5) In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 3B—

(a) the date of the event for those purposes is the effective date of the transaction;

(b) paragraph 3B has effect with the modifications in sub-paragraph (6).

(6) The modifications to paragraph 3B are—

(a) in sub-paragraph (3), for “At the time of” substitute “ Immediately before ”;

(b) in sub-paragraph (10)(a), for “at the time of” substitute “ immediately before and immediately after ”;

Introduction

Gifts with reservation

Rate of landfill tax

Companies acquiring their own shares

Abolition of accounting requirements relating to investment deposits

Transfer of chargeable interest to a partnership: general

Introduction

48A

(1) This section sets out how this Part applies to a transaction which is the acquisition of—

(a) an estate, interest, right or power in or over land, or

(b) the benefit of an obligation, restriction or condition affecting the value of any such estate, interest, right or power,

where the land is partly in England and partly in Wales.

(2) The transaction is to be treated as if it were two transactions, one relating to the land in England (“the English transaction”) and the other relating to the land in Wales.

(3) The consideration for the transaction is to be apportioned between those two transactions on a just and reasonable basis.

(4) Accordingly, the English transaction is to be treated as a land transaction within the meaning of this Part (being the acquisition of a chargeable interest relating to the land in England).

(5) But subsection (4) does not apply in the case of an exempt interest.

(6) See section 9 of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 0) as to the application of that Act to the transaction relating to the land in Wales.

Taxable benefits: lower threshold for cars with a CO2 emissions figure

Deferred unascertainable consideration: election for treatment of loss

Supplies not known to be taxable when made, etc

Ordinary accounts and investment accounts

Meaning of “restricted shares”

65A

(1) Schedule 7A provides for relief from stamp duty land tax.

(2) In that Schedule—

(a) Part 1 makes provision for relief for property authorised investment funds (PAIF seeding relief), and

(b) Part 2 makes provision for relief for co-ownership authorised contractual schemes and Reserved Investor Funds (Contractual Schemes) (co-ownership scheme seeding relief).

(3) Any relief under that Schedule must be claimed in a land transaction return or an amendment of such a return, and must be accompanied by a notice to HMRC referring to the claim.

(4) In the case of a claim for PAIF seeding relief, the notice must confirm that the purchaser is—

(a) a property AIF as defined in paragraph 2(2) of Schedule 7A, or

(b) a company treated as a property AIF by virtue of paragraph 2(5) of Schedule 7A (equivalent EEA funds).

(5) In the case of a claim for co-ownership scheme seeding relief, the notice must confirm that the purchaser is—

(a) a co-ownership authorised contractual scheme or a Reserved Investor Fund (Contractual Scheme) as defined in section 102A(8), or

(b) an entity treated as a co-ownership authorised contractual scheme by virtue of section 102A(7) (equivalent EEA schemes).

(6) The notice must be in such form, and contain such further information, as HMRC may require.

(7) Co-ownership scheme seeding relief may not be claimed where the purchaser is a Reserved Investor Fund (Contractual Scheme) if the scheme—

(a) has previously claimed such relief, and

(b) following that claim ceased, at any time, to be a Reserved Investor Fund (Contractual Scheme).

102A

(1) This section has effect for the purposes of this Part.

(2) This Part, with the exception of Schedule 7 (see subsection (10)), applies in relation to a co-ownership ... contractual scheme as if—

(a) the scheme were a company, and

(b) the rights of the participants were shares in the company.

(2A) In this Part, a “co-ownership contractual scheme” means—

(a) a co-ownership authorised contractual scheme, or

(b) a Reserved Investor Fund (Contractual Scheme).

(3) An “umbrella scheme” means a co-ownership ... contractual scheme—

(a) whose arrangements provide for separate pooling of the contributions of the participants and the profits or income out of which payments are made to them (“pooling arrangements”), and

(b) under which the participants are entitled to exchange rights in one pool for rights in another.

(4) A “sub-scheme”, in relation to an umbrella scheme, means such of the pooling arrangements as relate to a separate pool.

(5) Each of the sub-schemes of an umbrella scheme is regarded as a separate co-ownership ... contractual scheme, and the umbrella scheme as a whole is not so regarded.

(6) In relation to a sub-scheme of an umbrella scheme—

(a) references to chargeable interests are references to such of the chargeable interests as under the pooling arrangements form part of the separate pool to which the sub-scheme relates, and

(b) references to the scheme documents are references to such parts of the documents as apply to the sub-scheme.

(7) References to a co-ownership authorised contractual scheme are treated as including a collective investment scheme which—

(a) is constituted under the law of an EEA State ... by a contract,

(b) is managed by a body corporate incorporated under the law of any part of the United Kingdom or of an EEA State, and

(c) is authorised under the law of the EEA State mentioned in paragraph (a) in a way which makes it, under that law, the equivalent of a co-ownership authorised contractual scheme as defined in subsection (8),

provided that, apart from this section, no charge to tax is capable of arising to the scheme under this Part.

(8) Subject to any regulations under subsection (9)—

“co-ownership authorised contractual scheme” means a co-ownership scheme which is authorised for the purposes of FSMA 2000 by an authorisation order in force under section 261D(1) of that Act;

“co-ownership scheme” has the same meaning as in FSMA 2000 (see section 235A of that Act);

“Reserved Investor Fund (Contractual Scheme)” has the meaning given by section 20 of the Finance (No.2) Act 2024.

(9) The Treasury may by regulations provide that a scheme of a description specified in the regulations is to be treated as not being a co-ownership authorised contractual scheme or a Reserved Investor Fund (Contractual Scheme) for the purposes of this Part.

Any such regulations may contain such supplementary and transitional provisions as appear to the Treasury to be necessary or expedient.

(10) A co-ownership ... contractual scheme is not to be treated as a company for the purposes of Schedule 7 (group relief, reconstruction relief or acquisition relief).

(11) In relation to a land transaction in respect of which a co-ownership ... contractual scheme is treated as the purchaser by virtue of this section, references to the purchaser in the following provisions are to be read as references to the operator of the scheme—

(a) sections 76, 80, 81, 81A and 108(2) and Schedule 10 (provisions about land transaction returns and further returns, enquiries, assessments and related matters),

(b) section 85 (liability for tax), and

(12) In this section—

“collective investment scheme” has the meaning given by section 235 of FSMA 2000;

“FSMA 2000” means the Financial Services and Markets Act 2000;

“operator”—in relation to a co-ownership ... contractual scheme constituted under the law of the United Kingdom, has the meaning given by section 237(2) of FSMA 2000, andin relation to a collective investment scheme treated as a co-ownership authorised contractual scheme by virtue of subsection (7) (equivalent EEA schemes), means the corporate body responsible for the management of the scheme (however described);

“participant” is to be read in accordance with section 235 of FSMA 2000.

Circumstances in which group relief withdrawn

Provision of services through intermediary

Indexed rate bands for 2003-04: PAYE deductions etc

Deferred unascertainable consideration: election for treatment of loss

Debt Management Account: abolition of borrowing cap

SCHEDULE 4ZA

PART 1 — Higher rates

1

(1) In its application for the purpose of determining the amount of tax chargeable in respect of a chargeable transaction which is a higher rates transaction, section 55 (amount of tax chargeable: general) has effect with the modification in sub-paragraph (2).

(2) In subsection (1B) of section 55, for Table A substitute—

Part of relevant consideration	Percentage
So much as does not exceed £125,000	5%
So much as exceeds £125,000 but does not exceed £250,000	7%
So much as exceeds £250,000 but does not exceed £925,000	10%
So much as exceeds £925,000 but does not exceed £1,500,000	15%
The remainder (if any)	17%

PART 2 — Meaning of “higher rates transaction”

Meaning of “higher rates transaction” etc

2

(1) This paragraph explains how to determine whether a chargeable transaction is a “higher rates transaction” for the purposes of paragraph 1.

(2) In the case of a transaction where there is only one purchaser, determine whether the transaction falls within any of paragraphs 3 to 7; if it does fall within any of those paragraphs it is a “higher rates transaction” (otherwise it is not).

(3) In the case of a transaction where there are two or more purchasers—

(a) take one of the purchasers and determine, having regard to that purchaser only, whether the transaction falls within any of paragraphs 3 to 7, and

(b) do the same with each of the other purchasers.

If the transaction falls within any of those paragraphs when having regard to any one of the purchasers it is a “higher rates transaction” (otherwise it is not).

(3A) Sub-paragraphs (2) and (3) are subject to paragraph 9A (spouses and civil partners purchasing from one another).

(4) 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.

(5) References in this Schedule to a major interest in a dwelling include an undivided share in a major interest in a dwelling.

Single dwelling transactions

3

(1) A chargeable transaction falls within this paragraph if—

(a) the purchaser is an individual,

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

(1A) But sub-paragraph (1) is subject to paragraph 7A.

(2) Condition A is that the chargeable consideration for the transaction is £40,000 or more.

(3) Condition B is that on the effective date of the transaction the purchased dwelling—

(a) is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or

(b) is subject to such a lease but the lease has an unexpired term of no more than 21 years.

(4) Condition C is that at the end of the day that is the effective date of the transaction—

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

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

(5) Condition D is that the purchased dwelling is not a replacement for the purchaser's only or main residence.

(6) For the purposes of sub-paragraph (5) the purchased dwelling is a replacement for the purchaser's only or main residence if—

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

(b) in another land transaction (“the previous transaction”) whose effective date was during the period of three years ending with the effective date of the transaction concerned, the purchaser or the purchaser's spouse or civil partner at the time disposed of a major interest in another dwelling (“the sold dwelling”),

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

(c) at any time during the period of three years referred to in paragraph (b) the sold dwelling was the purchaser's only or main residence, and

(d) 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 purchaser or the purchaser's spouse or civil partner acquired a major interest in any other dwelling with the intention of it being the purchaser's only or main residence.

(6A) Sub-paragraph (6)(ba) does not apply in relation to a spouse or civil partner of the purchaser if the two of them were not living together (see paragraph 9(3)) on the effective date of the transaction concerned.

(7) For the purposes of sub-paragraph (5) the purchased dwelling is also a replacement for the purchaser's only or main residence if—

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

(b) in another land transaction whose effective date is during a permitted period, the purchaser or the purchaser's spouse or civil partner disposes of a major interest in another dwelling (“the sold dwelling”),

(ba) immediately after the effective date of that other land transaction, neither the purchaser nor the purchaser's spouse or civil partner has a major interest in the sold dwelling, and

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

(7A) For the purposes of sub-paragraph (7)(b), the permitted periods are—

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

(b) if HMRC are satisfied that the purchaser or the purchaser's spouse or civil partner would have disposed of the major interest in the sold dwelling within that three year period but was prevented from doing so by exceptional circumstances that could not reasonably have been foreseen, such longer period as HMRC may allow in response to an application made in accordance with sub-paragraph (7B).

(7B) An application for the purposes of sub-paragraph (7A)(b) must—

(a) be made within the period of 12 months beginning with the effective date of the transaction disposing of the major interest in the sold dwelling, and

(b) be made in such form and manner, and contain such information, as may be specified by HMRC.

(7C) Schedule 11A (claims not included in returns) does not apply in relation to an application made in accordance with sub-paragraph (7B).

(8) Sub-paragraph (7)(ba) does not apply in relation to a spouse or civil partner of the purchaser if the two of them are not living together (see paragraph 9(3)) on the effective date of that other land transaction.

4

A chargeable transaction falls within this paragraph if—

(a) the purchaser is not an individual,

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

Multiple dwelling transactions

5

(1) A chargeable transaction falls within this paragraph if—

(a) the purchaser is an individual,

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

(2) A purchased dwelling meets condition A 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) A purchased dwelling meets condition B if on the effective date of the transaction the purchased dwelling—

(a) is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or

(b) is subject to such a lease but the lease has an unexpired term of no more than 21 years.

(4) A purchased dwelling meets condition C if it is not subsidiary to any of the other purchased dwellings.

(5) 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.

6

(1) A chargeable transaction falls within this paragraph if—

(a) the purchaser is an individual,

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

(d) the purchased dwelling which meets those conditions is not a replacement for the purchaser's only or main residence, and

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

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

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

(iii) that interest is not reversionary on a lease which has an unexpired term of more than 21 years.

(1A) But sub-paragraph (1) is subject to paragraph 7A.

(2) Sub-paragraphs (2) to (5) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph.

(3) Sub-paragraphs (6) to (8) of paragraph 3 apply for the purposes of sub-paragraph (1)(d) of this paragraph as they apply for the purposes of sub-paragraph (5) of that paragraph.

7

(1) A chargeable transaction falls within this paragraph if—

(a) the purchaser 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

(2) Sub-paragraphs (2) and (3) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph.

PART 3 — Supplementary provisions

Further provision in connection with paragraph 3(6) and (7)

8

(1) This paragraph applies where by reason of paragraph 3(7) a chargeable transaction (“the transaction concerned”) is not a higher rates transaction for the purposes of paragraph 1.

(2) The land transaction (“the subsequent transaction”) by reference to which the condition in paragraph 3(7)(b) is met may not be taken into account for the purposes of paragraph 3(6)(b) in determining whether any other chargeable transaction is a higher rates transaction.

(3) A land transaction return in respect of the transaction concerned may be amended, to take account of the application of paragraph 3(7) by virtue of paragraph 3(7A)(a), at any time within the period of 12 months beginning with—

(a) the effective date of the subsequent transaction, or

(b) if later, the filing date for the return.

(4) Where a land transaction return in respect of the transaction concerned is amended to take account of the application of paragraph 3(7) by virtue of paragraph 3(7A)(a) (and not for any other reason), paragraph 6(2A) of Schedule 10 (notice of amendment of return to be accompanied by the contract for the transaction etc) does not apply in relation to the amendment.

(5) Where HMRC grant an application made in accordance with paragraph 3(7B)—

(a) the land transaction return in respect of the transaction concerned is treated as having been amended to take account of the application of paragraph 3(7) by virtue of paragraph 3(7A)(b), and

(b) HMRC must notify the purchaser accordingly.

Spouses and civil partners purchasing alone

9

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

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

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

(2) The transaction is to be treated as being a higher rates transaction for the purposes of paragraph 1 if it would have been a higher rates transaction had the purchaser's spouse or civil partner been a purchaser.

(3) Persons who are married to, or are civil partners of, each other are treated as living together for the purposes of this Schedule if they are so treated for the purposes of the Income Tax Acts (see section 1011 of the Income Tax Act 2007).

Settlements and bare trusts

10

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

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

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

(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 purchaser (or one of them) is acting as a trustee of a bare trust.

(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 purchaser (or as one of them).

(4) Paragraphs 3(3) and 4 of Schedule 16 (trustees to be treated as the purchaser) have effect subject to sub-paragraph (3).

11

(1) Sub-paragraph (3) applies where—

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

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

(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, 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.

12

(1) This paragraph applies where, by reason of paragraph 10 or 11 or paragraph 3(1) of Schedule 16, the child of a person (“P”) would (but for this paragraph) be treated for the purposes of this Schedule as—

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

(b) holding an interest in a dwelling, or

(1A) But this paragraph does not apply if the trustee (or any of the trustees) of the settlement or bare trust concerned—

(a) was the purchaser in relation to the land transaction,

(b) holds the interest in the dwelling, or

in the exercise of powers conferred on the trustee by reason of a relevant court appointment made in respect of the child concerned.

(1B) In sub-paragraph (1A) “relevant court appointment” means—

(a) an appointment under section 16 of the Mental Capacity Act 2005,

(b) an appointment under section 113 of the Mental Capacity Act (Northern Ireland) 2016, or

(2) Where this paragraph applies—

(a) P and any relevant spouse or civil partner of P are to be treated for the purposes of this Schedule as being the purchaser, 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) For the purposes of sub-paragraph (2) a spouse or civil partner of P is “relevant” if the spouse or civil partner—

(a) is not a parent of the child, and

(b) is living together with P (see paragraph 9(3)).

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) “Child” means a person under the age of 18.

13

(1) This paragraph applies in relation to a land transaction if—

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

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

(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 the transaction falls within paragraph 4 or paragraph 7—

(a) if the purchaser mentioned in sub-paragraph (1) is the only purchaser, ignore paragraph (a) of those paragraphs, and

(b) if that purchaser is not the only purchaser, ignore paragraph (a) of those paragraphs when having regard to that purchaser.

Partnerships

14

(1) Sub-paragraph (2) applies in relation to a chargeable transaction whose subject-matter consists of a major interest in one or more dwellings if—

(a) the purchaser (or one of them) is a partner in a partnership, but

(b) the purchaser does not enter into the transaction for the purposes of the partnership.

(2) For the purposes of determining whether the transaction falls within paragraph 3 or 6 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 purchaser.

(3) Paragraph 2(1)(a) of Schedule 15 (chargeable interests held by partnerships treated as held by the partners) has effect subject to sub-paragraph (2).

Alternative finance arrangements

15

(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.

(2) The person (rather than the institution) is to be treated for the purposes of this Schedule as the purchaser in relation to the transaction.

(3) In this paragraph—

“alternative finance arrangement” means an arrangement of a kind mentioned in section 71A(1) or 73(1);

“financial institution” has the meaning it has in those sections (see section 73BA);

“first transaction”, in relation to an alternative finance arrangement, has the meaning given by section 71A(1)(a) or (as the case may be) section 73(1)(a)(i).

Major interests in dwellings inherited jointly

16

(1) This paragraph applies where by virtue of an inheritance—

(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 3(4)(a) or 6(1)(e) as having the major interest at any time during the period of three years beginning with the date of the inheritance.

(3) But if at any time during that period of three 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 paragraph 3(4)(a) and 6(1)(e) (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) In this section “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.

Dwellings outside England, ... and Northern Ireland

17

(1) In the provisions of this Schedule specified in sub-paragraph (3), references to a “dwelling” include references to a dwelling situated in a country or territory outside England... and Northern Ireland.

(1A) In the application of those provisions in relation to a dwelling situated in Wales—

(a) references to a “major interest” in the dwelling are to an interest in the dwelling of a kind mentioned in section 117(2),

(b) references to a “land transaction” in relation to the dwelling are to the acquisition of an interest in the dwelling, and

(c) 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.

(2) In the application of those provisions in relation to a dwelling situated in a country or territory outside England, Wales and Northern Ireland—

(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,

(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.

(3) The provisions of this Schedule referred to in sub-paragraphs (1), (1A) and (2) are—

(a) paragraph 3(4), (6)(b), (ba), (c) and (d) and (7)(b), (ba) and (c),

(b) paragraph 6(1)(e),

(ba) paragraph 9B,

(d) paragraph 14(2), and

(e) paragraph 16.

(4) Where the child of a person (“P”) has an interest in a dwelling which is situated in a country or territory outside England... and Northern Ireland, P and any relevant spouse or civil partner of P are to be treated for the purposes of this Schedule as having that interest.

(5) For the purposes of sub-paragraph (4) a spouse or civil partner of P is “relevant” if the spouse or civil partner—

(a) is not a parent of the child, and

(b) is living together with P (see paragraph 9(3)).

(5A) Sub-paragraph (4) does not apply if the interest in the dwelling was acquired in the child's name or on the child's behalf by a person acting in exercise of powers conferred on that person by reason of a relevant court appointment made in respect of the child.

(5B) In sub-paragraph (5A) “relevant court appointment” has the meaning given by paragraph 12(1B).

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

What counts as a dwelling

18

(1) This paragraph sets out rules for determining what counts as a dwelling for the purposes of this Schedule.

(2) A building or part of a building counts as a dwelling if—

(a) it is used or suitable for use as a single 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 single 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” includes any agreement;

“relevant deeming provision” means any of sections 44 to 45A or paragraph 5(1) or (2) of Schedule 2A or paragraph 12A of Schedule 17A;

“substantially performed” has the same meaning as in section 44.

(7) A building or part of a building used for a purpose specified in section 116(2) or (3) 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.

Power to modify this Schedule

19

(1) The Treasury may by regulations amend or otherwise modify this Schedule for the purpose of preventing certain chargeable transactions from being higher rates transactions for the purposes of paragraph 1.

(2) The provision which may be included in regulations under this paragraph by reason of section 114(6)(c) includes incidental or consequential provision which may cause a chargeable transaction to be a higher rates transaction for the purposes of paragraph 1.

Acquisition under a regulated home reversion plan

5CA

(1) Paragraph 3 does not apply to a chargeable transaction if (and so far as) the purchaser—

(a) is an authorised plan provider, and

(b) acquires the subject-matter of the chargeable transaction as a plan provider.

(2) For the purposes of this paragraph the purchaser acquires the subject-matter of the chargeable transaction “as a plan provider” so far as the purchaser acquires it under a regulated home reversion plan which the purchaser enters into as plan provider.

(3) In this paragraph—

“authorised plan provider” means a person authorised under the Financial Services and Markets Act 2000 to carry on in the United Kingdom the regulated activity specified in article 63B(1) of the Regulated Activities Order (entering into regulated home reversion plan as plan provider);

“the Regulated Activities Order” means the Financial Services and Markets (Regulated Activities) Order 2001 (S.I. 2001/544);

“regulated home reversion plan” means an arrangement which is a regulated home reversion plan for the purposes of Chapter 15A of Part 2 of the Regulated Activities Order.

(4) In this section references to entering into a regulated home reversion plan “as plan provider” are to be interpreted as if the references were in the Regulated Activities Order.

Acquisition by management company of flat for occupation by caretaker

5EA

(1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in or over a flat which—

(a) is one of at least three flats contained in the same premises, and

(b) is acquired by a tenants' management company for the purpose of making the flat available for use as caretaker accommodation.

(2) For the purposes of this paragraph a tenants' management company makes a flat available for use “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises.

(3) In relation to the acquisition of a flat, a company is a “tenants' management company” if—

(a) the tenants of two or more other flats contained in the premises are members of the company, and

(b) the company owns, or it is intended that the company will acquire, the freehold of the premises;

but a company which carries on a relievable business is not a tenants' management company.

(4) In this paragraph “premises” means premises constituting the whole or part of a building.

5IA

(1) This paragraph applies where relief under paragraph 5CA (acquisition under a regulated home reversion plan) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction the purchaser holds the higher threshold interest otherwise than for the purposes of the regulated home reversion plan (as defined in paragraph 5CA).

(3) But sub-paragraph (2) does not apply if—

(a) after ceasing to hold the higher threshold interest for the purposes of the regulated home reversion plan, the purchaser sells the higher threshold interest without delay (except so far as delay is justified by commercial considerations or cannot be avoided), and

(b) at no time when the higher threshold interest is held by the purchaser as mentioned in sub-paragraph (2) is the dwelling (or any part of the dwelling) occupied by a non-qualifying individual.

(4) In this paragraph—

“the dwelling” means the dwelling to which the relief under paragraph 5CA relates;

“non-qualifying individual” is to be interpreted in accordance with paragraph 5A.

5JA

(1) This paragraph applies where relief under paragraph 5EA (acquisition by management company of flat for occupation by caretaker) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.

(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction the purchaser holds the higher threshold interest otherwise than for the purpose of making the flat available for use as caretaker accommodation.

(3) For the purposes of this paragraph a tenants' management company makes a flat available for use “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises.

SCHEDULE 7A

PART 1 — Property authorised investment funds

PAIF seeding relief

1

(1) A land transaction is exempt from charge if conditions A to D are met.

Relief under this paragraph is referred to in this Part of this Act as “PAIF seeding relief”.

(2) Condition A is that the purchaser is a property AIF (see paragraph 2).

(3) Condition B is that the main subject-matter of the transaction consists of a major interest in land.

(4) Condition C is that the only consideration for the transaction is the issue of units in the property AIF to a person who is the vendor.

(5) Condition D is that the effective date of the transaction is a day within the seeding period (see paragraph 3).

(6) This paragraph is subject to paragraph 4 (restrictions on availability of relief) and paragraphs 5 to 8 (withdrawal of relief).

Meaning of “property AIF”

2

(1) This paragraph has effect for the purposes of this Schedule.

(2) A “property AIF” is an open-ended investment company to which Part 4A of the AIF (Tax) Regulations applies.

(3) In sub-paragraph (2) “open-ended investment company” is to be read in accordance with regulation 7(1) and (2) of those Regulations (part of an umbrella company is regarded as an open-ended investment company).

(4) Regulation 7(3)(a) of those Regulations applies for the purposes of this Schedule as it applies for the purposes of those Regulations but as if references to investments and scheme property were a reference to chargeable interests.

(5) References to a property AIF are treated as including a collective investment scheme which—

(a) is a company incorporated under the law of an EEA State ..., and

(b) is authorised under the law of that EEA State in a way which makes it, under that law, the equivalent of a property AIF as defined in sub-paragraph (2).

(6) In sub-paragraph (5) “collective investment scheme” has the meaning given by section 235 of FSMA 2000.

Meaning of “seeding period”

3

(1) In this Part of this Schedule, subject to sub-paragraph (2), the “seeding period” means—

(a) the period beginning with the first property seeding date and ending with the date of the first external investment into the property AIF, or

(b) if shorter, the period of 18 months beginning with the first property seeding date.

(2) The property AIF may elect to bring the seeding period to an end sooner than it would otherwise end under sub-paragraph (1).

Where an election is made, the seeding period is the period beginning with the first property seeding date and ending with the date specified in the election.

(3) An election under sub-paragraph (2) may be made—

(a) by being included in a notice accompanying a claim for PAIF seeding relief (see section 65A), or

(b) by separate notice in writing to HMRC.

(4) In sub-paragraphs (1) and (2), “the first property seeding date” means the earliest effective date of a transaction in respect of which conditions A to C in paragraph 1 are met.

(5) In this paragraph—

“external investment” means a non-land transaction in which the vendor is an external investor;

“external investor” means a person other than a person who has been a vendor in a transaction—the effective date of which is on or before the date of the non-land transaction, andin respect of which conditions A to C in paragraph 1 are met;

“non-land transaction” means a transaction by which the property AIF acquires assets which do not consist of or include a chargeable interest.

Restrictions on availability of relief

4

(1) This paragraph restricts the availability of PAIF seeding relief for a transaction in respect of which conditions A to D in paragraph 1 are met.

(2) PAIF seeding relief is not available unless, at the effective date of the transaction, the property AIF has arrangements in place requiring a person who is the vendor to notify the authorised corporate director of the property AIF of the following matters—

(a) the identity of the beneficial owner of the units in the property AIF received in consideration of the transaction, and

(b) any disposal of units in the property AIF on or after the effective date of that transaction by that owner (or, where that person is a company, by a group company) which is or could be a relevant disposal (see paragraph 7).

In paragraph (b) “group company” means a company which is a member of the same group of companies as the person mentioned in paragraph (a) for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief).

(3) PAIF seeding relief is not available if at the effective date of the transaction there are arrangements in existence by virtue of which, at that or some later time, a person who is the vendor makes or could make a disposal of units in the property AIF which is or could be a relevant disposal (see paragraph 7).

(4) PAIF seeding relief is not available if the transaction—

(a) is not effected for bona fide commercial reasons, or

(b) forms part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax.

“Tax” here means stamp duty, income tax, corporation tax, capital gains tax or tax under this Part.

Withdrawal of relief: ceasing to be property AIF

5

(1) Where PAIF seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the purchaser ceases to be a property AIF—

(a) at any time after the effective date of that transaction but within the seeding period,

(b) at any time in the control period (see paragraph 21), or

then, subject to sub-paragraph (2), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.

(2) Relief is withdrawn only if, at the time when the purchaser ceases to be a property AIF, the purchaser holds—

(a) the chargeable interest that was acquired by the purchaser under the relevant transaction, or

(b) a chargeable interest that is derived from that interest.

(3) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for PAIF seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the purchaser at the time it ceases to be a property AIF.

Withdrawal of relief: portfolio test not met

6

(1) Where PAIF seeding relief has been allowed in respect of a transaction, and the portfolio test is not met immediately before the end of the seeding period, the relief is withdrawn and tax is chargeable in accordance with sub-paragraph (2).

See sub-paragraph (7) for the meaning of “portfolio test”.

(2) The amount chargeable is the amount that would have been chargeable in respect of the transaction but for PAIF seeding relief.

(3) Where PAIF seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the portfolio test is met immediately before the end of the seeding period, but is not met—

(a) at a time in the control period, or

(b) at a time after the end of the control period, where the failure is pursuant to or in connection with arrangements made before the end of that period,

then, subject to sub-paragraph (4), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with sub-paragraph (5).

(4) The requirement to meet the portfolio test at a time mentioned in sub-paragraph (3)(a) or (b) applies only to times when the property AIF holds—

(a) the chargeable interest that was acquired by the property AIF under the relevant transaction, or

(b) a chargeable interest that is derived from that interest.

(5) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for PAIF seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.

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Finance Act 2003

Trades involving making a dwelling available to the public

5B

Financial institutions acquiring dwellings in the course of lending

5C

Dwellings for occupation by certain employees etc of a relievable business

5D

More about the condition in paragraph 5D(2)(a)

5E

Farmhouses

5F

Withdrawal of relief

5G

5H

5I

5J

5K

Modifications for cases involving alternative finance arrangements

6A

6B

Paragraphs 6A and 6B: application where transaction is split under paragraph 2(3)

6C

Alternative finance arrangements: withdrawal of relief

6D

6E

6F

6G

6H

Acquisition by property trader from individual acquiring new dwelling

3A

Meaning of “restricted shares”

Joint purchasers: partial relief

3A

Withdrawal of relief given under paragraph 3A

3B

Partial relief: charity not fully meeting the “qualifying charity” condition

3C

Introduction

Gifts with reservation

Rate of landfill tax

Companies acquiring their own shares

Abolition of accounting requirements relating to investment deposits

Transfer of chargeable interest to a partnership: general

Introduction

Introduction

48A

Taxable benefits: lower threshold for cars with a CO2 emissions figure

Deferred unascertainable consideration: election for treatment of loss

Supplies not known to be taxable when made, etc

Ordinary accounts and investment accounts

Meaning of “restricted shares”

65A

102A

Circumstances in which group relief withdrawn

Circumstances in which group relief withdrawn

Provision of services through intermediary

Indexed rate bands for 2003-04: PAYE deductions etc

Approved share plans and schemes

Deferred unascertainable consideration: election for treatment of loss

Debt Management Account: abolition of borrowing cap

SCHEDULE 4ZA

PART 1 — Higher rates

1

PART 2 — Meaning of “higher rates transaction”

Meaning of “higher rates transaction” etc

2

Single dwelling transactions

3

4

Multiple dwelling transactions

5

6

7

PART 3 — Supplementary provisions

Further provision in connection with paragraph 3(6) and (7)

8

Spouses and civil partners purchasing alone

9

Settlements and bare trusts

10