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Finance Act 2003

Type Public General Act

Publication 2003-07-10

Last updated 2025-03-20

State In force

Department Statute Law Database

Source legislation.gov.uk

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(6) In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the property AIF at the time when the portfolio test is not met.

(7) The portfolio test is a requirement that the property AIF meets—

(a) the non-residential portfolio test (see sub-paragraph (8)), or

(b) the residential portfolio test (see sub-paragraph (9)).

(8) The “non-residential portfolio test” is met at any time if—

(a) the property AIF holds at least 10 seeded interests at that time,

(b) so much of the total chargeable consideration as is attributable to all the seeded interests held by the property AIF at that time (“the seeded portfolio”) is at least £100 million, and

(c) so much of the total chargeable consideration as is attributable to so many of those seeded interests as are interests in or over residential property (if any) does not exceed 10% of the seeded portfolio.

(9) The “residential portfolio test” is met at any time if—

(a) so much of the total chargeable consideration as is attributable to all the seeded interests held by the property AIF at that time is at least £100 million, and

(b) at least 100 of the seeded interests held by the property AIF at that time are interests in or over residential property.

(10) In sub-paragraphs (8) and (9)—

“seeded interest” means a chargeable interest acquired by the property AIF in a transaction for which PAIF seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent) (a “seeding transaction”), and

“total chargeable consideration” means the total of the chargeable consideration for all seeding transactions.

(11) For the purposes of this paragraph, section 116(7) does not apply (modification of what counts as residential property).

Withdrawal of relief: units disposed of

7

(1) This paragraph applies where—

(a) a person (“V”) makes a relevant disposal of one or more units in a property AIF—

(i) at any time in the seeding period,

(ii) at any time in the control period, or

(iii) in pursuance of, or in connection with, arrangements made before the end of the control period, and

(b) there is, in relation to that disposal, a relevant seeding transaction (see sub-paragraph (6)).

(2) In respect of a transaction which is, in relation to the relevant disposal, a relevant seeding transaction—

(a) PAIF seeding relief is withdrawn to the extent set out in this paragraph, and

(b) tax is chargeable in accordance with this paragraph.

(3) V's disposal of units in a property AIF is a “relevant disposal” for the purposes of this paragraph if, in relation to the disposal, A exceeds B.

(4) In this paragraph—

“A” means—where the value of V's investment in the property AIF immediately before the disposal is equal to or greater than the total of the chargeable consideration for all relevant seeding transactions, the total of the chargeable consideration for all relevant seeding transactions, orwhere the value of V's investment in the property AIF immediately before the disposal is less than the total of the chargeable consideration for all relevant seeding transactions, the value of V's investment in the property AIF immediately before the disposal, and

“B” means the value of V's investment in the property AIF immediately after the disposal.

(5) The amount chargeable in respect of a relevant seeding transaction (“RST”) is—

$$C CCRST × SDLT$where—“C” means the difference between A and B;“CCRST” means the total of the chargeable consideration for all relevant seeding transactions;“SDLT” means the amount of tax that would have been chargeable in respect of RST but for PAIF seeding relief, ignoring any amount of tax that has been charged under this paragraph in respect of RST in relation to an earlier disposal of units by V.$

(6) In this paragraph—

“group company” means (where V is a company) a company which is a member of the same group of companies as V for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief);

“relevant seeding transaction”, in relation to a disposal of units by V in a property AIF, means a seeding transaction—the effective date of which is, or is before, the date of the disposal,in which that property AIF is the purchaser, andin which a vendor is—V, or(where V is a company) a company which is a group company at the time of the disposal;

“seeding transaction” means a transaction in respect of which PAIF seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent);

“the value of V's investment in the property AIF” at a particular time means the market value of all units in the property AIF held at that time by—V, and(where V is a company) a company which—is a group company at that time, andbefore that time, has been a vendor in one or more seeding transactions in which the property AIF was the purchaser.

(7) For the purposes of this paragraph, the “market value” on a particular date of units in the property AIF is an amount equal to the buying price (that is, the lower price) published by the authorised corporate director on that date (or, if no such price is published on that date, on the latest date before).

Withdrawal of relief: dwelling occupied by non-qualifying individual

8

(1) This paragraph applies to a transaction (“the relevant transaction”) if—

(a) PAIF seeding relief has been allowed in respect of the transaction,

(b) the main subject-matter of the transaction consists of a chargeable interest in or over land which is or includes a dwelling, and

(c) a non-qualifying individual (see paragraph 9) is permitted to occupy the dwelling at any time on or after the effective date of the transaction.

The dwelling which a non-qualifying individual is permitted to occupy is referred to as “the disqualifying dwelling”.

(2) The relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.

This is subject to sub-paragraphs (3) and (4).

(3) Relief is withdrawn only if, at the time a non-qualifying individual is permitted to occupy the disqualifying dwelling, the property AIF holds a chargeable interest in or over that dwelling—

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

(b) that is derived from an interest so acquired.

(4) Where a non-qualifying individual is first permitted to occupy the disqualifying dwelling at a time after the end of the control period, relief is withdrawn only if, at that time, the purchaser in the relevant transaction fails to meet the genuine diversity of ownership condition set out in regulation 9A of the AIF (Tax) Regulations.

For the purposes of this sub-paragraph, regulation 9A(2)(a) of those Regulations is to be read as if the words “throughout the accounting period” were omitted.

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

(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.

9

(1) In paragraph 8 “non-qualifying individual”, in relation to a land transaction and a property AIF, means any of the following—

(a) an individual who is a major participant in the property AIF;

(b) an individual who is connected with a major participant in the property AIF;

(d) a relevant settlor;

(e) the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);

(f) a relative of an individual falling within paragraph (b), (c) or (d), or the spouse or civil partner of a relative of an individual falling within paragraph (b), (c) or (d);

(g) a relative of the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);

(h) the spouse or civil partner of an individual falling within paragraph (g).

(2) An individual who participates in a property AIF is a “major participant” in it if the individual—

(a) is entitled to a share of at least 50% either of all the profits or income arising from the property AIF or of any profits or income arising from it that may be distributed to participants, or

(b) would in the event of the winding up of the property AIF be entitled to 50% or more of the assets of the property AIF that would then be available for distribution among the participants.

(3) The reference in sub-paragraph (2)(a) to profits or income arising from the property AIF is to profits or income arising from the acquisition, holding, management or disposal of the property subject to the property AIF.

(4) In this paragraph—

“relative” means brother, sister, ancestor or lineal descendant;

“relevant settlor”, in relation to a land transaction, means an individual who is a settlor in relation to a relevant settlement (as defined in sub-paragraph (5));

“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).

(5) Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a land transaction, that settlement is a “relevant settlement” in relation to the transaction.

(6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).

(7) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph, but for those purposes, subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded.

PART 2 — Co-ownership ... contractual schemes

Co-ownership scheme seeding relief

10

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

Relief under this paragraph is referred to in this Part of this Act as “co-ownership scheme seeding relief”.

(2) Condition A is that the purchaser is a co-ownership ... contractual scheme (see section 102A).

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

(4) Condition C is that the only consideration for the transaction is the issue of units in the co-ownership ... contractual scheme to a person who is the vendor.

(5) Condition D is that the effective date of the transaction is a day within the seeding period (see paragraph 11).

(5A) But condition D is met in a case where the purchaser is a Reserved Investor Fund (Contractual Scheme) only if an entry notice has been given in relation to the scheme on or before the effective date.

(5B) In sub-paragraph (5A), “entry notice” has the meaning it has in the Co-ownership Contractual Schemes (Tax) Regulations 2025.

(6) This paragraph is subject to paragraph 12 (restrictions on availability of relief) and paragraphs 13, 14, 16, 17 and 18 (withdrawal of relief).

Meaning of “seeding period”

11

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

(a) the period beginning with the first property seeding date and ending with the date of the first external investment into the co-ownership ... contractual scheme, or

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

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

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

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

(a) by being included in a notice accompanying a claim for co-ownership scheme seeding relief (see section 65A), or

(b) by separate notice in writing to HMRC.

(4) In sub-paragraphs (1) and (2), “the first property seeding date” means the earliest effective date of a transaction in respect of which conditions A to C in paragraph 10 are met.

(5) In this paragraph—

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

“external investor” means a person other than a person who has been a vendor in a transaction—the effective date of which is on or before the date of the non-land transaction, andin respect of which conditions A to C in paragraph 10 are met;

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

Restrictions on availability of relief

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(1) This paragraph restricts the availability of co-ownership scheme seeding relief for a transaction in respect of which conditions A to D in paragraph 10 are met.

(2) Co-ownership scheme seeding relief is not available unless, at the effective date of the transaction, the arrangements constituting the co-ownership ... contractual scheme require a person who is the vendor to notify the operator of the scheme of the following matters—

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

(b) any disposal of units in the scheme on or after the effective date of that transaction by that owner (or, where that person is a company, by a group company) which is or could be a relevant disposal (see paragraph 17).

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

(3) Co-ownership scheme seeding relief is not available if at the effective date of the transaction there are arrangements in existence by virtue of which, at that or some later time, a person who is the vendor makes or could make a disposal of units in the co-ownership ... contractual scheme which is or could be a relevant disposal (see paragraph 17).

(4) Co-ownership scheme seeding relief is not available if the transaction—

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

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

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

Withdrawal of relief: ceasing to be co-ownership ... contractual scheme

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(1) Where co-ownership scheme seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the purchaser ceases to be a co-ownership ... contractual scheme—

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

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

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

(2) Relief is withdrawn only if, at the time when the purchaser ceases to be a co-ownership ... contractual scheme, the purchaser holds—

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

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

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

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

Withdrawal of relief: genuine diversity of ownership condition not met by COACS

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(A1) This paragraph applies where co-ownership scheme seeding relief has been allowed in respect of a transaction (“the relevant transaction”) entered into by—

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

(b) a Reserved Investor Fund (Contractual Scheme) that has since become a co-ownership authorised contractual scheme.

(1) Where , in relation to the relevant transaction, the genuine diversity of ownership condition (see paragraph 15) is not met—

(a) immediately before the end of the seeding period,

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

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

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

(2) The requirement to meet the genuine diversity of ownership condition at a time mentioned in sub-paragraph (1) applies only to times when the co-ownership authorised contractual scheme holds—

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

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

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

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the scheme at the time when the genuine diversity of ownership condition is not met.

(5) For the purposes of this paragraph, the operator of a co-ownership authorised contractual scheme may apply to HMRC in writing for clearance that the scheme meets the genuine diversity of ownership condition, and where an application is made, HMRC must notify the scheme of its decision within 28 days of the receipt of all the information that is needed to make the decision.

(6) Any such clearance has effect only for so long as the information on which HMRC relies in granting clearance is materially unchanged and the scheme is operated in accordance with it (including, in particular, continuing to operate in accordance with condition C of the genuine diversity of ownership condition).

Genuine diversity of ownership condition

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(1) This paragraph has effect for the purposes of paragraphs 14 and 18(4).

(1A) Sub-paragraphs (2) to (8) and (9) apply where the relevant transaction was entered into by a co-ownership authorised contractual scheme.

(1B) Sub-paragraph (8A) applies where the relevant transaction was entered into by a Reserved Investor Fund (Contractual Scheme) that has since become a co-ownership authorised contractual scheme.

(2) A co-ownership authorised contractual scheme meets the genuine diversity of ownership condition at any time when it meets conditions A to C.

(3) Condition A is that the scheme documents, which are available to investors and to HMRC, contain—

(a) a statement specifying the intended categories of investor,

(b) an undertaking that units in the scheme will be widely available, and

(c) an undertaking that units in the scheme will be marketed and made available in accordance with the requirements of sub-paragraph (6)(a).

(4) Condition B is that—

(a) the specification of the intended categories of investor does not have a limiting or deterrent effect, and

(b) any other terms or conditions governing participation in the scheme do not have a limiting or deterrent effect.

(5) In sub-paragraph (4) “limiting or deterrent effect” means an effect which—

(a) limits investors to a limited number of specific persons or specific groups of connected persons, or

(b) deters a reasonable investor falling within one of (what are specified as) the intended categories of investor from investing in the scheme.

(6) Condition C is that—

(a) units in the scheme are marketed and made available—

(i) sufficiently widely to reach the intended categories of investors, and

(ii) in a manner appropriate to attract those categories of investors, and

(b) a person who falls within one of the intended categories of investors can, upon request to the operator of the scheme, obtain information about the scheme and acquire units in it.

(7) A scheme is not regarded as failing to meet condition C at any time by reason of the scheme's having, at that time, no capacity to receive additional investments, unless—

(a) the capacity of the scheme to receive investments in it is fixed by the scheme documents (or otherwise), and

(b) a pre-determined number of specific persons or specific groups of connected persons make investments in the scheme which collectively exhaust all, or substantially all, of that capacity.

(8) A co-ownership authorised contractual scheme also meets the genuine diversity of ownership condition at any time when—

(a) there is a feeder fund in relation to the scheme (see paragraph 20), and

(b) conditions A to C are met in relation to the scheme after taking into account—

(i) the scheme documents relating to the feeder fund, and

(ii) the intended investors in the feeder fund.

(8A) A co-ownership authorised contractual scheme which at the time of the relevant transaction was a Reserved Investor Fund (Contractual Scheme) meets the genuine diversity of ownership condition at any time that the scheme—

(a) meets the genuine diversity of ownership condition under regulation 7 of the Co-ownership Contractual Schemes (Tax) Regulations 2025 (but not solely by virtue of regulation 9 of those Regulations), or

(b) meets the non-close condition under regulation 8 of those Regulations (but not solely by virtue of regulation 9 of those Regulations).

(9) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph.

Withdrawal of relief: portfolio test not met

16

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

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

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

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

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

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

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

(4) The requirement to meet the portfolio test at a time mentioned in sub-paragraph (3)(a) or (b) applies only to times when the co-ownership ... contractual scheme holds—

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

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

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

(6) In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the scheme at the time when the portfolio test is not met.

(7) The portfolio test is a requirement that the scheme meets—

(a) the non-residential portfolio test (see sub-paragraph (8)), or

(b) the residential portfolio test (see sub-paragraph (9)).

(8) The “non-residential portfolio test” is met at any time if—

(a) the scheme holds at least 10 seeded interests at that time,

(b) so much of the total chargeable consideration as is attributable to all the seeded interests held by the scheme at that time (“the seeded portfolio”) is at least £100 million, and

(c) so much of the total chargeable consideration as is attributable to so many of those seeded interests as are interests in or over residential property (if any) does not exceed 10% of the seeded portfolio.

(9) The “residential portfolio test” is met at any time if—

(a) so much of the total chargeable consideration as is attributable to all the seeded interests held by the scheme at that time is at least £100 million, and

(b) at least 100 of the seeded interests held by the scheme at that time are interests in or over residential property.

(10) In sub-paragraphs (8) and (9)—

“seeded interest” means a chargeable interest acquired by the scheme in a transaction for which co-ownership scheme seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent) (a “seeding transaction”), and

“total chargeable consideration” means the total of the chargeable consideration for all seeding transactions.

(11) For the purposes of this paragraph, section 116(7) does not apply (modification of what counts as residential property).

Withdrawal of relief: units disposed of

17

(1) This paragraph applies where—

(a) a person (“V”) makes a relevant disposal of one or more units in a co-ownership ... contractual scheme—

(i) at any time in the seeding period,

(ii) at any time in the control period, or

(iii) in pursuance of, or in connection with, arrangements made before the end of the control period, and

(b) there is, in relation to that disposal, a relevant seeding transaction (see sub-paragraph (6)).

(2) In respect of a transaction which is, in relation to the relevant disposal, a relevant seeding transaction—

(a) co-ownership scheme seeding relief is withdrawn to the extent set out in this paragraph, and

(b) tax is chargeable in accordance with this paragraph.

(3) V's disposal of units in a scheme is a “relevant disposal” for the purposes of this paragraph if, in relation to the disposal, A exceeds B.

(4) In this paragraph—

“A” means—where the value of V's investment in the scheme immediately before the disposal is equal to or greater than the total of the chargeable consideration for all relevant seeding transactions, the total of the chargeable consideration for all relevant seeding transactions, orwhere the value of V's investment in the scheme immediately before the disposal is less than the total of the chargeable consideration for all relevant seeding transactions, the value of V's investment in the scheme immediately before the disposal, and

“B” means the value of V's investment in the scheme immediately after the disposal.

(5) The amount chargeable in respect of a relevant seeding transaction (“RST”) is—

$$C CCRST × SDLT$where—“C” means the difference between A and B;“CCRST” means the total of the chargeable consideration for all relevant seeding transactions;“SDLT” means the amount of tax that would have been chargeable in respect of RST but for co-ownership scheme seeding relief, ignoring any amount of tax that has been charged under this paragraph in respect of RST in relation to an earlier disposal of units by V.$

(6) In this paragraph—

“group company” means (where V is a company) a company which is a member of the same group of companies as V for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief);

“relevant seeding transaction”, in relation to a disposal of units by V in a co-ownership ... contractual scheme, means a seeding transaction—the effective date of which is, or is before, the date of the disposal,in which that scheme is the purchaser, andin which a vendor is—V, or(where V is a company) a company which is a group company at the time of the disposal;

“seeding transaction” means a transaction in respect of which co-ownership scheme seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent);

“the value of V's investment in the scheme” at a particular time means the market value of all units in the co-ownership ... contractual scheme held at that time by—V, and(where V is a company) a company which—is a group company at that time, andbefore that time, has been a vendor in one or more seeding transactions in which the scheme was the purchaser.

(7) For the purposes of this paragraph, the “market value” on a particular date of units in the scheme is an amount equal to the buying price (that is, the lower price) published by the operator on that date (or, if no such price is published on that date, on the latest date before).

Withdrawal of relief: dwelling occupied by non-qualifying individual

18

(1) This paragraph applies to a transaction (“the relevant transaction”) if—

(a) co-ownership scheme seeding relief has been allowed in respect of the transaction,

(b) the main subject-matter of the transaction consists of a chargeable interest in or over land which is or includes a dwelling, and

(c) a non-qualifying individual (see paragraph 19) is permitted to occupy the dwelling at any time on or after the effective date of the transaction.

The dwelling which a non-qualifying individual is permitted to occupy is referred to as “the disqualifying dwelling”.

(2) The relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.

This is subject to sub-paragraphs (3) and (4).

(3) Relief is withdrawn only if, at the time a non-qualifying individual is permitted to occupy the disqualifying dwelling, the co-ownership ... contractual scheme holds a chargeable interest in or over that dwelling—

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

(b) that is derived from an interest so acquired.

(4) Where a non-qualifying individual is first permitted to occupy the disqualifying dwelling at a time after the end of the control period, relief is withdrawn only if, at that time, the scheme fails to meet the genuine diversity of ownership condition (see paragraph 15).

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

(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.

19

(1) In paragraph 18 “non-qualifying individual”, in relation to a land transaction and a co-ownership ... contractual scheme, means any of the following—

(a) an individual who is a major participant in the scheme;

(b) an individual who is connected with a major participant in the scheme;

(d) a relevant settlor;

(e) the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);

(f) a relative of an individual falling within paragraph (b), (c) or (d), or the spouse or civil partner of a relative of an individual falling within paragraph (b), (c) or (d);

(g) a relative of the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);

(h) the spouse or civil partner of an individual falling within paragraph (g).

(2) An individual who participates in a scheme is a “major participant” in it if the individual—

(a) is entitled to a share of at least 50% either of all the profits or income arising from the scheme or of any profits or income arising from it that may be distributed to participants, or

(b) would in the event of the winding up of the scheme be entitled to 50% or more of the assets of the scheme that would then be available for distribution among the participants.

(3) The reference in sub-paragraph (2)(a) to profits or income arising from the scheme is to profits or income arising from the acquisition, holding, management or disposal of the property subject to the scheme.

(4) In this paragraph—

“depositary”, in relation to a co-ownership ... contractual scheme, means the person to whom the property subject to the scheme is entrusted for safekeeping;

“relative” means brother, sister, ancestor or lineal descendant;

“relevant settlor”, in relation to a land transaction, means an individual who is a settlor in relation to a relevant settlement (as defined in sub-paragraph (5));

“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).

(5) Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a land transaction, that settlement is a “relevant settlement” in relation to the transaction.

(6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).

(7) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph, but for those purposes, subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded.

PART 3 — Interpretation

“Feeder fund” and “units”

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In this Schedule—

a “feeder fund” of a property AIF means a unit trust scheme—one of the main objects of which is investment in the property AIF, andwhich is managed by the same person as the property AIF;

a “feeder fund” of a co-ownership ... contractual scheme means an open-ended investment company, an offshore fund or a unit trust scheme—one of the main objects of which is investment in the co-ownership ... contractual scheme, andwhich is managed by the same person as the scheme;

“units in the property AIF” means—units in the property AIF (and, where the property AIF is a part of an umbrella company as mentioned in regulation 7(1) and (2) of the AIF (Tax) Regulations, this means units in the separate pool to which that part of the umbrella company relates), andunits in a feeder fund of the property AIF;

“units in the co-ownership ... contractual scheme” means—units in the co-ownership ... contractual scheme (and, where the co-ownership ... contractual scheme is a sub-scheme of an umbrella scheme (see section 102A(3) and (4)), this means units in the separate pool to which that sub-scheme relates), andunits in a feeder fund of the scheme;

“units” means the rights or interests (however described) of the participants in the property AIF or the co-ownership ... contractual scheme.

Interpretation of other terms

21

In this Schedule—

the “AIF (Tax) Regulations” means the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964);

“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;

“attributable” means attributable on a just and reasonable basis;

“authorised corporate director”, in relation to a property AIF, has the same meaning as in regulation 8 of the AIF (Tax) Regulations;

“co-ownership scheme seeding relief” means relief under paragraph 10;

“control period” means the period of 3 years beginning with the day following the last day of the seeding period;

“co-ownership authorised contractual scheme” is to be construed in accordance with section 102A (see in particular subsections (2), (2A), (5), (7) and (8) of that section);

“CTA 2010” means the Corporation Tax Act 2010;

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

the “genuine diversity of ownership condition”, in relation to a co-ownership authorised contractual scheme, has the meaning given by paragraph 15;

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;

“non-qualifying individual” has the meaning given by paragraph 9 (in relation to a property AIF) and paragraph 19 (in relation to a co-ownership ... contractual scheme);

“offshore fund” has the meaning given by section 355 of the Taxation (International and Other Provisions) Act 2010;

“open-ended investment company” has the meaning given by section 236 of FSMA 2000;

“operator”, in relation to a co-ownership ... contractual scheme, has the same meaning as in section 102A;

“PAIF seeding relief” means relief under paragraph 1;

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

“portfolio test” has the meaning given by paragraph 6(7) (in relation to a property AIF) and paragraph 16(7) (in relation to a co-ownership ... contractual scheme);

“property AIF” is to be construed in accordance with paragraph 2 (see in particular sub-paragraphs (2), (3) and (5) of that paragraph);

“relevant disposal” has the meaning given by paragraph 7(3) (in relation to a property AIF) and paragraph 17(3) (in relation to a co-ownership ... contractual scheme);

“seeding period” has the meaning given by paragraph 3 (in relation to a property AIF) and paragraph 11 (in relation to a co-ownership ... contractual scheme);

“unit trust scheme” has the meaning given by section 237(1) of FSMA 2000.

Introduction

57B

(1) Schedule 6ZA provides relief for first-time buyers.

(2) Any relief under that Schedule must be claimed in a land transaction return or an amendment of such a return.

Exception where purchaser has prior interest in purchased dwelling

7A

(1) A chargeable transaction which would (but for this paragraph) fall within paragraph 3 or paragraph 6 does not fall within that paragraph if—

(a) the purchaser had a major interest (“the prior interest”) in the relevant purchased dwelling immediately before the effective date of the transaction, and

(b) the relevant purchased dwelling had been the purchaser's only or main residence throughout the period of three years ending with the effective date of the transaction.

(2) Sub-paragraph (1) does not apply if—

(a) the prior interest is a term of years absolute or a leasehold estate, and

(b) immediately before the effective date of the transaction, the remaining term of the prior interest is less than 21 years.

(3) Sub-paragraph (1) does not apply if immediately before the effective date of the transaction—

(a) the purchaser is beneficially entitled as a joint tenant to the prior interest, and

(b) there are more than three other joint tenants.

(4) Sub-paragraph (1) does not apply if immediately before the effective date of the transaction the purchaser is beneficially entitled as a tenant in common or coparcener to less than a quarter of the prior interest.

(5) In this paragraph “relevant purchased dwelling” means—

(a) the purchased dwelling mentioned in paragraph 3(1)(b), or (as the case may be)

(b) the purchased dwelling which meets the conditions mentioned in paragraph 6(1)(c).

Spouses and civil partners purchasing from one another

9A

(1) A chargeable transaction is not a higher rates transaction for the purposes of paragraph 1 if—

(a) there is only one purchaser,

(b) there is only one vendor, and

(i) married to, or civil partners of, each other, and

(ii) living together (see paragraph 9(3)).

(2) Where—

(a) there are two purchasers in relation to a chargeable transaction, and

(b) one of them (“P”) is also the vendor in relation to the transaction,

P is to be treated for the purposes of sub-paragraph (1) as not being a purchaser.

(3) Where—

(a) there are two vendors in relation to a chargeable transaction, and

(b) one of them (“V”) is also the purchaser in relation to the transaction,

V is to be treated for the purposes of sub-paragraph (1) as not being a vendor.

Property adjustment on divorce, dissolution of civil partnership etc

9B

(1) This paragraph applies where—

(a) a person (“A”) has a major interest in a dwelling,

(b) a property adjustment order has been made in respect of the interest for the benefit of another person (“B”), and

(i) is B's only or main residence, and

(ii) is not A's only or main residence.

(2) A is to be treated for the purposes of this Schedule as not having the interest in the dwelling.

(3) “Property adjustment order” means—

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

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

(c) an order under Article 26(1)(b) of the Matrimonial Causes (Northern Ireland) Order 1978 (property adjustment orders in connection with divorce proceedings etc),

(d) an order under Article 21(a)(ii) of the Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (property adjustment orders after overseas divorce) corresponding to such an order as is mentioned in paragraph (c),

(e) an order under paragraph 7(1)(b) of Schedule 5 or paragraph 7(1)(b) of Schedule 15 to the Civil Partnership Act 2004 (property adjustment orders in connection with dissolution etc of civil partnership), or

(f) an order under paragraph 9 of Schedule 7 or paragraph 9 of Schedule 17 to the Civil Partnership Act 2004 (property adjustment orders in connection with overseas dissolution etc of civil partnership) corresponding to such an order as is mentioned in paragraph (e).

SCHEDULE 6ZA

PART 1 — Eligibility for relief

Eligibility for relief

1

(1) Relief may be claimed for a chargeable transaction if the following conditions are met (but this is subject to sub-paragraph (7)).

(2) The first condition is that the main subject-matter of the transaction consists of a major interest in a single dwelling (“the purchased dwelling”).

(3) The second condition is that the relevant consideration for the transaction (other than any consisting of rent) is not more than £500,000.

(4) The third condition is that the purchaser, or (if more than one) each of the purchasers, is a first-time buyer who intends to occupy the purchased dwelling as the purchaser's only or main residence.

(5) The fourth condition is that—

(a) the transaction is not linked to another land transaction, or

(b) the transaction is linked only to land transactions that are within sub-paragraph (6).

(6) A land transaction is within this sub-paragraph if the main subject-matter of the transaction consists of—

(a) an interest in land that is or forms part of the garden or grounds of the purchased dwelling, or

(b) an interest in or right over land that subsists for the benefit of—

(i) the purchased dwelling, or

(ii) land that is or forms part of the garden or grounds of the purchased dwelling.

(7) Relief may not be claimed under this paragraph for a chargeable transaction if it is a higher rates transaction for the purposes of paragraph 1 of Schedule 4ZA.

Eligibility for relief: linked transactions within paragraph 1(6)

2

(1) Where a land transaction (“the main transaction”) is eligible for relief under paragraph 1 (or would be if it were a chargeable transaction), relief may also be claimed for any chargeable transaction that is linked to the main transaction.

(2) But relief may not be claimed under this paragraph for a chargeable transaction if the purchaser, or (if more than one) any of the purchasers in relation to the transaction is not a purchaser in relation to the main transaction.

Eligibility for relief: alternative finance arrangements

3

(1) This paragraph applies in relation to a land 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 as the purchaser in relation to the transaction for the purposes of paragraphs 1(4) and 2(2).

(3) In this paragraph—

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

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

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

PART 2 — The Relief

The relief

4

If relief is claimed under paragraph 1 or 2 for a chargeable transaction, the amount of tax chargeable in respect of the transaction is to be determined as if in section 55(1B) (amount of tax chargeable: general) for Table A there were substituted—

Relevant consideration	Percentage
So much as does not exceed £300,000	0%
Any remainder (so far as not exceeding £500,000)	5%

Withdrawal of relief

5

(1) This paragraph applies if—

(a) relief is claimed under paragraph 1 or 2 for a chargeable transaction (“the first transaction”), and

(b) the effect of another land transaction (“the later transaction”) that is linked to the first transaction is that the first transaction ceases to be a transaction for which relief may be claimed under that paragraph.

(2) Tax or (as the case may be) additional tax is chargeable on the first transaction as if the claim had not been made.

PART 3 — Interpretation

“First-time buyer”

6

(1) In this Schedule “first-time buyer” means an individual who—

(a) has not previously been a purchaser in relation to a land transaction the main subject-matter of which was a major interest in a dwelling,

(b) has not previously acquired —

(i) an equivalent interest in a dwelling situated in a country or territory outside England, Wales and Northern Ireland, or

(ii) an interest of a kind mentioned in section 117(2) in a dwelling situated in Wales,

(c) has not previously been, or been one of the persons who was, “the person” for the purposes of section 71A or 73 in a case where the main subject-matter of the first transaction within the meaning of the section concerned was a major interest in a dwelling, and

(d) would not have been such a person for those purposes in such a case if the provisions mentioned in paragraph (c) had been in force, and had had effect in the country or territory concerned at all material times (subject, where required, to appropriate modifications).

(2) For the purposes of sub-paragraph (1)(b) and (d), ignore a lease or, in the case of a dwelling situated in Wales, a term of years absolute which has less than 21 years to run at the beginning of the day after the date on which it is acquired.

(3) In determining any question for the purposes of sub-paragraph (1), paragraph 3 of Schedule 16 is to have effect as if sub-paragraphs (2) and (3) (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) were omitted.

“Relevant consideration”

7

In this Schedule “relevant consideration” means—

(a) in the case of a transaction that is not one of a number of linked transactions, the chargeable consideration for the transaction, and

(b) in the case of a transaction that is one of a number of linked transactions, the total of the chargeable consideration for all those transactions.

“Major interest”

8

The main subject-matter of a transaction is not a major interest for the purposes of this Schedule if it is a term of years absolute which has less than 21 years to run at the beginning of the day after the effective date of the transaction.

What counts as a dwelling

9

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

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

(a) it is used or suitable for use as a single dwelling, or

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

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

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

(5) The main subject-matter of a transaction is also taken to consist of a major 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 a major interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a single dwelling, and

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

(6) In sub-paragraph (5)—

“contract” includes any agreement,

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

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

(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraphs (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.

No relief for first-time buyers for staircasing transactions etc

16

(1) This paragraph applies where—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(c) paragraph 4A applies in relation to the acquisition of an interest (but the acquisition is not exempt from charge by virtue of sub-paragraph (2) of that paragraph),

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

(e) an equity-acquisition payment is made under a shared ownership trust (but the equity-acquisition payment, and the consequential increase in the purchaser's beneficial interest, are not exempt from charge by virtue of paragraph 10).

(2) Schedule 6ZA (relief for first-time buyers) does not apply in relation to—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the acquisition of the interest,

(d) the equity-acquisition payment and the consequential increase in the purchaser's beneficial interest.

Meaning of “restricted shares”

66A

(1) A land transaction is exempt from charge if it is effected by—

(a) an instrument listed in subsection (2), or

(b) an instrument made under an instrument listed in subsection (2).

(2) The instruments are—

(a) a property transfer instrument made in accordance with section 12(2) of the Banking Act 2009 (transfer to a bridge bank),

(b) a property transfer instrument made in accordance with section 12ZA(3) of that Act (transfer to asset management vehicle),

(c) a supplemental property transfer instrument made in accordance with section 42(2) of that Act where the original instrument was made in accordance with section 12(2), 12ZA(3) or 41A(2) of that Act,

(d) a property transfer instrument made in accordance with section 41A(2) of that Act (transfer of property subsequent to resolution instrument),

(e) a bridge bank supplemental property transfer instrument made in accordance with section 44D(2) of that Act,

(f) a property transfer order made in accordance with section 45(2) of that Act (temporary public ownership: property transfer), ...

(g) a third-country instrument made in accordance with section 89H(2) or 89I(4) of that Act.

(h) a property transfer instrument made in accordance with paragraph 29(3) (bridge central counterparty) of Schedule 11 to the Financial Services and Markets Act 2023 (central counterparties),

(i) a property transfer instrument made in accordance with paragraph 66(2) of that Schedule (transfer of property subsequent to resolution instrument),

(j) a supplemental property transfer instrument made in accordance with paragraph 67(2) of that Schedule (supplemental instruments) where the original instrument was made in accordance with paragraph 29(3) of that Schedule,

(k) a property transfer instrument made in accordance with paragraph 71(2) (transfer of ownership and private sector purchaser: property transfer) where the original instrument was made in accordance with paragraph 30(2) of that Schedule (transfer of ownership), or

(l) a third-country instrument made in accordance with paragraph 145(2) (third-country resolution actions) or 146(4) (effects of recognition on third-country resolution action) of that Schedule.

(3) References in subsection (2) to a provision of the Banking Act 2009 include references to that provision as applied by or under any other provision of that Act (including where it is applied with modifications or in a substituted form).

Relief for first-time buyers: shared ownership lease where no election made

15A

(1) This paragraph applies where—

(a) a shared ownership lease is granted, and

(b) no election is made for tax to be charged in accordance with paragraph 2 or 4.

(2) For the purpose of determining whether the second condition in paragraph 1 of Schedule 6ZA is met in respect of the grant, the chargeable consideration for the grant is to be treated as being the amount stated in the lease in accordance with paragraph 2(2)(e) or paragraph 4(2)(e)(i) or (ii).

(3) If relief is claimed in respect of the grant under paragraph 1 of Schedule 6ZA no tax is chargeable in respect of so much of the chargeable consideration for the grant as consists of rent.

(4) In this paragraph “shared ownership lease” has the same meaning as in paragraph 4A.

Relief for first-time buyers: shared ownership trust where no election made

15B

(1) This paragraph applies where—

(a) a shared ownership trust is declared, and

(b) no election is made for tax to be charged in accordance with paragraph 9.

(2) For the purpose of determining whether the second condition in paragraph 1 of Schedule 6ZA is met in respect of the declaration, the chargeable consideration for the declaration is to be treated as being the sum specified in the trust in accordance with paragraph 7(4)(f).

(3) If relief is claimed in respect of the declaration under paragraph 1 of Schedule 6ZA no tax is chargeable in respect of any rent-equivalent payment treated by reason of paragraph 11(b) as rent.

Introduction

Increased rates for non-resident transactions

75ZA

(1) In its application for the purpose of determining the amount of tax chargeable in respect of a chargeable transaction that is a non-resident transaction, this Part has effect as if 2% were added to each rate specified in the rate-specifying provisions.

(2) The “rate-specifying provisions” are—

(a) in section 55(1B), Table A;

(b) in Schedule 4ZA, in paragraph 1(2), Table A;

(d) in Schedule 5, in paragraph 2(3), Table A;

(e) in Schedule 6ZA, in paragraph 4, Table A;

(f) in section 74(1A), Step 4.

(3) Schedule 9A defines “non-resident transaction” and makes further provision in connection with this section.

Anti-avoidance

SCHEDULE 9A

PART 1 — Introduction

1

This Schedule is arranged as follows—

(a) Part 2 explains how to determine for the purposes of this Part of this Act whether a chargeable transaction is a “non-resident transaction”;

(b) Part 3 explains how to determine for the purposes of this Schedule whether an individual is “non-resident” in relation to a chargeable transaction;

(c) Part 4 explains how to determine for the purposes of this Schedule whether a company is “non-resident” in relation to a chargeable transaction;

(d) Part 5 contains special rules applying in relation to particular purchasers and transactions;

(e) Part 6 contains supplementary provision.

PART 2 — Meaning of “non-resident transaction”

Meaning of “non-resident transaction”

2

(1) A chargeable transaction is a “non-resident transaction” for the purposes of this Part of this Act if—

(a) the purchaser is, or (if there is more than one) the purchasers include, a person who is non-resident in relation to the transaction,

(b) the main subject-matter of the transaction consists of—

(i) a major interest in one or more dwellings, or

(ii) a major interest in one or more dwellings and other property,

(c) that major interest, at the beginning of the effective date of the transaction, is not a term of years absolute or leasehold estate that has 7 years or less to run, and

(d) the de minimis threshold is exceeded.

(2) A reference in sub-paragraph (1)(b) or (c) to a major interest in a dwelling includes an undivided share in a major interest in a dwelling.

(3) For the purposes of sub-paragraph (1)(d), the de minimis threshold is exceeded if—

(a) in a case in which the chargeable consideration for the transaction does not consist of or include rent, the chargeable consideration for the transaction is £40,000 or more;

(b) in a case in which the chargeable consideration for the transaction consists of or includes rent—

(i) the chargeable consideration other than rent is £40,000 or more, or

(ii) the annual rent is £1,000 or more.

(4) In sub-paragraph (3) “annual rent” in relation to a transaction, means the average annual rent over the term of the lease to which the transaction relates or, if—

(a) different amounts of rents are payable for different parts of the term, and

(b) those amounts (or any of them) are ascertainable at the effective date of the transaction,

the average annual rent over the period for which the highest ascertainable rent is payable.

(5) For provision modifying sub-paragraph (1)(a) in its application to chargeable transactions of particular descriptions, see—

paragraph 13 (bare trust acquiring new lease);

paragraph 14 (purchases by certain settlements).

(6) Sub-paragraph (1) is subject to paragraph 17 (completion of contract previously substantially performed).

PART 3 — “Non-resident” in relation to a chargeable transaction: individuals

3

For the purposes of this Schedule, an individual is “non-resident” in relation to a chargeable transaction if the individual is not UK resident in relation to the transaction (see paragraphs 4 and 5).

4

(1) For the purposes of this Schedule, an individual is “UK resident” in relation to a chargeable transaction if the individual is present in the United Kingdom on at least 183 days during any continuous period of 365 days that falls within the relevant period.

(2) “The relevant period” means the period that—

(a) begins with the day 364 days before the effective date of the chargeable transaction, and

(b) ends with the day 365 days after the effective date of the chargeable transaction.

(3) This paragraph does not apply in relation to a chargeable transaction to which paragraph 5 applies.

(4) References in this paragraph to an individual being present in the United Kingdom on a day are to the individual being present in the United Kingdom at the end of that day.

(5) This paragraph is subject to paragraph 12 (spouses and civil partners of UK residents).

5

(1) For the purposes of this Schedule, an individual is “UK resident” in relation to a chargeable transaction to which this paragraph applies if the individual is present in the United Kingdom on at least 183 days during the period that—

(a) begins with the day 364 days before the effective date of the chargeable transaction, and

(b) ends with the effective date of the chargeable transaction.

(2) This paragraph applies to a chargeable transaction if any of conditions A to C is met in relation to the transaction.

(3) Condition A is that the purchaser is, or (if there is more than one) the purchasers include—

(a) a company, or

(b) a person acting as a trustee of a unit trust scheme.

(4) Condition B is that the purchaser is, or (if there is more than one) the purchasers include, an individual who is treated as entering into the transaction by virtue of paragraph 2 of Schedule 15 (transaction entered into for the purposes of a partnership treated as entered into by partners).

(5) Condition C is that—

(a) the purchaser is, or (if there is more than one) the purchasers include, an individual who is acting as a trustee of a settlement, and

(b) under the terms of the settlement no beneficiary is entitled—

(i) to occupy the dwelling or dwellings for life, or

(ii) to income earned in respect of the dwelling or dwellings.

(6) References in this paragraph to an individual being present in the United Kingdom on a day are to the individual being present in the United Kingdom at the end of that day.

(7) This paragraph is subject to paragraph 12 (spouses and civil partners of UK residents).

6

(1) For the purposes of paragraphs 4 and 5, an individual is (subject to sub-paragraph (3)) treated as present in the United Kingdom at the end of a day if at that time the individual—

(a) is in Crown employment, and

(b) is present in a country or territory outside the United Kingdom for the purpose of performing activities in the course of that employment.

(2) For the purposes of paragraphs 4 and 5, an individual is (subject to sub-paragraph (3)) treated as present in the United Kingdom at the end of a day if at that time the individual—

(a) is the spouse or civil partner of an individual who is treated as present in the United Kingdom at the end of that day under sub-paragraph (1), and

(b) is living with that spouse or civil partner.

(3) Sub-paragraph (1) or (2) applies in relation to an individual only if a claim that it should so apply is included in a land transaction return or an amendment of such a return.

(4) “Crown employment” means employment under the Crown—

(a) which is of a public nature, and

(b) the earnings from which are payable out of the public revenue of the United Kingdom or of Northern Ireland.

(5) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.

PART 4 — “Non-resident” in relation to a chargeable transaction: companies

7

(1) For the purposes of this Schedule a company is “non-resident” in relation to a chargeable transaction if either of the following conditions is met.

(2) The first condition is that, on the effective date of the chargeable transaction, the company is not UK resident for the purposes of the Corporation Tax Acts (see Chapter 3 of Part 2 of CTA 2009).

(3) The second condition is that, on the effective date of the chargeable transaction, the company (though UK resident for the purposes of the Corporation Tax Acts)—

(a) is a close company (see paragraph 8),

(b) meets the non-UK control test in relation to the transaction (see paragraphs 9 and 10), and

(4) This paragraph is subject to—

(a) paragraph 15 (co-ownership ... contractual schemes);

(b) paragraph 16 (alternative property finance).

8

(1) For the purposes of this Schedule, a company is a “close company” if it is a close company within the meaning given by Chapter 2 of Part 10 of CTA 2010 (basic definitions), applying that Chapter subject to the following modifications.

(2) Section 444 (companies involved with close companies) applies as if condition A in that section were omitted.

(3) Section 446 (particular types of quoted company not treated as close) is treated as omitted.

9

(1) For the purposes of this Schedule, a company meets the “non-UK control test” in relation to a chargeable transaction if it is a close company within the meaning given by Chapter 2 of Part 10 of CTA 2010 (basic definitions), applying that Chapter subject to the following modifications.

(2) Section 439 (“close company”) applies as if—

(a) references to a participator were to a relevant participator, and

(b) references to five or fewer participators were to any number of relevant participators.

(3) In sub-paragraph (2), “relevant participator” means a participator (within the meaning given by Chapter 2 of Part 10 of CTA 2010) who—

(a) is non-resident in relation to the chargeable transaction (within the meaning of this Schedule), and

(b) is not a general partner in a limited partnership.

(4) Section 444 (companies involved with close companies) applies as if condition A in that section were omitted.

(5) Section 446 (particular types of quoted company not treated as close) is treated as omitted.

(6) Section 451 (attribution of rights and powers) has effect subject to the limitations set out in paragraph 10.

(7) The reference in sub-paragraph (3)(b) to a general partner does not include a general partner who possesses, or is entitled to acquire, rights that entitle the general partner, in the event of the winding up of the company or in any other circumstances, to receive more than 1% of the assets of the company which would then be available for distribution among its members.

10

(1) This paragraph sets out limitations on the rights and powers of a person (A) that, apart from this paragraph, would be capable of being attributed to another person (B) under section 451(4) of CTA 2010, as that provision applies for the purposes of paragraph 9(1).

(2) Where A and B are partners in a partnership, no rights and powers of A may be attributed to B under paragraph (c) or (d) of section 451(4) of CTA 2010 by virtue of that fact.

(3) Where—

(a) A and B are spouses or civil partners of each other,

(b) A and B are living together, and

no rights and powers of A may be attributed to B under paragraph (c) or (d) of section 451(4) of CTA 2010 by virtue of the fact mentioned in paragraph (a).

(4) Where A’s or B’s interest in a company is de minimis, no rights and powers of A in relation to the company may be attributed to B under any of paragraphs (a) to (d) of section 451(4) of CTA 2010.

(5) For this purpose, a person’s interest in a company is “de minimis” if—

(a) the proportion of the share capital or issued share capital in the company that the person possesses or is entitled to acquire is less than 5%,

(b) the proportion of the voting rights in the company that the person possesses or is entitled to acquire is less than 5%,

(c) the issued share capital in the company that the person possesses or is entitled to acquire would, on the assumption that the whole of the income of the company were distributed among the participators, entitle the person to receive less than 5% of the income so distributed, and

(d) the person’s rights in the company entitle the person, in the event of the winding up of the company or in any other circumstances, to less than 5% of the assets of the company which would then be available for distribution among the participators.

(6) Any rights A has as a loan creditor are to be disregarded for the purposes of the assumption in sub-paragraph (5)(c).

(7) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.

11

(1) A company is an “excluded company” for the purposes of paragraph 7(3)(c) if it is any of the following—

(a) a PAIF;

(b) a body corporate that is a 51% subsidiary of PAIF;

(d) a company that is a member of a group UK REIT;

(e) a company acting as a trustee of a settlement.

(2) In this paragraph—

(a) “PAIF” means a body corporate that is a property AIF for the purposes of Schedule 7A to this Act by virtue of paragraph 2(2) of that Schedule;

(b) “51% subsidiary” has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of CTA 2010);

(d) “group UK REIT” has the same meaning as in Part 12 of CTA 2010 (see section 523(5) of that Act).

PART 5 — Special rules for particular purchasers and transactions

12

(1) This paragraph applies where—

(a) there are two or more purchasers in relation to a chargeable transaction who are or will be jointly entitled to the interest acquired, and

(b) the following conditions are met in relation to those purchasers.

(2) The conditions are—

(a) that, on the effective date of the transaction, the purchasers, or (if there are more than two) two of them, are spouses or civil partners of each other;

(b) that, on the effective date of the transaction, those spouses or civil partners are living together;

(d) that (apart from this paragraph) one of those spouses or civil partners is non-resident in relation to the chargeable transaction;

(e) that neither of the spouses or civil partners is acting as a trustee of a settlement.

(3) For the purposes of this Schedule, the spouse or civil partner mentioned in sub-paragraph (2)(d) is UK resident in relation to the chargeable transaction.

(4) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.

13

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

(a) the purchaser is, or (if there is more than one) the purchasers include, a person (P) who is acting as a trustee of a bare trust, and

(b) paragraph 3(3) of Schedule 16 (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) applies in relation to P.

(2) In determining for the purposes of this Part of this Act whether the chargeable transaction is a “non-resident transaction”, paragraph 2(1)(a) (condition that purchaser be non-resident) has effect as if a reference to the purchaser or purchasers—

(a) included the beneficiary or beneficiaries of the bare trust, and

(b) did not include P.

14

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

(a) the purchaser is, or (if there is more than one) the purchasers include, a person (P) who is acting as a trustee of a settlement, and

(b) under the terms of the settlement a beneficiary is entitled—

(i) to occupy the dwelling or dwellings for life, or

(ii) to income earned in respect of the dwelling or dwellings.

(2) In determining for the purposes of this Part of this Act whether the chargeable transaction is a “non-resident transaction”, paragraph 2(1)(a) (condition that purchaser be non-resident) has effect as if a reference to the purchaser or purchasers—

(a) included the beneficiary or beneficiaries of the settlement, and

(b) did not include P.

(3) In this paragraph “settlement” does not include a settlement under a unit trust scheme.

15

(1) Subject to sub-paragraph (2), a co-ownership authorised contractual scheme is not “non-resident” in relation to any chargeable transaction.

(2) A collective investment scheme that is a co-ownership authorised contractual scheme by virtue of section 102A(7) (EEA schemes) is “non-resident” in relation to all chargeable transactions.

(3) A Reserved Investor Fund (Contractual Scheme) is not “non-resident” in relation to any chargeable transaction.

16

(1) Sub-paragraph (2) applies in relation to a chargeable transaction within section 71A(1)(a) (purchase of land by financial institution as part of alternative property finance arrangements).

(2) The financial institution that enters into the transaction is “non-resident” in relation to the transaction if and only if the person with whom it enters into the arrangements mentioned in section 71A(1) is non-resident in relation to the transaction.

(3) Sub-paragraph (4) applies in relation to a chargeable transaction within section 73(1)(a)(i) (purchase of land by financial institution as part of alternative property finance arrangements).

(4) The financial institution that enters into the transaction is “non-resident” in relation to the transaction if and only if the person with whom it enters into the arrangements mentioned in section 73(1) is non-resident in relation to the transaction.

17

In a case within section 44(8) (contract substantially performed and subsequently completed by a conveyance) the later of the notifiable transactions mentioned in that provision is a “non-resident transaction” for the purposes of this Part if and only if the earlier of those notifiable transactions is a non-resident transaction for the purposes of this Part.

PART 6 — Supplementary provision

18

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

(a) in order to determine whether the chargeable transaction is a non-resident transaction, it is necessary to determine whether one or more individuals are UK resident in relation to the transaction under paragraph 4(1), and

(b) that individual or any of those individuals, at the beginning of the day on which the land transaction return is delivered, has not yet met the condition in that provision (but might turn out to do so depending on their residence during the remainder of the relevant period).

(2) The land transaction return must be prepared on the assumption that the individual or (as the case may be) each of the individuals is resident outside the United Kingdom throughout the period—

(a) beginning with the day on which the land transaction return is delivered, and

(b) ending at the end of the relevant period.

(3) In this paragraph “the relevant period” has the same meaning as in paragraph 4(1).

19

(1) Sub-paragraph (2) applies where—

(a) a land transaction return in respect of a chargeable transaction is prepared on the assumption mentioned in paragraph 18(2), and

(b) the individual or (as the case may be) each of the individuals in respect of whom the assumption was made subsequently meets the condition in paragraph 4(1) (with the result that the transaction is not a non-resident transaction).

(2) The land transaction return may be amended, at any time before the end of the period of 2 years beginning with the day after the effective date of the transaction, to take account of the fact that the transaction is not a non-resident transaction.

(3) Where a land transaction return is amended under sub-paragraph (2), paragraph 6(2A) of Schedule 10 (notice of amendment of return to be accompanied by the contract for the transaction etc) does not apply in relation to the amendment.

20

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

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

(a) it is used or suitable for use as a single dwelling, or

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

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

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

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

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

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

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

(6) In sub-paragraph (5)—

“contract” includes any agreement;

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

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

(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).

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

21

In this Schedule—

“CTA 2009” means the Corporation Tax Act 2009;

“CTA 2010” means the Corporation Tax Act 2010.

22

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

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

61A

(1) Schedule 6C provides for relief in the case of transactions relating to land in a special tax site.

(2) In that Schedule—

(a) Part 1 contains definitions,

(b) Part 2 makes provision about the relief,

(d) Part 4 makes provision about cases involving alternative finance arrangements, and

(e) Part 5 confers power to change the cases in which the relief is available.

(3) Relief under that Schedule is available only in relation to a land transaction with an effective date falling on or before the applicable sunset date in relation to the special tax site concerned (as to which see section 332 (4) and (5) of the Finance (No.2) Act 2023).

(4) Any relief under that Schedule must be claimed in a land transaction return or an amendment of such a return.

(5) A claim for relief under that Schedule must—

(a) be made on or before the period of one year and 14 days beginning with the end of the applicable sunset date in relation to the special tax site in which the transaction land is situated, and

(b) include, or be accompanied by, such information as HMRC may require.

(6) In this section and Schedule 6C, “special tax site” means an area for the time being designated under section 113 of the Finance Act 2021.

Qualifying housing co-operatives

5FA

Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest that is acquired by a company on a day on which the company is a qualifying housing co-operative for the purposes of section 150(3A) of the Finance Act 2013 (relief from ATED).

5L

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

(2) References in this paragraph to a qualifying housing body are to—

(a) a company that is a qualifying housing co-operative for the purposes of section 150(3A) of the Finance Act 2013 (relief from ATED),

(b) a registered provider of social housing, or

(3) The relief under paragraph 5FA is withdrawn (subject to sub-paragraph (4)) if—

(a) on any day in the period of three years beginning with the effective date of the chargeable transaction (“the control period”), the purchaser is not a qualifying housing body, and

(b) immediately before the first day on which that is the case the purchaser still holds the higher threshold interest or holds a chargeable interest derived from it.

(4) If, on any day in the control period, the purchaser is not a qualifying housing body because it ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless—

(a) another person (“the first successor”) has succeeded to the engagements of the purchaser, and

(b) condition A or condition B is met (and if condition B is met, subject to sub-paragraph (7)).

(5) Condition A is that, on the day the first successor succeeds to the engagements of the purchaser (“the day of succession”), the first successor is not a qualifying housing body.

(6) Condition B is that—

(a) on any day in the part of the control period that falls after the day of succession, the first successor is not a qualifying housing body, and

(b) immediately before the first day on which that is the case the first successor still holds the higher threshold interest or holds a chargeable interest derived from it.

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