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

Type Act of Senedd Cymru

Publication 2017-05-24

Last updated 2026-02-13

State In force

Jurisdiction Wales

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

5

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

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

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

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

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

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

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

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

$$MV × PI$Figure 4 where—MV is the market value of the major interest, andPI is—the percentage of the interest to which the buyer is entitled, orwhere—the buyer and the buyer's spouse or civil partner are living together on the effective date of the transaction (for the meaning of ““living together””, see paragraph 25(3)), andtaken together the buyer and the buyer's spouse or civil partner are entitled as tenants in common,the percentage of the interest to which the buyer and the buyer's spouse or civil partner are so entitled.$

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

$$MV JT$Figure 5 where—MV is the market value of the major interest, andJT is the number of joint tenants entitled to the interest.$

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

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

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

Two or more buyers

6

Where there are two or more buyers who are individuals in a transaction—

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

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

Interest in same main residence exception

7

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

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

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

Replacement of main residence exception

8

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

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

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

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

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

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

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

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

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

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

(2B) The conditions are—

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

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

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

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

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

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

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

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

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

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

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

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

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

(4B) The conditions are—

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

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

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

(4C) The conditions are—

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

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

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

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

(4D) In sub-paragraph (4C)—

“fire safety defect” (“diffyg diogelwch tân”), in relation to a sold dwelling, means a fire safety defect that is liable to—substantially reduce the number of persons interested in purchasing the sold dwelling than would be the case without the defect, orsubstantially reduce the market value of the sold dwelling than would be the case without the defect;

“relevant person” (“person perthnasol”) means—where the major interest in the sold dwelling is a leasehold interest—the landlord of the person who had the major interest, orthe developer of the sold dwelling;where the major interest in the sold dwelling is a freehold interest in commonhold land—the commonhold association for the sold dwelling, orthe developer of the sold dwelling;where the major interest in the sold dwelling is a freehold interest (other than an interest in commonhold land), the developer of the sold dwelling.

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

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

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

Replacement of main residence: transactions during interim period

9

(1) This paragraph applies where—

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

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

(2) An intermediate transaction is a transaction—

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

(b) to which paragraph 5 does not apply.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PART 3 — BUYER IS AN INDIVIDUAL: MULTIPLE DWELLING TRANSACTIONS

Introductory

10

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

Higher rates residential property transaction

11

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

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

(b) paragraph 13 or 15 applies.

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

(a) the buyer is an individual, and

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

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

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

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

Two or more buyers

12

Where there are two or more buyers who are individuals in a transaction—

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

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

Two or more qualifying dwellings

13

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

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

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

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

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

(4) The conditions are that—

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

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

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

(6) This paragraph applies subject to the exception in paragraph 18A (subsequent disposal to local authorities exception).

Subsidiary dwelling exception

14

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

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

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

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

(i) dwelling A,

(ii) dwelling B, and

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

Buyer has a major interest in other dwelling

15

(1) This paragraph applies if—

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

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

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

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

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

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

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

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

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

$$MV × PI$Figure 6 where—MV is the market value of the major interest, andPI is—the percentage of the interest to which the buyer is entitled, orwhere—the buyer and the buyer's spouse or civil partner are living together on the effective date of the transaction (for the meaning of ““living together””, see paragraph 25(3)), andtaken together the buyer and the buyer's spouse or civil partner are entitled as tenants in common,the percentage of the interest to which the buyer and the buyer's spouse or civil partner are so entitled.$

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

$$MV JT$Figure 7 where—MV is the market value of the major interest, andJT is the number of joint tenants entitled to the interest.$

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

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

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

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

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

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

Interest in same main residence exception

16

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

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

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

Replacement of main residence exception

17

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

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

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

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

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

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

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

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

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

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

(2B) The conditions are—

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

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

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

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

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

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

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

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

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

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

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

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

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

(4B) The conditions are—

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

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

(i) on or after 12 July 2024, and

(ii) as soon as reasonably practicable.

(4C) The conditions are—

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

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

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

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

(4D) In sub-paragraph (4C)—

“fire safety defect” (“diffyg diogelwch tân”), in relation to a sold dwelling, means a fire safety defect that is liable to—substantially reduce the number of persons interested in purchasing the sold dwelling than would be the case without the defect, orsubstantially reduce the market value of the sold dwelling than would be the case without the defect;

“relevant person” (“person perthnasol”) means—where the major interest in the sold dwelling is a leasehold interest—the landlord of the p who had the major interest, orthe developer of the sold dwelling;where the major interest in the sold dwelling is a freehold interest in commonhold land—the commonhold association for the sold dwelling, orthe developer of the sold dwelling;where the major interest in the sold dwelling is a freehold interest (other than an interest in commonhold land), the developer of the sold dwelling.

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

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

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

Replacement of main residence: transactions during interim period

18

(1) This paragraph applies where—

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

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

(2) An intermediate transaction is a transaction—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PART 4 — BUYER IS NOT AN INDIVIDUAL

Introductory

19

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

Transaction involving a dwelling

20

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

(a) the buyer is not an individual,

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

(1A) Sub-paragraph (1) applies subject to the exceptions in—

(a) sub-paragraph (2), and

(b) paragraph 20A (subsequent disposal to local authorities exception).

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

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

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

(3) The conditions are that—

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

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

Transaction involving multiple dwellings

21

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

(a) the buyer is not an individual,

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

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

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

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

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

(4) The conditions are that—

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

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

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

(5A) This paragraph applies subject to paragraph 21A (subsequent disposal to local authorities exception).

Two or more buyers

22

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

PART 5 — SUPPLEMENTARY PROVISIONS

Further provision in connection with replacement of main residence exception

23

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

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

(3) Sub-paragraph (4) applies where—

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

(b) the return has not been made.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

24

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

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

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

(4) A return made under this paragraph must—

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

(b) include a self-assessment.

Spouses and civil partners purchasing alone

25

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

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

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

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

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

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

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

Property adjustment on divorce, dissolution of civil partnership etc.

26

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

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

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

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

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

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

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

Settlements and bare trusts

27

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

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

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

28

(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 (within the meaning given by paragraph 2(1) and (2) of Schedule 8), and

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

(3) Where this sub-paragraph applies—

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

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

29

(1) Where—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i) occupy the dwelling for life, or

(ii) income earned in respect of the dwelling,

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

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

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

30

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

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

(b) holding an interest in a dwelling, or

(2) Where this paragraph applies—

(a) P and any spouse or civil partner of P are to be treated for the purposes of this Schedule as being the buyer, holding the interest or (as the case may be) having disposed of the interest, and

(b) the child is not to be so treated.

(3) Sub-paragraph (2)(a) does not apply in relation to a spouse or civil partner of P if the two of them are not living together (for the meaning of which, see paragraph 25(3)).

(4) This paragraph does not apply where—

(a) a person (““D””) acquires, holds or disposes of, a major interest in a dwelling in a child's name or on the child's behalf,

(b) D does so in the exercise of powers conferred on D as the deputy of the child, and

(5) In sub-paragraph (4), “"deputy”” means—

(a) a person appointed under section 16 of the Mental Capacity Act 2005 (c. 9), or

(b) a person appointed to an equivalent position under the law of a country or territory outside England and Wales (and accordingly the reference to an interest being held on trust by such a person is to its being held on an equivalent basis under that law).

31

(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 buyer (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 paragraph 20 or 21 applies to the transaction—

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

(b) if that buyer is not the only buyer, ignore sub-paragraph (1)(a) of those paragraphs when having regard to that buyer.

Partnerships

32

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

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

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

(2) For the purposes of determining whether paragraph 5 or 15 applies to the transaction, any major interest in any other dwelling that is held by or on behalf of the partnership for the purposes of a trade carried on by the partnership is not to be treated as held by or on behalf of the buyer.

(3) Paragraph 4(1)(a) of Schedule 7 (chargeable interests held by partnerships treated as held by the partners) has effect subject to sub-paragraph (2).

Alternative finance arrangements

33

(1) This paragraph applies in relation to a chargeable transaction which is the first transaction under an alternative finance arrangement entered into between a person and a financial institution.

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

(3) In this paragraph—

“"alternative finance arrangement”” (“"trefniant cyllid arall**”") means an arrangement of a kind mentioned in paragraph 2(1) or 3(1) of Schedule 10 (alternative property finance reliefs);

“"financial institution”” (“"sefydliad ariannol**”") has the meaning given by paragraph 8 of that Schedule;

“"first transaction”” (“"trafodiad cyntaf**”"), in relation to an alternative finance arrangement, has the meaning given by paragraph 2(1)(a) or 3(1)(a) of that Schedule.

Major interests in dwellings inherited jointly

34

(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 5(1)(a) or 15(1)(b) as having the major interest at any time during the period of 3 years beginning with the date of the inheritance.

(3) But if at any time during that period of 3 years P becomes the only person beneficially entitled to the whole of the interest or P's beneficial share in the interest exceeds 50% P is, from that time, to be treated as having the major interest for the purposes of the application of paragraphs 5(1)(a) and 15(1)(b) (subject to any disposal by P).

(4) P's share in the interest exceeds 50% if—

(a) P is beneficially entitled as a tenant in common or coparcener to more than half the interest,

(b) P and P's spouse or civil partner taken together are beneficially entitled as tenants in common or coparceners to more than half the interest, or

(c) P and P's spouse or civil partner are beneficially entitled as joint tenants to the interest and there is no more than one other joint tenant who is so entitled.

(5) Sub-paragraph (4)(b) and (c) do not apply if, on the effective date of the transaction referred to in paragraph 5 or 15, P and P's spouse or civil partner are not living together (for the meaning of ““living together””, see paragraph 25(3)).

(6) In this paragraph “"inheritance”” means the acquisition of an interest in or towards satisfaction of an entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person.

(7) This paragraph applies in relation to an interest acquired following a person's death as a result of a variation of a disposition (whether effected by will, under the law relating to intestacy or otherwise) of property comprised in that person's estate made within the period of 2 years after the person's death, as it applies in relation to an inheritance; and in such a case the reference in sub-paragraph (2) to the date of the inheritance means the date of the acquisition of the interest in accordance with the variation.

PART 6 — INTERPRETATION

Dwellings outside Wales

35

(1) In the provisions of this Schedule specified in sub-paragraph (4), references to a ““dwelling”” include references to a dwelling situated outside Wales.

(2) In relation to a dwelling situated in England, those provisions are to be construed in accordance with the provisions of the Finance Act 2003 (c. 14).

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

(a) references to a ““major interest”” in the dwelling are to an equivalent interest in the dwelling under the law of that country or territory,

(b) references to persons being beneficially entitled as joint tenants, tenants in common or coparceners to an interest in the dwelling are to persons having an equivalent entitlement to the interest in the dwelling under the law of that country or territory,

(c) references to a “"land transaction”” in relation to the dwelling are to the acquisition of an interest in the dwelling under the law of that country or territory,

(d) references to the “"effective date”” of a land transaction in relation to the dwelling are to the date on which the interest in the dwelling is acquired under the law of that country or territory, ...

(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.

(f) references to “relevant restrictions” are references to a prohibition or restriction of any activity by the law of that country or territory or by a public authority of that country or territory by virtue of such a law for the purpose of preventing and controlling or mitigating the effects of an emergency, and

(g) the reference to “emergency” in paragraph (f), if the dwelling is situated outside the United Kingdom, is to be interpreted as if each reference to the United Kingdom in section 19(1) of the Civil Contingencies Act 2004 (c. 36) were a reference to the country or territory in which the dwelling is situated.

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

(a) paragraph 5(1)(a),

(b) paragraph 8(2)(b), (c), (d) and (e); paragraph 8(2A)(a) and (b); paragraph 8(2B)(a) and (c); paragraph 8(4)(b), (c) and (d); paragraph 8(4A)(a) and (b); paragraph 8(4B)(a) and (c) and paragraph 8(4C)(a),

(d) paragraph 15(1)(b),

(e) paragraph 17(2)(b), (c), (d) and (e); paragraph 17(2A)(a) and (b); paragraph 17(2B)(a) and (c); paragraph 17(4)(b), (c) and (d); paragraph 17(4A)(a) and (b); paragraph 17(4B)(a) and (c) and paragraph 17(4C)(a),

(f) paragraph 18(4),

(g) paragraph 26,

(h) paragraph 28,

(i) paragraph 32(2), and

(j) paragraph 34.

(5) Where the child of a person (““P””) has an interest in a dwelling which is situated in a country or territory outside Wales—

(a) P and any spouse or civil partner of P are to be treated for the purposes of this Schedule as having that interest, and

(b) the child is not to be so treated.

(6) Sub-paragraph (5)(a) does not apply in relation to a spouse or civil partner of P if the two of them are not living together (for the meaning of which, see paragraph 25(3)).

(7) Sub-paragraph (5) does not apply where—

(a) a person (““D””) acquires, holds or disposes of, a major interest in a dwelling in a child's name or on the child's behalf,

(b) D does so in the exercise of powers conferred on D as the deputy of the child, and

(8) In sub-paragraph (7), “"deputy”” means—

(a) a person appointed under section 16 of the Mental Capacity Act 2005 (c. 9), or

(b) a person appointed to an equivalent position under the law of a country or territory outside England and Wales (and accordingly the reference to an interest being held on trust by such a person is to its being held on an equivalent basis under that law).

What counts as a dwelling

36

(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 dwelling, or

(b) it is in the process of being constructed or adapted for such use.

(3) Land that is, or is to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on that land) is taken to be part of that dwelling.

(4) Land that subsists, or is to subsist, for the benefit of a dwelling is taken to be part of that dwelling.

(5) The main subject-matter of a transaction is also taken to consist of or include an interest in a dwelling if—

(a) substantial performance of a contract constitutes the effective date of that transaction by virtue of a relevant deeming provision,

(b) the main subject-matter of the transaction consists of or includes an interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a dwelling, and

(c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed.

(6) In sub-paragraph (5)—

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

“"relevant deeming provision”” (“"darpariaeth dybio berthnasol**”") means any of sections 10 to 13 or paragraph 8(1) to (5) of Schedule 2 (pre-completion transactions) or paragraph 20 of Schedule 6 (agreement for lease);

“"substantially performed”” (“"cyflawni'n sylweddol**”") has the same meaning as in section 14.

(7) A building or part of a building used for a purpose specified in section 72(4) or (5) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).

(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.

Major interest not to include certain leases

37

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.

SCHEDULE 6

PART 1 — INTRODUCTORY

Overview

1

(1) This Schedule makes provision about the application of this Act in relation to leases.

(2) The Schedule is arranged as follows—

(a) Part 2 makes provision about determining the duration of a lease for the purposes of this Act and associated provision about leases with overlapping terms;

(b) Part 3 makes provision about the treatment of consideration in relation to leases, including rent and consideration other than rent and makes provision about not treating certain consideration as chargeable consideration;

(c) Part 4 makes provision about agreements for lease and the treatment of certain assignments and variations of leases for the purposes of this Act;

(d) Part 5 makes provision for no tax to be chargeable on the rent element of residential leases, sets out how the charge to tax is to be calculated on the rent element of other leases and makes provision about the calculation of the tax charge in relation to consideration other than rent.

PART 2 — DURATION OF LEASE AND TREATMENT OF OVERLAPPING LEASES

Lease for a fixed term

2

In applying any provision of this Act to a lease for a fixed term no account is to be taken of—

(a) any contingency as a result of which the lease may be terminated before the end of the fixed term, or

(b) any right of either party to terminate the lease or renew it.

Leases that continue after a fixed term

3

(1) This paragraph applies to—

(a) a lease granted for a fixed term and thereafter until terminated, or

(b) a lease granted for a fixed term that may continue beyond the fixed term by operation of law.

(2) For the purposes of this Act (except section 46 (notifiable transactions: exceptions)) a lease to which this paragraph applies is treated—

(a) in the first instance as if it were a lease for the original fixed term and no longer;

(b) if the lease continues after the end of that term, as if it were a lease for a fixed term one year longer than the original fixed term;

(c) if the lease continues after the end of the term resulting from the application of paragraph (b), as if it were a lease for a fixed term two years longer than the original fixed term,

and so on (but see sub-paragraph (5)).

(3) For the purposes of section 46 (notifiable transactions: exceptions) a lease to which this paragraph applies is treated as granted for a period equal to the original fixed term.

(4) Where—

(a) a lease is treated, by virtue of sub-paragraph (2), as continuing for a period longer than the original fixed term, and

(b) as a result additional tax is payable in respect of a land transaction or tax is payable in respect of a land transaction where none was payable,

the buyer must make a return or further return (including a self-assessment) in respect of the land transaction before the end of the period of 30 days beginning with the day after the end of the period for which the lease is treated as continuing.

(5) Where—

(a) a lease would, by virtue of sub-paragraph (2), be treated as continuing for a period (or further period) of one year, but

(b) it actually terminates at a time during that one year period,

the lease is to be treated as continuing under sub-paragraph (2) only until it terminates; and sub-paragraph (4) applies accordingly.

(6) This paragraph is subject to paragraphs 4 and 8 (rent under a continuing lease to be treated as rent under a new lease).

Leases that continue after a fixed term: grant of a new lease

4

(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 fixed term,

(b) during that one year period the tenant under that lease is granted a new lease of the same or substantially the same premises,

(d) paragraph 8 (tenant holding over: new lease backdated to previous year) does not apply.

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

(3) The term of the new lease is treated for the purposes of this Act as beginning with the day after the end of the original fixed term.

(4) Any rent which, in the absence of this paragraph, would be payable under the original lease in respect of that one year period is to be treated as payable under the new lease (and paragraph 9(3) does not apply to that rent).

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

Leases for an indefinite term

5

(1) For the purposes of this Act (except section 46 (notifiable transactions: exceptions))—

(a) a lease for an indefinite term is treated in the first instance as if it were a lease for a fixed term of a year;

(b) if the lease continues after the end of the term resulting from the application of paragraph (a), it is treated as if it were a lease for a fixed term of 2 years;

(c) if the lease continues after the end of the term resulting from the application of paragraph (b), it is treated as if it were a lease for a fixed term of 3 years,

and so on.

(2) But where—

(a) a lease is treated, by virtue of sub-paragraph (1) as if it were a lease for a fixed term of 2 or more years, and

(b) it actually terminates before the end of that fixed term,

the lease is to be treated as continuing under sub-paragraph (1) only until it terminates; and sub-paragraph (5) applies accordingly.

(3) For the purposes of section 46 (notifiable transactions: exceptions) a lease for an indefinite term is treated as granted for a period of less than 7 years.

(4) For the purposes of this Act, no account is to be taken of any other enactment deeming a lease for an indefinite term to be a lease for a different term.

(5) Where—

(a) a lease is treated, by virtue of sub-paragraph (1), as being for a fixed term,

(b) the lease continues after the end of that term and accordingly is treated as being for a longer fixed term, and

(c) as a result of the lease continuing, additional tax is payable in respect of a land transaction or tax is payable in respect of a land transaction where none was payable,

the buyer must make a return or further return (including a self-assessment) in respect of the land transaction before the end of the period of 30 days beginning with the day after the end of the longer fixed term for which the lease is treated as continuing.

(6) Where—

(a) a lease is treated, by virtue of sub-paragraph (1), as being for a fixed term of one year,

(b) the lease actually terminates before the end of that fixed term, and

(c) had the lease been granted for a fixed term ending on the date on which it actually terminates, less tax would have been chargeable than the amount assessed as such in the return made in respect of the grant of the lease,

the buyer may, within the period allowed for amendment of the return, amend it accordingly (for provision as to amendment of returns, see section 41 of TCMA).

Successive linked leases

6

(1) For the purposes of this Act a series of linked leases are treated as a single lease—

(a) granted at the time of the grant of the first lease in the series,

(b) for a term equal to the aggregate of the terms of all the leases, and

(2) Two or more leases constitute ““a series of linked leases”” if they—

(a) are successive leases granted or treated as granted (whether at the same time or at different times) of the same or substantially the same premises, and

(b) are linked transactions.

(3) The grant of later leases in the series is accordingly disregarded for the purposes of this Act except section 51 (return or further return in consequence of later linked transaction).

Rent for overlap period in case of grant of further lease

7

(1) This paragraph applies where—

(a) the tenant under a lease (““the old lease””) surrenders it to the landlord and in consideration of that surrender the landlord grants a lease to the tenant of the same or substantially the same premises (“"the new lease””),

(b) the tenant under a lease (““the old lease””) of premises to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (security of tenure for business, professional and other tenants) applies, makes a request for a new tenancy (“"the new lease””) which is then executed,

(c) on termination of a lease (““the head lease””) a sub-tenant is granted a lease (“"the new lease””) of the same or substantially the same premises as those comprised in the sub-tenant's original lease (““the old lease””) in pursuance of—

(i) an order of a court on a claim for relief against re-entry or forfeiture, or

(ii) a contractual entitlement arising in the event of the head lease being terminated, or

(d) a person who has guaranteed the obligations of a tenant under a lease that has been terminated (““the old lease””) is granted a lease of the same or substantially the same premises (“"the new lease””) in pursuance of the guarantee.

(2) For the purposes of this Act, the rent payable under the new lease in respect of any period falling within the overlap period is treated as reduced by the amount of the taxable rent that would have been payable in respect of that period under the old lease (but it cannot be treated as being reduced to a negative amount).

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

(a) the ““overlap period”” is the period between the date of the grant of the new lease and what would have been the end of the term of the old lease had it not been terminated;

(b) rent is ““taxable”” if or to the extent that it is taken into account in determining the tax chargeable in respect of the acquisition of the old lease.

Tenant holding over: new lease backdated to previous year

8

(1) This paragraph applies where—

(a) the tenant under a lease (““the old lease””) continues in occupation after the date on which, under its terms, the lease terminates (““the contractual termination date””),

(b) the tenant is granted a lease of the same or substantially the same premises (“"the new lease””),

(d) the term of the new lease is expressed to begin on a date falling within the period —

(i) beginning with the contractual termination date, and

(ii) ending with the latest anniversary of that date falling before the date on which the new lease is granted,

(““the whole years of holdover””).

(2) The term of the new lease is treated for the purposes of this Act as beginning with the date on which it is expressed to begin.

(3) The rent payable under the new lease in respect of the period—

(a) beginning with the date on which the new lease is expressed to begin, and

(b) ending at the end of the whole years of holdover,

is treated for the purposes of this Act as reduced by the amount of taxable rent payable in respect of the holdover tenancy for that period (but it cannot be treated as being reduced to a negative amount).

(4) The holdover tenancy is treated for the purposes of this Act as a lease for a fixed term ending at the end of the whole years of holdover.

(5) For the purposes of this paragraph—

(a) “"holdover tenancy”” means—

(i) the old lease if it continues beyond the contractual termination date (whether by virtue of the lease being granted for a fixed term and thereafter until terminated or by operation of law), or

(ii) any other tenancy of the same or substantially the same premises by virtue of which the tenant under the old lease continues in occupation after the contractual termination date;

(b) rent is ““taxable”” if or to the extent that it is taken into account in determining the tax chargeable in respect of the acquisition of the holdover tenancy.

PART 3 — RENT AND OTHER CONSIDERATION

Rent

9

(1) For the purposes of this Act, a single sum expressed to be payable in respect of rent and other matters but not apportioned is to be treated as entirely rent.

(2) Sub-paragraph (1) is without prejudice to the application of paragraph 4 of Schedule 4 (chargeable consideration: just and reasonable apportionment) where separate sums are expressed to be payable in respect of rent and other matters.

(3) For the purposes of this Act, “"rent”” does not include any chargeable consideration for the grant of a lease that is payable in respect of a period before the grant of the lease.

Variable or uncertain rent

10

(1) This paragraph applies where the amount of rent payable under a lease—

(a) varies in accordance with provision in the lease, or

(b) is contingent, uncertain or unascertained.

(2) As regards rent payable in respect of any period before the end of the fifth year of the term of the lease—

(a) this Act applies as in relation to other chargeable consideration, and

(b) accordingly sections 19 and 20 apply if the amount is contingent, uncertain or unascertained.

(3) As regards rent payable in respect of any period after the end of the fifth year of the term of the lease, the annual amount of rent is assumed, in every case, to be the equal to the highest amount of rent payable in respect of any period of 12 consecutive months in the first 5 years of the term.

(4) In determining that amount—

(a) disregard paragraphs 7(2) and 8(3) (where further lease granted, deemed reduction of rent for overlap period), and

(b) if necessary, take into account any amounts determined in accordance with sub-paragraph (2)(b).

(5) This paragraph is subject to paragraph 12 (adjustment where rent ceases to be uncertain).

(6) For the purposes of this paragraph and paragraph 12, the cases where the amount of rent payable under a lease is uncertain or unascertained include cases where there is a possibility of that amount being varied under—

(a) section 12, 13 or 33 of the Agricultural Holdings Act 1986 (c. 5) (provisions relating to increases, reductions and other variations of rent), or

(b) Part 2 of the Agricultural Tenancies Act 1995 (c. 8) (rent review under farm business tenancy).

(7) For the purposes of this Act, no account is to be taken of any provision for rent to be adjusted in line with the retail prices index, consumer prices index or any other similar index used to express a rate of inflation.

First rent review in final quarter of fifth year

11

Where—

(a) a lease contains provision under which the rent may be adjusted,

(b) under that provision the first (or only) such adjustment—

(i) is to an amount that (before that adjustment) is uncertain, and

(ii) has effect from a date (the ““review date””) that is expressed as falling 5 years after a specified date, and

this Act applies as if references to the first 5 years of the term of the lease were to the period beginning with the start of the term and ending with the review date and references to the fifth year of the term of the lease are to be read accordingly.

Adjustment of tax where rent determined on reconsideration date

12

(1) Where, in the case of a land transaction relating to a lease—

(a) section 19 or 20 (contingent, uncertain or unascertained consideration) applies to the land transaction by virtue of paragraph 10, and

(b) the reconsideration date is reached,

the buyer in the transaction must, on the reconsideration date, determine the rent paid or payable in respect of the first 5 years of the term of the lease.

(2) Paragraphs 13 and 14 make provision for the adjustment of tax payable in respect of a land transaction (and of any transaction linked to such a transaction) as a result of such a determination.

(3) For the purposes of this paragraph and paragraphs 13 and 14, the reconsideration date is —

(a) the date falling at the end of the fifth year of the term of the lease, or

(b) any earlier date on which the amount of rent payable in respect of the first 5 years of the term of the lease ceases to be uncertain.

(4) For the purposes of sub-paragraph (3)(b) and paragraph 13(2), the amount of rent payable ceases to be uncertain when—

(a) in the case of contingent rent, the contingency occurs or it becomes clear that it will not occur;

(b) in the case of uncertain or unascertained rent, the amount becomes ascertained.

Underpayment of tax where rent determined on reconsideration date

13

(1) If, as a result of determining on the reconsideration date the rent paid or payable in respect of the first 5 years of the term of the lease—

(a) a land transaction becomes notifiable, or

(b) additional tax is payable in respect of a land transaction or tax is payable where none was payable,

the buyer must make a return or further return (including a self-assessment) in respect of the land transaction before the end of the period of 30 days beginning with the reconsideration date.

(2) Where—

(a) a return is made under sub-paragraph (1) as a result of determining the rent paid or payable in respect of the first 5 years of the term of the lease on the date falling at the end of the fifth year of that term,

(b) when the return is made, the rent so paid or payable remains uncertain, and

(c) no later than the end of the period of 12 months beginning with the filing date for the return, that rent ceases to be uncertain,

the buyer must amend the return in accordance with section 41 of TCMA.

Overpayment of tax where rent determined on reconsideration date

14

(1) If, as a result of determining on the reconsideration date the rent paid or payable in respect of the first 5 years of the term of the lease, less tax is payable in respect of a land transaction than has already been paid—

(a) the buyer may, within the period allowed for amendment of the return, amend it accordingly;

(b) after the end of that period, the buyer may (if the return is not so amended) make a claim for repayment of the amount overpaid in accordance with Chapter 7 of Part 3 of TCMA as modified by sub-paragraph (2).

(2) In its application to a claim to which sub-paragraph (1)(b) applies, Chapter 7 of Part 3 of TCMA applies as if for section 78 there were substituted—

(78) A claim under section 63 to which paragraph 14(1)(b) of Schedule 6 to LTTA applies must be made before the later of the end of— (a) the period of 4 years beginning with the day after the filing date for the tax return to which the land transaction tax already paid relates, or (b) the period of 12 months beginning with the reconsideration date (within the meaning of paragraph 12(3) of that Schedule).

Reverse premiums

15

(1) In the case of the grant, assignment or surrender of a lease a reverse premium does not count as chargeable consideration.

(2) A “"reverse premium”” means—

(a) in relation to the grant of a lease, a premium moving from the landlord to the tenant;

(b) in relation to the assignment of a lease, a premium moving from the assignor to the assignee;

Tenants’ obligations etc. that do not count as chargeable consideration

16

(1) In the case of a grant of a lease none of the following counts as chargeable consideration —

(a) any undertaking by the tenant to repair, maintain or insure the leased premises;

(b) any undertaking by the tenant to pay any amount in respect of services, repairs, maintenance or insurance or the landlord's costs of management;

(c) any other obligation of the tenant that is not such as to affect the rent that a tenant would be prepared to pay in the open market;

(d) any guarantee of the payment of rent or the performance of any other obligation of the tenant under the lease;

(e) any penal rent, or increased rent in the nature of a penal rent, payable in respect of the breach of any obligation of the tenant under the lease;

(f) any liability of the tenant for costs under section 14(2) of the Leasehold Reform Act 1967 (c. 88) or section 60 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (costs to be borne by person exercising statutory rights to be granted lease);

(g) any other obligation of the tenant to bear the landlord's reasonable costs or expenses of, or incidental to, the grant of the lease;

(h) any obligation under the lease to transfer to the landlord, on the termination of the lease, payment entitlements granted to the tenant under the basic payment scheme (that is, the scheme of income support for farmers in pursuance of Regulation (EU) No 1307/2013) in respect of land subject to the lease.

(2) Where sub-paragraph (1) applies in relation to an obligation, a payment made in discharge of the obligation does not count as chargeable consideration.

(3) The release of an obligation mentioned in sub-paragraph (1) does not count as chargeable consideration in relation to the surrender of the lease.

Surrender of existing lease in return for new lease

17

(1) Where a lease is granted in consideration of the surrender of an existing lease between the same parties—

(a) the grant of the new lease does not count as chargeable consideration for the surrender, and

(b) the surrender does not count as chargeable consideration for the grant of the new lease.

(2) Paragraph 5 (exchanges) of Schedule 4 (chargeable consideration) does not apply in such a case.

Assignment of lease: assumption of obligations by assignee

18

In the case of an assignment of a lease the assumption by the assignee of the obligation—

(a) to pay rent, or

(b) to perform or observe any other undertaking of the tenant under the lease,

does not count as chargeable consideration for the assignment.

Loan or deposit in connection with grant or assignment of lease

19

(1) Where, under arrangements made in connection with the grant of a lease—

(a) the tenant, or any person connected with or acting on behalf of the tenant, pays a deposit, or makes a loan, to any person, and

(b) the repayment of all or part of the deposit or loan is contingent on anything done or omitted to be done by the tenant, or on the death of the tenant,

the amount of the deposit or loan (disregarding any repayment) is to be taken for the purposes of this Act to be consideration other than rent given for the grant of the lease.

(2) Where, under arrangements made in connection with the assignment of a lease—

(a) the assignee, or any person connected with or acting on behalf of the assignee, pays a deposit, or makes a loan, to any person, and

(b) the repayment of all or part of the deposit or loan is contingent on anything done or omitted to be done by the assignee, or on the death of the assignee,

the amount of the deposit or loan (disregarding any repayment) is to be taken for the purposes of this Act to be consideration other than rent given for the assignment of the lease.

(3) Sub-paragraph (1) or (2) does not apply in relation to a deposit if the amount that would otherwise fall within the sub-paragraph in question in relation to the grant or assignment of the lease is not more than twice the relevant maximum rent.

(4) The relevant maximum rent is—

(a) in relation to the grant of a lease, the highest amount of rent payable in respect of any period of 12 consecutive months in the first 5 years of the term of the lease;

(b) in relation to the assignment of a lease, the highest amount of rent payable in respect of any period of 12 consecutive months falling within the first 5 years of the term remaining outstanding as at the date of the assignment.

(5) In determining the highest amount of rent for the purposes of sub-paragraph (4)—

(a) disregard paragraphs 7(2) and 8(3) (where further lease granted, deemed reduction of rent for overlap period), and

(b) if necessary, take into account any amounts determined in accordance with paragraph 10(2)(b) (determining contingent, uncertain or unascertained rent).

(6) Tax is not chargeable by virtue of this paragraph if it would be chargeable only as a result of the application of paragraph 34 (which excludes the zero rate band in cases where the relevant rent attributable to non-residential property is not less than £1,000 a year) to an amount of chargeable consideration determined under sub-paragraph (1) or (2).

PART 4 — AGREEMENTS FOR LEASE, ASSIGNMENTS AND VARIATIONS

Agreement for lease

20

(1) Where—

(a) an agreement for a lease is entered into, and

(b) the agreement is substantially performed without having been completed,

the agreement is treated for the purposes of this Act as if it were the grant of a lease in accordance with the agreement (““the notional lease””), beginning with the date of substantial performance.

(2) The effective date of the transaction is the date of substantial performance of the agreement.

(3) For the purposes of this paragraph the agreement is completed by the grant of a lease (““the actual lease””) in substantial conformity with the agreement.

(4) Where the actual lease is subsequently granted the notional lease is treated for the purposes of this Act as if it were a lease granted—

(a) on the date of substantial performance of the agreement,

(b) for a term beginning with that date and ending at the end of the term of the actual lease, and

(c) in consideration of the total rent payable over that term and any other consideration given for the agreement or the actual lease.

(5) Where sub-paragraph (4) applies the grant of the actual lease is disregarded for the purposes of this Act except section 51 (return or further return in consequence of later linked transaction).

(6) For the purposes of section 51—

(a) the grant of the notional lease and the grant of the actual lease are linked (whether or not they would be linked by virtue of section 8),

(b) the tenant under the actual lease (rather than the tenant under the notional lease) is liable for any tax or additional tax chargeable in respect of the notional lease as a result of sub-paragraph (4), and

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