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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

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(4) A transfer to P that results from the exercise of the right mentioned in sub-paragraph (1)(d) (““a further transaction””) is relieved from tax if—

(a) the provisions of this Act and TCMA relating to the first and second transactions are complied with, and

(b) at all times between the second transaction and the further transaction—

(i) the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and

(ii) the lease or sub-lease granted under the second transaction is held by P.

(5) The agreement mentioned in sub-paragraph (1)(d) is not to be treated—

(a) as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred to P (and accordingly section 14(1) does not apply), nor

(b) as a distinct land transaction by virtue of section 15 (options and rights of pre-emption).

(6) A further transaction that is relieved from tax by virtue of sub-paragraph (4) is not a notifiable transaction unless it involves the transfer to P of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction.

Land sold to financial institution and re-sold to a person

3

(1) This paragraph applies where arrangements are entered into between a person (““P””) and a financial institution under which—

(a) the institution—

(i) purchases a major interest in land (““the first transaction””), and

(ii) sells that interest to P (““the second transaction””), and

(b) P grants the institution a legal mortgage (as defined in section 205(1)(xvi) of the Law of Property Act 1925 (c. 20)) over that interest.

(2) The first transaction is relieved from tax if the seller is—

(a) P, or

(b) another financial institution by whom the interest was acquired under other arrangements of the kind mentioned in paragraph 2(1) entered into between it and P.

(3) The second transaction is relieved from tax if the financial institution complies with the provisions of this Act and TCMA relating to the first transaction and, where that includes a requirement to pay tax chargeable on the first transaction, the tax so chargeable must be based on chargeable consideration that is not less than the market value of the interest and, in the case of the grant of a lease at a rent, the market rent.

(4) For the purposes of sub-paragraph (3), the market rent of a lease at any time is the rent which the lease might reasonably be expected to fetch at that time in the open market.

References to P where P is an individual who has died

4

References in paragraphs 2 and 3 to P are to be read, in relation to times after P has died, as references to P's personal representatives.

PART 3 — CIRCUMSTANCES WHERE ARRANGEMENTS NOT RELIEVED

No relief where group relief, acquisition relief or reconstruction relief available on first transaction

5

Paragraphs 2 and 3 do not apply to arrangements in relation to which group relief, acquisition relief or reconstruction relief is available on the first transaction (even if such a relief is subsequently withdrawn).

Land sold to financial institution and leased to a person: arrangements to transfer control of institution

6

(1) Paragraph 2 does not apply to alternative finance arrangements if those arrangements, or any connected arrangements, include arrangements for a person to acquire control of the relevant financial institution.

(2) That includes arrangements for a person to acquire control of the relevant financial institution only if one or more conditions are met (such as an event occurring or the carrying out of an act).

(3) In this paragraph—

“"alternative finance arrangements”” (“"trefniadau cyllid eraill**”") means the arrangements referred to in paragraph 2(1);

“"connected arrangements”” (“"trefniadau cysylltiedig**”") means any arrangements entered into in connection with the making of alternative finance arrangements (including arrangements involving one or more persons who are not parties to the alternative finance arrangements);

“"relevant financial institution”” (“"sefydliad ariannol perthnasol**”") means the financial institution which enters into the alternative finance arrangements.

(4) Section 1124 of the Corporation Tax Act 2010 (c. 4) applies for the purposes of determining who has control of the relevant financial institution.

PART 4 — EXEMPT INTEREST

Interest held by financial institution an exempt interest

7

(1) An interest held by a financial institution as a result of the first transaction within the meaning of paragraph 2(1)(a) is an exempt interest (but see the following).

(2) The interest ceases to be an exempt interest if—

(a) the lease mentioned in paragraph 2(1)(c) ceases to have effect, or

(b) the right under paragraph 2(1)(d) ceases to have effect or becomes subject to a restriction.

(3) The interest is not an exempt interest if group relief, acquisition relief or reconstruction relief is available on the first transaction (even if such a relief is subsequently withdrawn).

(4) Despite sub-paragraph (1), the interest is not an exempt interest in respect of—

(a) the first transaction itself, or

(b) a further transaction within the meaning of paragraph 2(4).

PART 5 — INTERPRETATION

Meaning of “financial institution”

8

In this Schedule, “"financial institution”” means—

(a) a financial institution within the meaning of section 564B of the Income Tax Act 2007 (c. 3) (alternative finance arrangements: meaning of ““financial institution””) other than a person referred to in subsection (1)(d) of that section (persons with permission to enter into credit agreements and contracts for hire of goods);

(b) a person with permission under Part 4A of the Financial Services and Markets Act 2000 (c. 8) to carry on the regulated activity specified in Article 63F(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (entering into regulated home purchase plans as home purchase providers).

Meaning of “arrangements”

9

In this Schedule, “"arrangements”” includes any agreement, understanding, scheme, transaction or series of any of those things (whether or not legally enforceable).

SCHEDULE 11

PART 1 — INTRODUCTORY

Overview

1

(1) This Schedule makes provision for relief in the case of certain land transactions connected to alternative finance investment bonds.

(2) The Schedule is arranged as follows—

(a) this Part includes definitions of key terms (paragraph 2);

(b) Part 2 provides that certain events relating to an alternative finance investment bond are not to be treated as chargeable transactions (paragraph 3) and provides for exceptions to that (paragraph 4);

(d) Part 4 provides for relief for certain transactions (paragraphs 13 and 15) as well as making provision about withdrawal of relief (paragraph 14) and circumstances where relief is not available (paragraph 17);

(e) Part 5 sets out how to apply the relief provisions in cases where the underlying asset is replaced by another asset (paragraph 18) and imposes a duty on WRA to notify the Chief Land Registrar when a charge registered under this Schedule is discharged (paragraph 19).

Interpretation

2

In this Schedule—

“"alternative finance investment bond”” (“"bond buddsoddi cyllid arall**”") means arrangements to which section 564G of the Income Tax Act 2007 (c. 3) (investment bond arrangements) applies;

“"arrangements”” (“"trefniadau**”") includes any agreement, understanding, scheme, transaction or series of any of those things (whether or not legally enforceable);

“"bond assets”” (“"asedau bond”"), “"bond-holder”” (“"deiliad bond”"), “"bond-issuer”” (“"dyroddwr bond”") and “"capital”” (“"cyflafaf”") have the meaning given by section 564G of the Income Tax Act 2007 (c. 3);

“"prescribed”” (“"rhagnodedig**”") means prescribed in regulations made by the Welsh Ministers;

“"qualifying interest”” (“"buddiant cymwys**”") means a major interest in land other than a lease for a term of 21 years or less.

PART 2 — ISSUE, TRANSFER AND REDEMPTION OF RIGHTS UNDER BOND NOT TO BE TREATED AS CHARGEABLE TRANSACTION

Bond-holder not to be treated as having an interest in the bond assets

3

For the purposes of this Act—

(a) the bond-holder under an alternative finance investment bond is not treated as having an interest in the bond assets;

(b) the bond-issuer under such a bond is not treated as a trustee of the bond assets.

Bond-holder treated as having an interest if control of underlying asset acquired

4

(1) Paragraph 3 does not apply if control of the underlying asset is acquired by—

(a) a bond-holder, or

(b) a group of connected bond-holders.

(2) A bond-holder (““BH””), or a group of connected bond-holders, acquires control of the underlying asset if—

(a) the rights of bond-holders under an alternative finance investment bond include the right of management and control of the bond assets, and

(b) BH, or the group, acquires sufficient rights to enable BH, or the members of the group acting jointly, to exercise management and control of the bond assets to the exclusion of any other bond-holders.

(3) But sub-paragraph (1) does not operate to disapply paragraph 3 in either of the following cases.

(4) The first case is where—

(a) at the time that the rights were acquired BH (or all of the connected bond-holders) did not know and had no reason to suspect that the acquisition enabled the exercise of the right of management and control of the bond assets, and

(b) as soon as reasonably practicable after BH (or any of the bond-holders) becomes aware that the acquisition enables that exercise, BH transfers (or some or all of the bond-holders) transfer sufficient rights for that exercise no longer to be possible.

(5) The second case is where BH—

(a) underwrites a public offer of rights under the bond, and

(b) does not exercise the right of management and control of the bond assets.

(6) In this paragraph, “"underwrite””, in relation to an offer of rights under a bond, means to agree to make payments of capital under the bond in the event that other persons do not make those payments.

PART 3 — CONDITIONS FOR OPERATION OF RELIEFS ETC.

Introduction

5

This Part of this Schedule defines conditions 1 to 7 for the purposes of paragraphs 13 to 16 and 18.

Condition 1

6

Condition 1 is that one person (““A””) and another (““B””) enter into arrangements under which—

(a) A transfers to B a qualifying interest in land (““the first transaction””), and

(b) A and B agree that when the interest ceases to be held by B as mentioned in paragraph 7(b), B will transfer the interest to A.

Condition 2

7

Condition 2 is that—

(a) B, as bond-issuer, enters into an alternative finance investment bond (whether before or after entering into the arrangements mentioned in condition 1), and

(b) the interest in land to which the arrangements mentioned in condition 1 relate is held by B as a bond asset.

Condition 3

8

(1) Condition 3 is that, for the purpose of generating income or gains for the alternative finance investment bond—

(a) B and A enter into a leaseback agreement, or

(b) such other condition or conditions as may be prescribed is or are met.

(2) For the purposes of condition 3, B and A enter into a leaseback agreement if B grants to A, out of the interest transferred to B—

(a) a lease (if the interest transferred is freehold), or

(b) a sub-lease (if the interest transferred is leasehold).

Condition 4

9

(1) Condition 4 is that, before the end of the period of 120 days beginning with the effective date of the first transaction, B provides WRA with the prescribed evidence that a satisfactory legal charge has been entered in the register of title kept under section 1 of the Land Registration Act 2002 (c. 9).

(2) A charge is satisfactory for the purposes of condition 4 if it—

(a) is a first charge on the interest transferred to B,

(b) is in favour of WRA, and

(i) the amount of tax which would (apart from paragraph 13) be chargeable on the first transaction if the chargeable consideration for that transaction had been the market value of the interest on the effective date of that transaction, and

(ii) any interest and penalties which would for the time being be payable on or in relation to that amount of tax, if the tax had been payable (but not paid) in respect of the first transaction.

Condition 5

10

Condition 5 is that the total of the payments of capital made to B before the termination of the bond is not less than 60% of the market value of the interest in the land on the effective date of the first transaction.

Condition 6

11

Condition 6 is that B holds the interest in the land as a bond asset until the termination of the bond.

Condition 7

12

Condition 7 is that—

(a) before the end of the period of 30 days beginning with the date on which the interest in the land ceases to be held as a bond asset, the interest is transferred by B to A (““the second transaction””), and

(b) the second transaction is given effect not more than 10 years (or such other period as may be prescribed) after the first transaction.

PART 4 — RELIEF FOR CERTAIN TRANSACTIONS

Relief for the first transaction

13

(1) The first transaction is relieved from tax if each of conditions 1 to 3 is met before the end of the period of 30 days beginning with the effective date of that transaction.

(2) Where the qualifying interest in land is replaced as the bond asset by an interest in other land, sub-paragraph (1) is subject to paragraph 18 (replacement of asset).

(3) Sub-paragraph (1) is also subject to paragraph 17 (no relief where bond-holder acquires control of underlying asset).

Withdrawal of relief for the first transaction

14

(1) Relief under paragraph 13 is withdrawn if—

(a) the qualifying interest in land is transferred by B to A without conditions 5 and 6 having been met,

(b) the period mentioned in (or prescribed under) paragraph 12(b) expires and any one of those conditions has not been met, or

(2) Relief under paragraph 13 is also withdrawn if condition 4 is not met.

(3) Where relief under paragraph 13 is withdrawn the amount of tax chargeable on the first transaction is the tax that would have been chargeable but for the relief if the chargeable consideration for the transaction had been the market value of the qualifying interest on the effective date of the transaction.

Relief for the second transaction

15

(1) The second transaction is relieved from tax if—

(a) each of conditions 1 to 7 is met, and

(b) the provisions of this Act and TCMA in relation to the first transaction are complied with.

(2) Where the qualifying interest in land is replaced as the bond asset by an interest in other land, sub-paragraph (1) is subject to paragraph 18 (replacement of asset).

(3) Sub-paragraph (1) is also subject to paragraph 17 (no relief where bond-holder acquires control of underlying asset).

Discharge of charge when conditions for relief met

16

If, after the effective date of the second transaction, B provides WRA with the prescribed evidence that each of conditions 1 to 3 and 5 to 7 has been met, the land ceases to be subject to the charge registered in pursuance of condition 4.

Relief not available where bond-holder acquires control of underlying asset

17

(1) Relief provided under paragraph 13 or 15 (including where the relief is provided under either paragraph as modified by paragraph 18) is not available if control of the underlying asset is acquired by—

(a) the bond-holder, or

(b) a group of connected bond-holders.

(2) A bond-holder (““BH””), or a group of connected bond-holders, acquires control of the underlying asset if—

(a) the rights of bond-holders under an alternative finance investment bond include the right of management and control of the bond assets, and

(b) BH, or the group, acquires sufficient rights to enable BH, or the members of the group acting jointly, to exercise management and control of the bond assets to the exclusion of any other bond-holders.

(3) If BH, or the group, acquires control of the underlying asset before the end of the period of 30 days beginning with the effective date of the first transaction, the effect of sub-paragraph (1) is that paragraph 13 does not apply to that transaction.

(4) If BH, or the group, acquires control of the underlying asset after the end of that period and conditions 1 to 3 have been met, the effect of sub-paragraph (1) is that any relief under paragraph 13 is treated as withdrawn under paragraph 14.

(5) But sub-paragraph (1) does not prevent the reliefs being available in either of the following cases.

(6) The first case is where—

(a) at the time that the rights were acquired BH (or all of the connected bond-holders) did not know and had no reason to suspect that the acquisition enabled the exercise of the right of management and control of the bond assets, and

(b) as soon as reasonably practicable after BH (or any of the bond-holders) becomes aware that the acquisition enables that exercise, BH transfers (or some or all of the bond-holders transfer) sufficient rights for that exercise no longer to be possible.

(7) The second case is where BH—

(a) underwrites a public offer of rights under the bond, and

(b) does not exercise the right of management and control of the bond assets.

(8) In this paragraph, “"underwrite””, in relation to an offer of rights under a bond, means to agree to make payments of capital under the bond in the event that other persons do not make those payments.

PART 5 — SUPPLEMENTARY

Replacement of asset

18

(1) Paragraphs 13 to 16 apply with the modifications set out in sub-paragraph (2) or (as the case may be) (3) if—

(a) conditions 1 to 3 and 7 are met in relation to an interest in land (““the original land””),

(b) B ceases to hold the original land as a bond asset (and accordingly, transfers it to A) before the termination of the alternative finance investment bond,

(c) A and B enter into further arrangements satisfying condition 1 relating to an interest in other land (““the replacement land””), and

(d) the value of the interest in the replacement land at the time it is transferred from A to B is greater than or equal to the market value of the interest in the original land on the effective date of the first transaction relating to the original land.

(2) In relation to the original land, condition 6 does not need to be met if conditions 1, 2, 3, 6 and 7 (as modified by sub-paragraph (3)) are met in relation to the replacement land.

(3) In relation to the replacement land—

(a) condition 5 applies as if the reference to the interest in land were a reference to the interest in the original land, and

(b) condition 7 applies as if the reference in paragraph 12(b) to the first transaction were a reference to the first transaction relating to the original land.

(4) If the replacement land is in Wales, the original land ceases to be subject to the charge registered in pursuance of condition 4 when—

(a) B provides WRA with the prescribed evidence that condition 7 is met in relation to the original land, and

(b) condition 4 is met in relation to the replacement land.

(5) If the replacement land is not in Wales, the original land ceases to be subject to the charge registered in pursuance of condition 4 when B provides WRA with the prescribed evidence that—

(a) condition 7 is met in relation to the original land, and

(b) each of conditions 1 to 3 is met in relation to the replacement land.

(6) This paragraph also applies where the replacement land is replaced by further replacement land; and in that event—

(a) references to the original land (except those in sub-paragraph (3)) are to be read as references to the replacement land, and

(b) references to the replacement land are to be read as references to the further replacement land.

WRA to notify Registrar of discharge of charge

19

(1) Where a charge is discharged in accordance with paragraph 16 or 18(4) or (5), WRA must notify the Chief Land Registrar of the discharge in accordance with land registration rules (within the meaning of the Land Registration Act 2002 (c. 9)).

(2) WRA must do so within the period of 30 days beginning with the date on which B provides the evidence in question.

SCHEDULE 12

The relief

1

A transaction by which a chargeable interest is transferred by a person (“"the transferor””) to a limited liability partnership in connection with its incorporation is relieved from tax if conditions A to C are met.

Condition A

2

Condition A is that the effective date of the transaction is not more than one year after the date of incorporation of the limited liability partnership.

Condition B

3

Condition B is that at the relevant time the transferor—

(a) is a partner in a partnership comprised of all the persons who are, or are to be, members of the limited liability partnership (and no-one else), or

(b) holds the chargeable interest as nominee or bare trustee for one or more of the partners in such a partnership.

Condition C

4

Condition C is that—

(a) the proportions of the chargeable interest to which the persons mentioned in paragraph 3(a) are entitled immediately after the transfer are the same as those to which they were entitled at the relevant time, or

(b) none of the differences in those proportions has arisen as part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax.

Interpretation

5

(1) In this Schedule—

“"limited liability partnership”” (“"partneriaeth atebolrwydd cyfyngedig**”") means a limited liability partnership formed under the Limited Liability Partnerships Act 2000 (c. 12);

“"the relevant time”” (“"yr adeg berthnasol**”") means—where the transferor acquired the chargeable interest after the incorporation of the limited liability partnership, immediately after the transferor acquired it, andin any other case, immediately before the limited liability partnership's incorporation.

(2) In paragraph 4(b), “"arrangements”” includes any scheme, agreement or understanding, whether or not legally enforceable.

SCHEDULE 13

Overview

1

This Schedule makes provision about relief available for acquisitions involving multiple dwellings.

2

This Schedule is arranged as follows—

(a) paragraph 3 identifies the transactions to which this Schedule applies,

(b) paragraph 4 defines key terms,

(d) paragraphs 6 and 7 make further provision about how the tax is calculated, and

(e) paragraph 8 provides for certain buildings which are yet to be constructed or adapted to be treated as dwellings for the purposes of this Schedule.

Transactions to which this Schedule applies

3

(1) This Schedule applies to a relevant transaction.

(2) A ““relevant transaction”” is a chargeable transaction that is—

(a) within sub-paragraph (3) or (4), and

(b) not excluded by sub-paragraph (5).

(3) A transaction is within this sub-paragraph if its main subject-matter consists of—

(a) an interest in at least two dwellings, or

(b) an interest in at least two dwellings and other property.

(4) A transaction is within this sub-paragraph if—

(a) its main subject-matter consists of—

(i) an interest in a dwelling, or

(ii) an interest in a dwelling and other property,

(b) it is one of a number of linked transactions, and

(i) an interest in some other dwelling or dwellings, or

(ii) an interest in some other dwelling or dwellings and other property.

(5) A transaction is excluded by this sub-paragraph if—

(a) paragraph 10 (relief for transactions entered into by persons exercising collective rights) of Schedule 14 applies to it, or

(b) relief under Schedule 16 (group relief), Schedule 17 (reconstruction and acquisition relief) or Schedule 18 (charities relief) is available for it (even if such a relief is withdrawn).

(6) A reference in this Schedule to an interest in a dwelling is to any chargeable interest in or over a dwelling.

(7) But, in the case of a dwelling subject to a lease granted for an initial term of more than 21 years, any interest that is a superior interest in relation to the lease is not to be treated as an interest in a dwelling for the purposes of paragraphs 4 and 5.

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

(a) the seller is a qualifying body within the meaning given by paragraph 9(3) of Schedule 15 (relief for certain acquisitions of residential properties by tenants),

(b) the transaction is a sale under a sale and leaseback arrangement within the meaning of paragraph 2 of Schedule 9 (sale and leaseback arrangements),

(d) the leaseback element of that arrangement is relieved from tax under Schedule 9 (sale and leaseback relief).

Key terms

4

(1) ““The consideration attributable to dwellings”” is—

(a) for a single dwelling transaction, so much of the chargeable consideration for the transaction as is attributable to the dwelling;

(b) for a multiple dwelling transaction, so much of the chargeable consideration for the transaction as is attributable to the dwellings in total.

(2) ““The remaining consideration”” is the chargeable consideration for the transaction less the consideration attributable to dwellings.

(3) A relevant transaction is a ““single dwelling transaction”” if its main subject-matter consists of—

(a) an interest in a dwelling, or

(b) an interest in a dwelling and other property.

(4) A relevant transaction is a ““multiple dwelling transaction”” if its main subject-matter consists of—

(a) an interest in at least two dwellings, or

(b) an interest in at least two dwellings and other property.

(5) “"Attributable”” means attributable on a just and reasonable apportionment.

The amount of tax chargeable

5

(1) If relief under this Schedule is claimed for a relevant transaction, the amount of tax chargeable in respect of the transaction is the sum of—

(a) the tax related to the consideration attributable to dwellings, and

(b) the tax related to the remaining consideration (if any).

(2) If the whole or part of the chargeable consideration for a relevant transaction is rent, sub-paragraph (1) has effect subject to Part 5 of Schedule 6 (leases: calculation of tax chargeable).

6

(1) For the purposes of paragraph 5(1)(a), ““the tax related to the consideration attributable to dwellings”” is determined as follows—

Step 1 Determine the amount of tax that would be chargeable under section 27 on the assumption that—the chargeable transaction is a residential property transaction, andthe chargeable consideration were the fraction produced by dividing total dwellings consideration by total dwellings.

Step 2 Multiply the amount determined at Step 1 by total dwellings.

Step 3 If the relevant transaction is one of a number of linked transactions, go to Step 4. Otherwise, the amount found at Step 2 is the tax related to the consideration attributable to dwellings.

Step 4 Multiply the amount found at Step 2 by—$CD TDC$Figure 12 where—““CD”” is the consideration attributable to dwellings for the relevant transaction, and““TDC”” is total dwellings consideration.

(2) But if the amount found at Step 2 of sub-paragraph (1) is less than 3% of total dwellings consideration, for the purposes of paragraph 5(1)(a) ““the tax related to the consideration attributable to dwellings”” is an amount equal to 3% of the consideration attributable to dwellings.

(3) ”Total dwellings consideration” means—

(a) for a transaction that is not one of a number of linked transactions, the consideration attributable to dwellings for that transaction;

(b) for one of a number of linked transactions—

(i) the total of the consideration attributable to dwellings for that transaction and all the other linked transactions that are relevant transactions, plus

(ii) so much of the chargeable consideration for any of the linked transactions (whether or not relevant transactions) as is not included in the calculation under paragraph (i) but is attributable to the same dwellings by reference to which that calculation is made.

(4) “"Total dwellings”” means the total number of dwellings by reference to which total dwellings consideration is calculated.

(5) In the application of sub-paragraph (1), no account is to be taken of—

(a) section 72(9) (transfer of 6 or more separate dwellings treated as non-residential property), or

(b) paragraph 34 (tax chargeable for consideration other than rent: mixed leases) of Schedule 6 (leases).

(6) In the application of sub-paragraph (1), where a relevant transaction is a higher rates residential property transaction (as provided for in Schedule 5), the amount of tax that would be chargeable under section 27 is to be determined on that basis.

(7) The Welsh Ministers may by regulations amend sub-paragraph (2) so as to substitute for the percentages for the time being specified there, different percentages.

7

(1) For the purposes of paragraph 5(1)(b), ““the tax related to the remaining consideration”” is the appropriate fraction of the amount of tax which (but for this Schedule) would be due in respect of the relevant transaction.

(2) In sub-paragraph (1), “"the appropriate fraction”” means—

$$RC TDC + TRC$Figure 13 where—““RC”” is the remaining consideration for the relevant transaction,““TDC”” is total dwellings consideration, and““TRC”” is total remaining consideration.$

(3) The ““total remaining consideration”” is—

(a) for a transaction that is not one of a number of linked transactions, the remaining consideration for that transaction;

(b) for one of a number of linked transactions—

(i) the total of the chargeable consideration for all those transactions, less

(ii) total dwellings consideration.

Certain buildings not yet constructed or adapted to count as a dwelling

8

(1) For the purposes of this Schedule, the main subject-matter of a transaction is to be taken to consist of or include an interest in a dwelling if—

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

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

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

(2) In sub-paragraph (1)—

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

““relevant deeming provision””(““darpariaeth dybio berthnasol””) means any of—section 10 (contract and transfer),section 11 (contract providing transfer to third party),paragraph 8(1) to (5) of Schedule 2 (assignment of rights: transferor treated as making a separate acquisition), orparagraph 20 of Schedule 6 (agreement for lease);

“"substantially performed”” (“"cyflawni'n sylweddol**”") has the meaning given by section 14.

(3) Subsections (4) to (7) of section 72 (meaning of residential property) apply for the purposes of this paragraph as they apply for the purposes of subsection (1)(a) of that section.

SCHEDULE 14

PART 1 — INTRODUCTORY

Overview

1

(1) This Schedule makes provision about reliefs available for certain acquisitions of dwellings.

(2) This Schedule is arranged as follows—

(a) Part 2 provides relief for certain acquisitions by housebuilders, property traders and employers, and is arranged as follows—

(i) paragraph 2 provides for relief in the case of an acquisition of a dwelling by a housebuilder from an individual acquiring a new dwelling,

(ii) paragraph 3 provides for relief in the case of an acquisition of a dwelling by a property trader from an individual acquiring a new dwelling,

(iii) paragraph 4 provides for relief in the case of an acquisition of a dwelling by a property trader from an individual where a chain of transactions breaks down,

(iv) paragraph 5 provides for relief in the case of an acquisition of a dwelling by a property trader from personal representatives,

(v) paragraph 6 provides for relief in the case of an acquisition of a dwelling by a property trader in the case of relocation of employment,

(vi) paragraph 7 provides for relief in the case of an acquisition of a dwelling by an employer in the case of relocation of employment,

(vii) paragraph 8 makes provision about withdrawal of the reliefs available to property traders, and

(viii) paragraph 9 makes provision about the interpretation of words and phrases which apply to Part 2 of this Schedule;

(b) Part 3 provides relief for transactions entered into by a person or persons exercising collective rights.

PART 2 — RELIEF FOR CERTAIN ACQUISITIONS OF DWELLINGS

Acquisition by housebuilder from individual acquiring new dwelling

2

(1) Where a housebuilder acquires a dwelling (“"the old dwelling””) from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (3) for provision about partial relief).

(2) The conditions are—

(a) that the individual (whether alone or with other individuals) acquires a new dwelling from the housebuilder,

(b) that the individual—

(i) occupied the old dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of its acquisition by the housebuilder, and

(ii) intends to occupy the new dwelling as the individual's only or main residence,

(d) that the area of land acquired by the housebuilder does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired by the housebuilder exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(4) In this paragraph—

(a) references to the acquisition of the new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling,

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(c) references to the market value of the old dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Acquisition by property trader from individual acquiring new dwelling

3

(1) Where a property trader acquires a dwelling (“"the old dwelling””) from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (4) for provision about partial relief).

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals who acquire new dwellings from housebuilders,

(b) that the individual (whether alone or with other individuals) acquires a new dwelling from a housebuilder,

(i) occupied the old dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of its acquisition by the property trader, and

(ii) intends to occupy the new dwelling as the individual's only or main residence,

(d) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the old dwelling,

(ii) to grant a lease or licence of the old dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and

(e) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Sub-paragraph (2)(d)(ii) does not apply to the grant of lease or licence to the individual for a period of no more than 6 months.

(4) Where the conditions in sub-paragraph (2)(a) to (d) are met but the area of land acquired by the property trader exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(5) In this paragraph—

(a) references to the acquisition of a new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling,

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(c) references to the market value of the old dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Acquisition by property trader from individual where chain of transactions breaks down

4

(1) Where a property trader acquires a dwelling (“"the old dwelling””) from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (4) for provision about partial relief).

(2) The conditions are—

(a) that the individual has made arrangements to sell the old dwelling and acquire another dwelling (““the second dwelling””),

(b) that the arrangements to sell the old dwelling fail,

(c) that the acquisition of the old dwelling is made for the purpose of enabling the individual's acquisition of the second dwelling to proceed,

(d) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in those circumstances,

(e) that the individual—

(i) occupied the old dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of its acquisition by the property trader, and

(ii) intends to occupy the second dwelling as the individual's only or main residence,

(f) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the old dwelling,

(ii) to grant a lease or licence of the old dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and

(g) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Sub-paragraph (2)(f)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than 6 months.

(4) Where the conditions in sub-paragraph (2)(a) to (f) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(5) In this paragraph—

(a) references to the acquisition of the second dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling,

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(c) references to the market value of the old dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Relief for acquisition by property trader from personal representatives

5

(1) Where a property trader acquires a dwelling from the personal representatives of a deceased individual, the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (3) for provision about partial relief).

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from personal representatives of deceased individuals,

(b) that the deceased individual occupied the dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of the individual's death,

(i) to spend more than the permitted amount on refurbishment of the dwelling,

(ii) to grant a lease or licence of the dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and

(d) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(b) references to the market value of the dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Acquisition by property trader in case of relocation of employment

6

(1) Where a property trader acquires a dwelling from an individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (4) for provision about partial relief).

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in connection with a change of residence resulting from relocation of employment,

(b) that the individual occupied the dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of the acquisition by the property trader,

(c) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,

(d) that the consideration for the acquisition does not exceed the market value of the dwelling,

(e) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the dwelling, or

(ii) to grant a lease or licence of the dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and

(f) that the area of land acquired by the property trader does not exceed the permitted area.

(3) Sub-paragraph (2)(e)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than 6 months.

(4) Where the conditions in sub-paragraph (2)(a) to (e) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(5) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling, and

(b) references to the market value of the dwelling and of the permitted area are to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Acquisition by employer in case of relocation of employment

7

(1) Where an individual's employer acquires a dwelling from the individual (whether alone or with other individuals), the acquisition is relieved from tax if the following conditions are met (but see sub-paragraph (3) for provision about partial relief).

(2) The conditions are—

(a) that the individual occupied the dwelling as the individual's only or main residence at some time in the period of 2 years ending with the date of the acquisition by the employer,

(b) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,

(d) that the area of land acquired by the employer does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling,

(b) references to the market value of the dwelling and of the permitted area are, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area, and

Withdrawal of reliefs available to property traders

8

(1) Relief under paragraphs 3 (acquisition by property trader from individual acquiring new dwelling) and 4 (acquisition by property trader from individual where chain of transactions breaks down) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the old dwelling,

(b) grants a lease or licence of the old dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling.

(2) Sub-paragraph (1)(b) does not apply to the grant of lease or licence to the individual acquiring the new dwelling or the second dwelling for a period of no more than 6 months.

(3) Relief under paragraph 5 (relief for acquisition by property trader from personal representatives) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the dwelling,

(b) grants a lease or licence of the dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling.

(4) Relief under paragraph 6 (acquisition by property trader in case of relocation of employment) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the dwelling,

(b) grants a lease or licence of the dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling.

(5) Sub-paragraph (4)(b) does not apply to the grant of lease or licence to the individual relocating for a period of no more than 6 months.

(6) Where relief is withdrawn, the amount of tax chargeable is the amount that would have been chargeable in respect of the acquisition but for the relief.

Interpretation

9

(1) For the purposes of this Part of this Schedule—

(a) “"housebuilder”” means—

(i) a company,

(ii) a limited liability partnership, or

(iii) a partnership whose members are all either companies or limited liability partnerships,

that carries on the business of constructing or adapting buildings or parts of buildings for use as dwellings and references in this Schedule to a housebuilder includes any company or limited liability partnership connected with it;

(b) “"new dwelling”” means a building or part of a building that—

(i) has been constructed for use as a single dwelling and has not previously been occupied, or

(ii) has been adapted for use as a single dwelling and has not been occupied since its adaptation;

(c) “"new place of employment”” means the place where an individual normally performs, or is normally to perform, duties of employment after a relocation of employment;

(d) “"permitted amount””, in relation to the refurbishment of a dwelling, means—

(i) £10,000, or

(ii) 5% of the consideration for the acquisition of the dwelling,

whichever is the greater, but subject to a maximum of £20,000;

(e) “"permitted area””, in relation to a dwelling, means that part of the dwelling which is land occupied and enjoyed with the building or part of the building occupied as a dwelling as its garden or grounds that does not exceed—

(i) an area (inclusive of the site of the building or part of the building) of 0.5 of a hectare, or

(ii) such larger area as is required for the reasonable enjoyment of the building or part of the building as a dwelling having regard to its size and character,

but where paragraph (ii) applies, the permitted area is taken to consist of that part of the land that would be the most suitable for occupation and enjoyment with the building or part of the building as its garden or grounds if the rest of the land were separately occupied;

(f) “"principal””, in relation to a property trader, means—

(i) in the case of a company, a director;

(ii) in the case of a limited liability partnership, a member;

(iii) in the case of a partnership whose members are all either companies or limited liability partnerships, a member or a person who is a principal of a member;

(g) “"property trader”” means—

(i) a company,

(ii) a limited liability partnership, or

(iii) a partnership whose members are all either companies or limited liability partnerships,

that carries on the business of buying and selling dwellings;

(h) ““refurbishment”” of a dwelling means the carrying out of works that enhance or are intended to enhance the value of the dwelling, but does not include—

(i) cleaning the dwelling, or

(ii) works required solely for the purpose of ensuring that the dwelling meets minimum safety standards;

(i) “"relocation of employment”” means a change of an individual's place of employment due to—

(i) the individual becoming employed by a new employer,

(ii) an alteration of the duties of the individual's employment, or

(iii) an alteration of the place where the individual normally performs those duties.

(2) For the purposes of paragraphs 6 and 7, a change of residence is one ““resulting from”” relocation of employment if—

(a) the change is made wholly or mainly to allow the individual to live within a reasonable daily travelling distance of the individual's new place of employment, and

(b) the individual's former residence is not within a reasonable daily travelling distance of that place.

(3) For the purposes of Part 2—

(a) anything done by or in relation to a company connected with a property trader is treated as done by or in relation to that property trader, and

(b) references to the principals or employees of a property trader include the principals or employees of any such company.

PART 3 — RELIEF FOR PERSONS EXERCISING COLLECTIVE RIGHTS

Relief for transactions entered into by persons exercising collective rights

10

(1) This paragraph applies where a chargeable transaction is entered into by a person or persons nominated or appointed by qualifying tenants of flats contained in premises in exercise of—

(a) a right under Part 1 of the Landlord and Tenant Act 1987 (c. 31) (right of first refusal), or

(b) a right under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (right to collective enfranchisement).

(2) The amount of tax chargeable is determined as follows.

Step 1 Determine the fraction of the chargeable consideration produced by dividing the total amount of that consideration by the number of qualifying flats contained in the premises.

Step 2 Determine the amount of tax chargeable under section 27 as if the chargeable consideration for the chargeable transaction were the fraction of the chargeable consideration calculated under Step 1.

Step 3 Multiply the amount determined at Step 2 by the number of qualifying flats contained in the premises.

(3) In this paragraph—

(a) “"flat”” and “"qualifying tenant”” have the same meaning as in the Chapter or the Part of the Act conferring the right being exercised;

(b) “"qualifying flat”” means a flat that is held by a qualifying tenant who is participating in the exercise of the right.

SCHEDULE 15

PART 1 — INTRODUCTORY

Overview

1

(1) This Schedule makes provision about reliefs available for certain transactions relating to social housing.

(2) This Schedule is arranged as follows—

(a) Part 2 makes provision about relief available for transactions subject to a public sector discount,

(b) Part 3 makes provision about the tax chargeable and relief available where a shared ownership lease or a rent to shared ownership lease transaction is entered into,

(c) Part 4 makes provision about the tax chargeable and relief available where a shared ownership trust is declared and where a rent to shared ownership trust scheme is entered into,

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) Part 6 provides relief for certain acquisitions by registered social landlords.

PART 2 — Public Sector Discount Relief

Relief for right to buy transaction

2

(1) In the case of a transaction subject to a public sector discount—

(a) section 19(1) (contingent consideration to be included in chargeable consideration on assumption that contingency will occur) does not apply, and

(b) any consideration that would be payable only if a contingency were to occur, or that is payable only because a contingency has occurred, does not count as chargeable consideration.

(2) A ““transaction subject to a public sector discount”” means—

(a) the sale of a dwelling at a discount, or the grant of a lease of a dwelling at a discount, by a relevant public sector body...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The following are relevant public sector bodies for the purposes of this paragraph—

(a) a Minister of the Crown;

(b) the Welsh Ministers;

(d) a registered social landlord;

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f) a local policing body within the meaning of section 101(1) of the Police Act 1996 (c. 16);

(g) a person specified for the purposes of this paragraph by the Welsh Ministers by regulations.

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

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) In this paragraph—

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

PART 3 — SHARED OWNERSHIP LEASES

Shared ownership lease: election for market value treatment

3

(1) This paragraph applies where—

(a) a lease is granted—

(i) by a qualifying body...

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the conditions in sub-paragraph (2) are met, and

(2) The conditions are—

(a) that the lease must be of a dwelling;

(b) that the lease must give the tenant exclusive use of the dwelling;

(d) that the lease must be granted partly in consideration of rent and partly in consideration of a premium calculated by reference to—

(i) the market value of the dwelling, or

(ii) a sum calculated by reference to that value;

(e) that the lease must contain a statement of—

(i) the market value of the dwelling, or

(ii) the sum calculated by reference to that value,

by reference to which the premium is calculated.

(3) An election for tax to be charged under this paragraph—

(a) must be included in the return made in respect of the grant of the lease (or in an amendment to that return), and

(b) is irrevocable, so that the return may not be amended so as to withdraw the election.

(4) Where this paragraph applies the chargeable consideration for the grant of the lease is taken to be the amount stated in the lease in accordance with sub-paragraph (2)(e)(i) or (ii).

(5) Where this paragraph applies no account is taken for the purposes of land transaction tax of the rent mentioned in sub-paragraph (2)(d).

(6) Section 70 (meaning of market value) does not apply to this paragraph.

Shared ownership lease: transfer of reversion where election made for market value treatment

4

The transfer of the reversion to the tenant under the terms of a lease to which paragraph 3 applies (shared ownership lease: election for market value treatment) is relieved from tax if—

(a) an election was made under paragraph 3, and

(b) any tax chargeable in respect of the grant of the lease has been paid.

Shared ownership lease: election for market value treatment of premium where staircasing allowed

5

(1) This paragraph applies where—

(a) a lease is granted—

(i) by a qualifying body...

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the conditions in sub-paragraph (2) are met, and

(2) The conditions are—

(a) that the lease must be of a dwelling;

(b) that the lease must give the tenant exclusive use of the dwelling;

(c) that the lease must provide that the tenant may, on the payment of a sum, require the terms of the lease to be varied so that the rent payable under it is reduced;

(d) that the lease must be granted partly in consideration of rent and partly in consideration of a premium calculated by reference to—

(i) the premium obtainable on the open market for the grant of a lease containing the same terms as the lease but with the substitution of the minimum rent for the rent payable under the lease, or

(ii) a sum calculated by reference to that premium;

(e) that the lease must contain a statement of the minimum rent and of—

(i) the premium obtainable on the open market, or

(ii) the sum calculated by reference to that premium,

by reference to which the premium is calculated.

(3) An election for tax to be charged in accordance with this paragraph—

(a) must be included in the return made in respect of the grant of the lease (or in an amendment to that return), and

(b) is irrevocable, so that the return may not be amended so as to withdraw the election.

(4) Where an election is made under this paragraph the chargeable consideration for the grant other than rent is taken to be the amount stated in the lease in accordance with sub-paragraph (2)(e)(i) or (ii).

(5) In this paragraph, the “"minimum rent”” means the lowest rent which could become payable under the lease if it were varied as mentioned in sub-paragraph (2)(c) at the date when the lease is granted.

Shared ownership lease: staircasing transactions

6

(1) This paragraph applies where under a shared ownership lease—

(a) the tenant has the right, on the payment of a sum, to require the terms of the lease to be varied so that the rent payable under it is reduced, and

(b) by exercising that right the tenant acquires an interest, additional to one already held, calculated by reference to the market value of the dwelling and expressed as a percentage of that dwelling or its value (a ““share of the dwelling””).

(2) Where this paragraph applies, the acquisition is relieved from tax if—

(a) an election was made under paragraph 3 (shared ownership lease: election for market value treatment) or paragraph 5 (shared ownership lease: election where staircasing allowed) and any tax chargeable in respect of the grant of the lease has been paid, or

(b) immediately after the acquisition the total share of the dwelling held by the tenant does not exceed 80%.

(3) Section 70 (meaning of market value) does not apply in relation to the references in this paragraph to the market value of the dwelling.

Shared ownership lease: grant not linked with staircasing transactions etc.

7

For the purpose of determining the amount of tax chargeable on the grant of a shared ownership lease of a dwelling, the grant is to be treated as if it is not linked to—

(a) any acquisition of an interest in the dwelling to which paragraph 6 applies, or

(b) a transfer of the reversion to the tenant under the terms of the lease.

Rent to shared ownership lease: charge to tax

8

(1) The chargeable consideration for transactions forming part of a rent to shared ownership lease scheme is determined in accordance with this paragraph.

(2) A “"rent to shared ownership lease scheme”” means a scheme or arrangement under which a qualifying body—

(a) grants an occupation contract of a dwelling to a person (““the tenant””) or persons (““the tenants””), and

(b) subsequently grants a shared ownership lease of the dwelling or another dwelling to the tenant or one or more of the tenants.

(3) The following transactions are to be treated as if they were not linked to each other—

(a) the grant of the occupation contract;

(b) the grant of the shared ownership lease;

(c) any other land transaction between the qualifying body and the tenant, or any of the tenants, entered into as part of the scheme.

(4) For the purposes of determining the effective date of the grant of the shared ownership lease, the possession of the dwelling by the tenant or tenants under the occupation contract is to be disregarded.

(5) In this paragraph, “"occupation contract”” has the meaning given by Part 2 of the Renting Homes (Wales) Act 2016 (anaw 1).

Shared ownership leases: interpretation

9

(1) For the purposes of paragraphs 6, 7 and 8, a “"shared ownership lease”” means a lease granted—

(a) by a qualifying body...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

in relation to which the conditions in paragraph 3(2) or 5(2) are met.

(2) Sub-paragraphs (3) and (4) apply to paragraphs 3 to 8.

(3) A “"qualifying body”” means—

(a) a local housing authority within the meaning given by section 1 of the Housing Act 1985 (c. 68);

(b) a housing association within the meaning given by the Housing Associations Act 1985 (c. 69);

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

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 4 — SHARED OWNERSHIP TRUSTS

Shared ownership trusts: meaning of shared ownership trust and other key terms

10

(1) This paragraph applies to paragraphs 11 to 17.

(2) A “"shared ownership trust”” means a trust of land within the meaning of section 1 of the Trusts of Land and Appointment of Trustees Act 1996 (c. 47) which satisfies the following conditions.

(3) Condition 1 is that the trust property is—

(a) a dwelling, and

(b) in Wales.

(4) Condition 2 is that one of the beneficiaries (““the social landlord””) is a qualifying body.

(5) Condition 3 is that the terms of the trust—

(a) provide for one or more of the individual beneficiaries (““the buyer””) to have exclusive use of the trust property as the only or main residence of the buyer,

(b) require the buyer to make an initial payment to the social landlord (““the initial capital””),

(c) require the buyer to make additional payments to the social landlord by way of compensation under section 13(6)(a) of the Trusts of Land and Appointment of Trustees Act 1996 (““the rent-equivalent payments””),

(d) enable the buyer to make other additional payments to the social landlord (““equity-acquisition payments””),

(e) determine the initial beneficial interests of the social landlord and of the buyer by reference to which the initial capital was calculated,

(f) specify a sum, equating or relating to the market value of the dwelling, by reference to which the initial capital was calculated, and

(g) provide for the buyer's beneficial interest in the trust property to increase, and the social landlord's to diminish or to be extinguished as equity-acquisition payments are made.

(6) Section 70 (meaning of market value) does not apply to this paragraph.

(7) In Condition 1, “"dwelling”” includes land which is to be used for the construction of a dwelling.

(8) In Condition 2, “"qualifying body”” means—

(a) a local housing authority within the meaning given by section 1 of the Housing Act 1985 (c. 68);

(b) a housing association within the meaning given by the Housing Associations Act 1985 (c. 69);

Shared ownership trust: the buyer

11

For the purposes of this Act, the person or persons identified as the buyer in accordance with paragraph 10, and not the social landlord or any other beneficiary is (or are) to be treated as the buyers of the trust property.

Shared ownership trust: election for market value treatment

12

(1) This paragraph applies where—

(a) a shared ownership trust is declared, and

(b) the buyer makes an election under this paragraph.

(2) An election for tax to be charged in accordance with this paragraph—

(a) must be included in the return made in respect of the grant of the lease (or in an amendment to that return), and

(b) is irrevocable so that the return may not be amended so as to withdraw the election.

(3) Where this paragraph applies—

(a) the chargeable consideration for the declaration of the shared ownership trust is taken to be the amount stated in accordance with paragraph 10(5)(f), and

(b) no account is to be taken of the rent-equivalent payments.

Shared ownership trust transfer upon termination

13

The transfer to the buyer of an interest in the trust property upon the termination of the trust is relieved from tax if—

(a) an election has been made under paragraph 12, and

(b) any tax chargeable in respect of the declaration of the shared ownership trust has been paid.

Shared ownership trust: staircasing transactions

14

(1) An equity-acquisition payment under a shared ownership trust, and the consequent increase in the buyer's beneficial interest is to be relieved from tax if—

(a) an election has been made for relief under paragraph 12, and

(b) any tax chargeable in respect of the declaration of the trust has been paid.

(2) An equity-acquisition payment under a shared ownership trust, and the consequent increase in the buyer's beneficial interest is also to be relieved from tax if following the increase the buyer's beneficial interest does not exceed 80% of the the total beneficial interest in the trust property.

Shared ownership trust: treatment of additional payments where no election made

15

Where no election has been made under paragraph 12 in respect of a shared ownership trust—

(a) the initial capital is to be treated as chargeable consideration other than rent, and

(b) any rent-equivalent payment by the buyer is to be treated as a payment of rent.

Shared ownership trust: declaration not linked with staircasing etc.

16

For the purposes of determining the amount of tax chargeable on the declaration of a shared ownership trust, the declaration is to be treated as if it were not linked to—

(a) any equity-acquisition payment under the trust or any consequent increase in the buyer's beneficial interest in the trust property, or

(b) a transfer to the buyer of an interest in the trust property on the termination of the trust.

Rent to shared ownership trust: charge to tax

17

(1) The chargeable consideration for transactions forming part of a rent to shared ownership trust scheme is determined in accordance with this paragraph.

(2) A “"rent to shared ownership trust scheme”” means a scheme or arrangement under which —

(a) a qualifying body grants an occupation contract of a dwelling to a person (““the tenant””) or persons (““the tenants””), and

(b) the tenant, or one or more of the tenants, subsequently becomes the buyer under a shared ownership trust of the dwelling, or another dwelling, under which the qualifying body is the social landlord.

(3) The following transactions are to be treated as if they were not linked to each other—

(a) the grant of the occupation contract,

(b) the declaration of the shared ownership trust, and

(c) any other land transaction between the qualifying body and the tenant, or any of the tenants, entered into as part of the scheme.

(4) In this paragraph “"occupation contract”” has the meaning given by Part 2 of the Renting Homes (Wales) Act 2016 (anaw 1).

PART 5 — RENT TO MORTGAGE

Rent to mortgage: chargeable consideration

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19

(1) A land transaction under which the buyer is a registered social landlord is relieved from tax if—

(a) the registered social landlord is controlled by its tenants,

(b) the seller is a qualifying body, or

(2) The reference in sub-paragraph (1)(a) to a registered social landlord ““controlled by its tenants”” is to a registered social landlord the majority of whose board members are tenants occupying properties owned or managed by it.

(3) In this paragraph—

“"board member”” (“"aelod o'r bwrdd**”"), in relation to a registered social landlord, means—if it is a company, a director of the company,if it is a body corporate whose affairs are managed by its members, a member,if it is body of trustees, a trustee, orif it is not within paragraphs (a) to (c), a member of the committee of management or other body to which is entrusted the direction of the affairs of the registered social landlord;

“"public subsidy”” (“"cymhorthdal cyhoeddus**”") means any grant or other financial assistance—made or given by way of a distribution pursuant to section 25 of the National Lottery etc. Act 1993 (c. 39) (application of money by distributing bodies),made by the Welsh Ministers under section 18 of the Housing Act 1996 (c. 52) (social housing grants), orunder section 126 of the Housing Grants, Construction and Regeneration Act 1996 (c. 53) (financial assistance for regeneration and development);

“"qualifying body”” (“"corff cymwys**”") means any of the following—a registered social landlord;...a county or county borough council constituted under section 21 of the Local Government Act 1972 (c. 70);a county or district council constituted under section 2 of that Act;the Welsh Ministers.

SCHEDULE 16

PART 1 — INTRODUCTORY

Overview

1

(1) This Schedule makes provision about the relief available for certain transactions where the seller and the buyer are companies that are members of the same group.

(2) This Schedule is arranged as follows—

(a) Part 2 describes the relief available and makes provision about the interpretation of this Schedule,

(b) Part 3 restricts the availability of the relief,

(d) Part 5 makes provision about recovery of unpaid tax from certain persons.

PART 2 — THE RELIEF

Group relief

2

(1) A land transaction is relieved from tax if the seller and the buyer are companies that are members of the same group at the effective date of the transaction.

(2) Relief under this paragraph is referred to in this Schedule as “"group relief””.

(3) This paragraph is subject to paragraph 4 (restrictions on availability of group relief) and paragraphs 8 and 12 (withdrawal of group relief).

Group relief: interpretation

3

(1) The following provisions apply for the purposes of group relief.

(2) “"Company”” means a body corporate.

(3) Companies are members of the same group if one is the 75% subsidiary of the other or both are 75% subsidiaries of a third company.

(4) A company (““company A””) is the 75% subsidiary of another company (““company B””) if company B—

(a) is beneficial owner of not less than 75% of the ordinary share capital of company A,

(b) is beneficially entitled to not less than 75% of any profits available for distribution to equity holders of company A, and

(c) would be beneficially entitled to not less than 75% of any assets of company A available for distribution to its equity holders on a winding-up.

(5) For the purposes of sub-paragraph (4)(a)—

(a) the ownership referred to is ownership either directly or through another company or companies, and

(b) the amount of ordinary share capital of company A owned by company B through another company or companies is to be determined in accordance with sections 1155 to 1157 of the Corporation Tax Act 2010 (c. 4).

(6) In sub-paragraphs (4)(a) and (5)(b), “"ordinary share capital””, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company.

(7) Chapter 6 of Part 5 of the Corporation Tax Act 2010 (c. 4) (group relief: equity holders and profits or assets available for distribution) applies for the purposes of sub-paragraph (4)(b) and (c) as it applies for the purposes of section 151(4)(a) and (b) of that Act.

(8) But sections 171(1)(b) and (3), 173, 174 and 176 to 178 of that Act are to be treated as omitted for the purposes of sub-paragraph (4)(b) and (c).

PART 3 — RESTRICTIONS ON AVAILABILITY OF RELIEF

Restrictions on availability of group relief

4

(1) Group relief is not available if, at the effective date of the transaction, there are arrangements in existence by virtue of which—

(a) a person has or could obtain, at that or some later time, control of the buyer but not of the seller, or

(b) any persons together have or could obtain, at that time or some time later, control of the buyer but not of the seller.

(2) Sub-paragraph (1) does not apply to arrangements entered into with a view to an acquisition of shares by a company (“"the acquiring company””)—

(a) in relation to which section 75 of the Finance Act 1986 (c. 41) (stamp duty: acquisition relief) will apply,

(b) in relation to which the conditions for relief under that section will be met, and

(3) Group relief is not available if the transaction is effected in pursuance of, or in connection with, arrangements under which—

(a) the consideration, or any part of the consideration, for the transaction is to be provided or received (directly or indirectly) by a person other than a group company, or

(b) the seller and the buyer are to cease to be members of the same group by reason of the buyer ceasing to be a 75% subsidiary of the seller or a third company.

(4) Arrangements are within sub-paragraph (3)(a) if under them—

(a) the seller or the buyer, or another group company, is to be enabled to provide any of the consideration, or is to part with any of it, by or in consequence of the carrying out of a transaction or transactions, and

(b) the transaction or transactions, or any of them, involve a payment or other disposition by a person other than a group company.

(5) In sub-paragraphs (3)(a) and (b), a “"group company”” means a company that at the effective date of the transaction is a member of the same group as the seller or the buyer.

(6) In this paragraph—

“"arrangements”” (“"trefniadau**”") includes any scheme, agreement or understanding, whether or not legally enforceable;

“"control”” (“"rheolaeth**”") has the meaning given by section 1124 of the Corporation Tax Act 2010 (c. 4).

(7) This paragraph has effect subject to paragraphs 5 and 6 (certain arrangements not within paragraph 4).

Certain arrangements not within paragraph 4: joint venture companies

5

(1) Arrangements entered into by a joint venture company which, apart from this paragraph, would be arrangements to which paragraph 4 applies are not to be treated as such arrangements if and so long as—

(a) the arrangements fall within sub-paragraph (2), and

(b) none of the contingencies mentioned in sub-paragraph (3) to which the arrangements relate has occurred.

(2) Arrangements fall within this sub-paragraph if they are—

(a) an agreement which provides for the transfer of shares or securities in the joint venture company to one or more members of that company on, or as a result of, one or more contingencies mentioned in sub-paragraph (3) occurring, or

(b) a provision in a constitutional document of the joint venture company which provides for the suspension of a member's voting rights on, or as a result of, one or more of those contingencies occurring.

(3) The contingencies referred to in sub-paragraphs (1)(b) and (2) are—

(a) the voluntary departure of a member,

(b) the commencement of the liquidation, administration, administrative receivership or receivership of, or the entering into of a voluntary arrangement by, a member under the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I.1989/2405 (N.I.19)) or the commencement, or entering into, of equivalent proceedings or arrangements under the law of any country or territory outside the United Kingdom,

(d) a change of control of a member,

(e) a default by a member in performing its obligations under any agreement between the members or with the joint venture company (which, for this purpose, includes any constitutional document of the joint venture company),

(f) an external change in the commercial circumstances in which the joint venture company operates such that its viability is threatened,

(g) an unresolved disagreement between the members, and

(h) any contingency of a similar kind to that mentioned in any of paragraphs (a) to (g) which is provided for, but not intended to happen, when the arrangements in question were entered into.

(4) This paragraph does not apply if a member could, alone or together with connected persons, dictate the terms or timing of—

(a) the transfer of shares or securities, or

(b) the suspension of a member's voting rights,

in advance of one or more of the contingencies occurring.

(5) For the purposes of sub-paragraph (4), members are not connected with each other by reason only of their membership of the joint venture company.

(6) In this paragraph—

“"constitutional document”” (“"dogfen gyfansoddiadol**”") means a memorandum of association, articles of association or any other similar document regulating the affairs of the joint venture company;

“"joint venture company”” (“"cwmni cyd-fenter**”") means a company which—has two or more member companies, andcarries on a commercial activity governed by an agreement regulating the affairs of its members;

“"member”” (“"aelod**”") means a holder of shares or securities in the joint venture company.

Certain mortgage arrangements not within paragraph 4

6

(1) Arrangements entered into by a company which, apart from this paragraph, would be arrangements to which paragraph 4 applies are not to be treated as such arrangements if and so long as—

(a) the arrangements are a mortgage, secured by way of shares or securities in the company, which on default or the happening of any other event allows the mortgagee to exercise its rights against the mortgagor, and

(b) the mortgagee has not exercised its rights against the mortgagor.

(2) This paragraph does not apply if the mortgagee—

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