Legalize / United Kingdom / Wales / Act of Senedd Cymru

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

Type Act of Senedd Cymru

Publication 2017-05-24

State In force

Jurisdiction Wales

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

PART 1 — OVERVIEW

Overview of Act

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(1) This Act is arranged as follows–

(a) Part 2 provides for a tax to be charged on land transactions (““land transaction tax””) and makes provision about the key concepts underlying the tax including—

(i) which transactions are land transactions,

(ii) what is, and what is not, a chargeable interest,

(iii) when a chargeable interest is acquired and the treatment of transactions involving contracts required to be completed by transfer, as well as the treatment of other kinds of transactions,

(iv) which land transactions are, and which are not, chargeable to the tax (““chargeable transactions””), and

(v) what is, and what is not, chargeable consideration in relation to a chargeable transaction,

(b) Part 3 makes provision about—

(i) tax bands and tax rates,

(ii) how to calculate the amount of tax chargeable, and

(iii) the reliefs available from land transaction tax,

(d) Part 5 makes provision about the application of this Act and the Tax Collection and Management (Wales) Act 2016 (anaw 6) to certain persons and bodies, including companies, partnerships and trusts,

(e) Part 6 makes provision about returns and payment of the tax including provision about—

(i) when a return is required to be made in relation to a land transaction,

(ii) who must make a return and pay the tax, and

(iii) when the tax is required to be paid (including provision about when payment may be deferred),

(f) Part 7 inserts into the Tax Collection and Management (Wales) Act 2016 (anaw 6) provisions establishing a general rule for the purposes of counteracting avoidance arrangements in relation to devolved taxes, and

(g) Part 8 provides for amendments to the Tax Collection and Management (Wales) Act 2016 (anaw 6) and contains provisions that apply generally for the purposes of this Act, including definitions of expressions used in this Act.

(2) Schedule 1 contains an overview of the Schedules to this Act.

PART 2 — THE TAX AND KEY CONCEPTS

CHAPTER 1 — LAND TRANSACTION TAX

Land transaction tax

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(1) A tax (to be known as “"land transaction tax””) is to be charged on land transactions.

(2) The tax is chargeable—

(a) whether or not there is an instrument effecting the transaction,

(b) if there is such an instrument, regardless of where it is executed, and

(3) The Welsh Revenue Authority (““WRA””) is to be responsible for the collection and management of the tax.

CHAPTER 2 — LAND TRANSACTIONS

Land transaction

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(1) In this Act, a “"land transaction”” means an acquisition of a chargeable interest.

(2) Except as otherwise provided, this Act applies however the acquisition is effected, whether by act of the parties, by order of a court or other authority, by or under any enactment or by operation of law.

(3) See section 15 as to when the acquisition of an option or right of pre-emption is a land transaction.

Chargeable interest

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(1) A chargeable interest is—

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

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

other than an exempt interest.

(2) In this Act, “"land in Wales”” does not include land below mean low water mark.

(3) See section 9 as to land partly in Wales and partly in England.

Exempt interest

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(1) The following are exempt interests—

(a) a security interest;

(b) a licence to use or occupy land;

(d) a franchise or manor.

(2) In subsection (1)—

(a) “"security interest”” means an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any other obligation;

(b) “"franchise”” means a grant from the Crown such as the right to hold a market or fair, or the right to take tolls.

(3) See also paragraph 7 of Schedule 10 (which makes additional provision about exempt interests in relation to alternative financial arrangements).

(4) The Welsh Ministers may by regulations amend this section so as to—

(a) provide that any other description of interest or right in relation to land in Wales is an exempt interest;

(b) provide that a description of interest or right in relation to land in Wales is no longer an exempt interest;

Acquisition and disposal of chargeable interest

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(1) For the purposes of this Act, each of the following is an acquisition and a disposal of a chargeable interest—

(a) the creation of the interest;

(b) the surrender or release of the interest;

(2) But the variation of a lease is an acquisition and disposal of a chargeable interest only where—

(a) it takes effect, or is treated for the purposes of this Act, as the grant of a new lease, or

(b) paragraph 24 of Schedule 6 (reduction of rent or term or other variation of lease) applies.

(3) A person acquires a chargeable interest where—

(a) the person becomes entitled to the interest on its creation,

(b) the person's interest or right is benefited or enlarged by the surrender or release of the interest, or

(4) A person disposes of a chargeable interest where—

(a) the person's interest or right becomes subject to the interest on its creation,

(b) the person ceases to be entitled to the interest on its being surrendered or released, or

(5) This section has effect subject to section 10(4) (substantial performance without completion), section 11(3) (substantial performance of contract providing for transfer to third party) and paragraphs 20 and 24 of Schedule 6 (agreement for lease and reduction of rent or term or other variation of lease).

Buyer and seller

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(1) The buyer in a land transaction is the person acquiring the subject-matter of the transaction.

(2) The seller in a land transaction is the person disposing of the subject-matter of the transaction.

(3) These expressions apply even if there is no consideration given for the transaction.

Linked transactions

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(1) For the purposes of this Act, a land transaction is a linked transaction if it is one of a number of land transactions forming part of a single scheme, arrangement or series of transactions between the same seller and buyer or, in either case, persons connected with them.

(2) This section is subject to section 16 (exchanges; in particular see subsection (1) of that section which provides for transactions forming an exchange not to be treated as linked transactions).

Land partly in Wales and partly in England

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(1) This section sets out how this Act 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 Wales and partly in England.

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

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

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

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

(6) WRA must publish guidance about transactions to which subsection (1) applies, including guidance about identifying the location of the border between Wales and England.

(7) WRA may revise guidance published under subsection (6) and must publish the revised guidance.

(8) See section 48A of the Finance Act 2003 (c. 14) as to the application of Part 4 of that Act (stamp duty land tax) to the English transaction.

(9) In section 48A of the Finance Act 2003 (c. 14), after subsection (5) insert—

(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.

CHAPTER 3 — PARTICULAR TRANSACTIONS

Contracts and transfers: general provision

Contract and transfer

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(1) This section applies where a contract for a land transaction is entered into under which the transaction is to be completed by a transfer.

(2) A person is not regarded as entering into a land transaction by reason of entering into the contract (but see subsection (4)).

(3) If the transaction is completed without previously having been substantially performed—

(a) the contract and the transaction effected on completion are treated as parts of a single land transaction, and

(b) the effective date of the transaction is the date of completion.

(4) But if the contract is substantially performed without having been completed—

(a) the contract is treated as if it were itself the transaction provided for in the contract, and

(b) the effective date of that transaction is when the contract is substantially performed.

(5) Where subsection (4) applies and the contract is subsequently completed by a transfer—

(a) both the contract and the transaction effected on completion are notifiable transactions for the purposes of this Act, and

(b) tax is chargeable on the latter transaction to the extent (if any) that the amount mentioned in subsection (6) is greater than the amount of tax chargeable on the contract.

(6) The amount is the tax that would have been chargeable on the latter transaction if it had been completed without previously having been substantially performed.

(7) Where subsection (4) applies and the contract is (to any extent) afterwards rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of that subsection must (to that extent) be repaid by WRA.

(8) 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 made in respect of the contract.

(9) Where paragraph 20 of Schedule 6 applies (agreement for lease), it applies in place of subsections (4) to (8).

(10) In this section—

(a) references to completion are to completion of the land transaction proposed, between the same parties, in substantial conformity with the contract;

(b) “"contract”” includes any agreement and “"transfer”” includes any instrument.

Contracts and transfers: particular cases

Contract providing for transfer to third party

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(1) This section applies where a contract is entered into under which a chargeable interest is to be transferred by one party to the contract (““P1””) at the direction or request of the other (““P2””)—

(a) to a person (““P3””) who is not a party to the contract, or

(b) either to such a person or to P2.

(2) P2 is not regarded as entering into a land transaction by reason of entering into the contract.

(3) But if the contract is substantially performed without having been completed—

(a) P2 is treated for the purposes of this Act as acquiring a chargeable interest, and accordingly as entering into a land transaction, and

(b) the effective date of that transaction is when the contract is substantially performed.

(4) Where subsection (3) applies and the contract is (to any extent) afterwards rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of that subsection must (to that extent) be repaid by WRA.

(5) 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 made in respect of the contract.

(6) Subject to subsection (7), section 10 (contract and transfer) does not apply in relation to the contract.

(7) Where—

(a) this section applies by virtue of subsection (1)(b), and

(b) by reason of P2's direction or request, P1 becomes obliged to transfer a chargeable interest to P2,

section 10 applies to that obligation as it applies to a contract for a land transaction that is to be completed by a transfer.

(8) Section 10 applies in relation to any contract between P2 and P3, in respect of the chargeable interest referred to in subsection (1), that is to be completed by a transfer.

(9) References to completion in that section, as it so applies, include references to transfer by P1 to P3 of the subject-matter of the contract between P2 and P3.

(10) In this section, “"contract”” includes any agreement and “"transfer”” includes any instrument.

Contract providing for transfer to third party: effect of transfer of rights

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(1) This section applies where—

(a) a contract (““the original contract””) is entered into under which a chargeable interest is to be transferred by one party to the contract (““P1””) at the direction or request of the other (““P2””)—

(i) to a person (““P3””) who is not a party to the contract, or

(ii) either to such a person or to P2, and

(b) there is an assignment or other transaction (relating to the whole or part of the subject-matter of the original contract) as a result of which a person (““P4””) becomes entitled to exercise any of P2's rights under the original contract in place of P2.

(2) References in the following provisions of this section to a transfer of rights are to any such assignment or other transaction.

(3) P4 is not regarded as entering into a land transaction by reason of the transfer of rights, but section 11 (contract providing for transfer to third party) has effect in accordance with the following provisions.

(4) That section applies as if—

(a) P4 had entered into a contract (a ““secondary contract””) in the same terms as the original contract except with P4 as a party instead of P2, and

(b) the consideration due from P4 under the secondary contract were—

(i) so much of the consideration under the original contract as is referable to the subject-matter of the transfer of rights and is to be given (directly or indirectly) by P4 or a person connected with P4, and

(ii) the consideration given for the transfer of rights.

(5) The substantial performance of the original contract is to be disregarded if it occurs—

(a) at the same time as, and in connection with, the substantial performance of the secondary contract, or

(b) after the transfer of rights.

(6) Where there are successive transfers of rights, subsection (4) has effect in relation to each of them.

(7) The substantial performance of the secondary contract arising from an earlier transfer of rights is to be disregarded if it occurs—

(a) at the same time as, and in connection with, the substantial performance of the secondary contract arising from a subsequent transfer of rights, or

(b) after that subsequent transfer.

(8) Where a transfer of rights relates to only part of the subject-matter of the original contract, or to only some of the rights under that contract—

(a) a reference in subsection (4)(a) or (5) to the original contract, or a reference in subsection (7) to the secondary contract arising from an earlier transfer, is to that contract so far as relating to that part or those rights, and

(b) that contract so far as not relating to that part or those rights is to be treated as a separate contract.

(9) The effective date of a land transaction treated as entered into by virtue of subsection (4) is not earlier than the date of the transfer of rights.

(10) In relation to a such a transaction—

(a) references in Schedule 16 (group relief) to the seller are to be read as references to P1;

(b) other references in this Act to the seller are to be read, where the context permits, as referring to either P1 or P2.

(11) In this section, “"contract”” includes any agreement.

Pre-completion transactions

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Schedule 2 makes—

(a) provision about the application of section 10 (contract and transfer) in certain cases where an assignment of rights, subsale or other transaction is entered into without the contract having been completed, and

(b) other provision about such cases.

Substantial performance

Meaning of substantial performance

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(1) A contract is substantially performed for the purposes of this Act when—

(a) the buyer, or a person connected with the buyer, takes possession of the whole, or substantially the whole, of the subject-matter of the contract, or

(b) a substantial amount of the consideration is paid or provided.

(2) For the purposes of subsection (1)(a)—

(a) possession includes receipt of rents and profits or the right to receive them, and

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