Finance Act 2016

(2) (1) This paragraph explains how to determine whether a chargeable transaction is a “higher rates transaction” for the purposes of paragraph 1. (2) In the case of a transaction where there is only one purchaser, determine whether the transaction falls within any of paragraphs 3 to 7; if it does fall within any of those paragraphs it is a “higher rates transaction” (otherwise it is not). (3) In the case of a transaction where there are two or more purchasers— (a) take one of the purchasers and determine, having regard to that purchaser only, whether the transaction falls within any of paragraphs 3 to 7, and (b) do the same with each of the other purchasers. If the transaction falls within any of those paragraphs when having regard to any one of the purchasers it is a “higher rates transaction” (otherwise it is not). (4) For the purposes of this Schedule any term of years absolute or leasehold estate is not a “major interest” if its term does not exceed 7 years on the date of its grant. (3) (1) A chargeable transaction falls within this paragraph if— (a) the purchaser is an individual, (b) the main subject-matter of the transaction consists of a major interest in a single dwelling (“the purchased dwelling”), and (c) Conditions A to D are met. (2) Condition A is that the chargeable consideration for the transaction is £40,000 or more. (3) Condition B is that on the effective date of the transaction the purchased dwelling— (a) is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or (b) is subject to such a lease but the lease has an unexpired term of no more than 21 years. (4) Condition C is that at the end of the day that is the effective date of the transaction— (a) the purchaser has a major interest in a dwelling other than the purchased dwelling, (b) that interest has a market value of £40,000 or more, and (c) that interest is not reversionary on a lease which has an unexpired term of more than 21 years. (5) Condition D is that the purchased dwelling is not a replacement for the purchaser's only or main residence. (6) For the purposes of sub-paragraph (5) the purchased dwelling is a replacement for the purchaser's only or main residence if— (a) on the effective date of the transaction (“the transaction concerned”) the purchaser intends the purchased dwelling to be the purchaser's only or main residence, (b) in another land transaction (“the previous transaction”) whose effective date was during the period of three years ending with the effective date of the transaction concerned, the purchaser or the purchaser's spouse or civil partner at the time disposed of a major interest in another dwelling (“the sold dwelling”), (c) at any time during that period of three years the sold dwelling was the purchaser's only or main residence, and (d) at no time during the period beginning with the effective date of the previous transaction and ending with the effective date of the transaction concerned has the purchaser or the purchaser's spouse or civil partner acquired a major interest in any other dwelling with the intention of it being the purchaser's only or main residence. (7) For the purposes of sub-paragraph (5) the purchased dwelling may become a replacement for the purchaser's only or main residence if— (a) on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser's only or main residence, (b) in another land transaction whose effective date is during the period of three years beginning with the day after the effective date of the transaction concerned, the purchaser or the purchaser's spouse or civil partner disposes of a major interest in another dwelling (“the sold dwelling”), and (c) at any time during the period of three years ending with the effective date of the transaction concerned the sold dwelling was the purchaser's only or main residence. (4) A chargeable transaction falls within this paragraph if— (a) the purchaser is not an individual, (b) the main subject-matter of the transaction consists of a major interest in a single dwelling, and (c) Conditions A and B in paragraph 3 are met. (5) (1) A chargeable transaction falls within this paragraph if— (a) the purchaser is an individual, (b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), and (c) at least two of the purchased dwellings meet conditions A, B and C. (2) A purchased dwelling meets condition A if the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the purchased dwelling is £40,000 or more. (3) A purchased dwelling meets condition B if on the effective date of the transaction the purchased dwelling— (a) is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or (b) is subject to such a lease but the lease has an unexpired term of no more than 21 years. (4) A purchased dwelling meets condition C if it is not subsidiary to any of the other purchased dwellings. (5) One of the purchased dwellings (“dwelling A”) is subsidiary to another of the purchased dwellings (“dwelling B”) if— (a) dwelling A is situated within the grounds of, or within the same building as, dwelling B, and (b) the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to dwelling B is equal to, or greater than, two thirds of the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the following combined— (i) dwelling A, (ii) dwelling B, and (iii) each of the other purchased dwellings (if any) which are situated within the grounds of, or within the same building as, dwelling B. (6) (1) A chargeable transaction falls within this paragraph if— (a) the purchaser is an individual, (b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), (c) only one of the purchased dwellings meets conditions A, B and C, (d) the purchased dwelling which meets those conditions is not a replacement for the purchaser's only or main residence, and (e) at the end of the day that is the effective date of the transaction— (i) the purchaser has a major interest in a dwelling other than one of the purchased dwellings, (ii) that interest has a market value of £40,000 or more, and (iii) that interest is not reversionary on a lease which has an unexpired term of more than 21 years. (2) Sub-paragraphs (2) to (5) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph. (3) Sub-paragraphs (6) and (7) of paragraph 3 apply for the purposes of sub-paragraph (1)(d) of this paragraph as they apply for the purposes of sub-paragraph (5) of that paragraph. (7) (1) A chargeable transaction falls within this paragraph if— (a) the purchaser is not an individual, (b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), and (c) at least one of the purchased dwellings meets conditions A and B. (2) Sub-paragraphs (2) and (3) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph. (8) (1) This paragraph applies where by reason of paragraph 3(7) a chargeable transaction (“the transaction concerned”) ceases to be a higher rates transaction for the purposes of paragraph 1. (2) The land transaction (“the subsequent transaction”) by reference to which the condition in paragraph 3(7)(b) was met may not be taken into account for the purposes of paragraph 3(6)(b) in determining whether any other chargeable transaction is a higher rates transaction. (3) A land transaction return in respect of the transaction concerned may be amended, to take account of its ceasing to be a higher rates transaction, at any time within whichever of the following periods expires later— (a) the period of 3 months beginning within the effective date of the subsequent transaction, and (b) the period of 12 months beginning with the filing date for the return. (4) Where a land transaction return in respect of the transaction concerned is amended to take account of its ceasing to be a higher rates transaction (and not for any other reason), paragraph 6(2A) of Schedule 10 (notice of amendment of return to be accompanied by the contract for the transaction etc) does not apply in relation to the amendment. (9) (1) Sub-paragraph (2) applies in relation to a chargeable transaction if— (a) the purchaser (or one of them) is married or in a civil partnership on the effective date, (b) the purchaser and the purchaser's spouse or civil partner are living together on that date, and (c) the purchaser's spouse or civil partner is not a purchaser in relation to the transaction. (2) The transaction is to be treated as being a higher rates transaction for the purposes of paragraph 1 if it would have been a higher rates transaction had the purchaser's spouse or civil partner been a purchaser. (3) Persons who are married to, or are civil partners of, each other are treated as living together for the purposes of this paragraph if they are so treated for the purposes of the Income Tax Acts (see section 1011 of the Income Tax Act 2007). (10) (1) Sub-paragraph (3) applies in relation to a land transaction if— (a) the main subject-matter of the transaction consists of a major interest in one or more dwellings, (b) the purchaser (or one of them) is acting as trustee of a settlement, and (c) under the terms of the settlement a beneficiary will be entitled to— (i) occupy the dwelling or dwellings for life, or (ii) income earned in respect of the dwelling or dwellings. (2) Sub-paragraph (3) also applies in relation to a land transaction if— (a) the main subject-matter of the transaction consists of a term of years absolute in a dwelling, and (b) the purchaser (or one of them) is acting as a trustee of a bare trust. (3) Where this sub-paragraph applies in relation to a land transaction the beneficiary of the settlement or bare trust (rather than the trustee) is to be treated for the purposes of this Schedule as the purchaser (or as one of them). (4) Paragraphs 3(3) and 4 of Schedule 16 (trustees to be treated as the purchaser) have effect subject to sub-paragraph (3). (11) (1) Sub-paragraph (3) applies where— (a) a person is a beneficiary under a settlement, (b) a major interest in a dwelling forms part of the trust property, and (c) under the terms of the settlement, the beneficiary is entitled to— (i) occupy the dwelling for life, or (ii) income earned in respect of the dwelling. (2) Sub-paragraph (3) also applies where— (a) a person is a beneficiary under a bare trust, and (b) a term of years absolute in a dwelling forms part of the trust property. (3) Where this sub-paragraph applies— (a) the beneficiary is to be treated for the purposes of this Schedule as holding the interest in the dwelling, and (b) if the trustee of the settlement or bare trust disposes of the interest, the beneficiary is to be treated for the purposes of this Schedule as having disposed of it. (12) (1) This paragraph applies where, by reason of paragraph 10 or 11 or paragraph 3(1) of Schedule 16, the child of a person (“P”) would (but for this paragraph) be treated for the purposes of this Schedule as— (a) being the purchaser in relation to a land transaction, (b) holding an interest in a dwelling, or (c) having disposed of an interest in a dwelling. (2) Where this paragraph applies— (a) P and any spouse or civil partner of P are to be treated for the purposes of this Schedule as being the purchaser, holding the interest or (as the case may be) having disposed of the interest, and (b) the child is not to be so treated. (3) But sub-paragraph (2)(a) does not apply in relation to a spouse or civil partner of P if the two of them are not living together. (4) Sub-paragraph (3) of paragraph 9 applies for the purposes of this paragraph as it applies for the purposes of that paragraph. (5) “Child” means a person under the age of 18. (13) (1) This paragraph applies in relation to a land transaction if— (a) the main subject-matter of the transaction consists of a major interest in one or more dwellings, (b) the purchaser (or one of them) is acting as trustee of a settlement, (c) that purchaser is an individual, and (d) under the terms of the settlement a beneficiary is not entitled to— (i) occupy the dwelling or dwellings for life, or (ii) income earned in respect of the dwelling or dwellings. (2) In determining whether the transaction falls within paragraph 4 or paragraph 7— (a) if the purchaser mentioned in sub-paragraph (1) is the only purchaser, ignore paragraph (a) of those paragraphs, and (b) if that purchaser is not the only purchaser, ignore paragraph (a) of those paragraphs when having regard to that purchaser. (14) (1) Sub-paragraph (2) applies in relation to a chargeable transaction whose subject-matter consists of a major interest in one or more dwellings if— (a) the purchaser (or one of them) is a partner in a partnership, but (b) the purchaser does not enter into the transaction for the purposes of the partnership. (2) For the purposes of determining whether the transaction falls within paragraph 3 or 6 any major interest in any other dwelling that is held by or on behalf of the partnership for the purposes of a trade carried on by the partnership is not to be treated as held by or on behalf of the purchaser. (3) Paragraph 2(1)(a) of Schedule 15 (chargeable interests held by partnerships treated as held by the partners) has effect subject to sub-paragraph (2). (15) (1) This paragraph applies in relation to a chargeable transaction which is the first transaction under an alternative finance arrangement entered into between a person and a financial institution. (2) The person (rather than the institution) is to be treated for the purposes of this Schedule as the purchaser in relation to the transaction. (3) In this paragraph— - “alternative finance arrangement” means an arrangement of a kind mentioned in section 71A(1) or 73(1); - “financial institution” has the meaning it has in those sections (see section 73BA); - “first transaction”, in relation to an alternative finance arrangement, has the meaning given by section 71A(1)(a) or (as the case may be) section 73(1)(a)(i). (16) (1) This paragraph applies where by virtue of an inheritance— (a) a person (“P”) becomes jointly entitled with one or more other persons to a major interest in a dwelling, and (b) P's beneficial share in the interest does not exceed 50% (see sub-paragraph (4)). (2) P is not to be treated for the purposes of paragraph 3(4)(a) or 6(1)(e) as having the major interest at any time during the period of three years beginning with the date of the inheritance. (3) But if at any time during that period of three years P becomes the only person beneficially entitled to the whole of the interest or P's beneficial share in the interest exceeds 50% P is, from that time, to be treated as having the major interest for the purposes of paragraph 3(4)(a) and 6(1)(e) (subject to any disposal by P). (4) P's share in the interest exceeds 50% if— (a) P is beneficially entitled as a tenant in common or coparcener to more than half the interest, (b) P and P's spouse or civil partner taken together are beneficially entitled as tenants in common or coparceners to more than half the interest, or (c) P and P's spouse or civil partner are beneficially entitled as joint tenants to the interest and there is no more than one other joint tenant who is so entitled. (5) In this section “inheritance” means the acquisition of an interest in or towards satisfaction of an entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person. (17) (1) In the provisions of this Schedule specified in sub-paragraph (3), references to a “dwelling” include references to a dwelling situated in a country or territory outside England, Wales and Northern Ireland. (2) In the application of those provisions in relation to a dwelling situated in a country or territory outside England, Wales and Northern Ireland— (a) references to a “major interest” in the dwelling are to an equivalent interest in the dwelling under the law of that country or territory, (b) references to persons being beneficially entitled as joint tenants, tenants in common or coparceners to an interest in the dwelling are to persons having an equivalent entitlement to the interest in the dwelling under the law of that country or territory, (c) references to a “land transaction” in relation to the dwelling are to the acquisition of an interest in the dwelling under the law of that country or territory, (d) references to the “effective date” of a land transaction in relation to the dwelling are to the date on which the interest in the dwelling is acquired under the law of that country or territory, (e) references to “inheritance” are to the acquisition of an interest from a deceased person's estate in accordance with the laws of that country or territory concerning the inheritance of property. (3) The provisions of this Schedule referred to in sub-paragraphs (1) and (2) are— (a) paragraph 3(4), (6)(b), (c) and (d) and (7)(b) and (c), (b) paragraph 6(1)(e), (c) paragraph 11, (d) paragraph 14(2), and (e) paragraph 16. (4) Where the child of a person (“P”) has an interest in a dwelling which is situated in a country or territory outside England, Wales and Northern Ireland, P and any spouse or civil partner of P are to be treated for the purposes of this Schedule as having that interest. (5) But sub-paragraph (4) does not apply in relation to a spouse or civil partner of P if the two of them are not living together. (6) Sub-paragraph (3) of paragraph 9 applies for the purposes of sub-paragraph (5) of this paragraph as it applies for the purposes of that paragraph. (18) (1) This paragraph sets out rules for determining what counts as a dwelling for the purposes of this Schedule. (2) A building or part of a building counts as a dwelling if— (a) it is used or suitable for use as a single dwelling, or (b) it is in the process of being constructed or adapted for such use. (3) Land that is, or is to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on that land) is taken to be part of that dwelling. (4) Land that subsists, or is to subsist, for the benefit of a dwelling is taken to be part of that dwelling. (5) The main subject-matter of a transaction is also taken to consist of or include an interest in a dwelling if— (a) substantial performance of a contract constitutes the effective date of that transaction by virtue of a relevant deeming provision, (b) the main subject-matter of the transaction consists of or includes an interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a single dwelling, and (c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed. (6) In sub-paragraph (5)— - “contract” includes any agreement; - “relevant deeming provision” means any of sections 44 to 45A or paragraph 5(1) or (2) of Schedule 2A or paragraph 12A of Schedule 17A; - “substantially performed” has the same meaning as in section 44. (7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraph (2) or (5). (8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use. (19) (1) The Treasury may by regulations amend or otherwise modify this Schedule for the purpose of preventing certain chargeable transactions from being higher rates transactions for the purposes of paragraph 1. (2) The provision which may be included in regulations under this paragraph by reason of section 114(6)(c) includes incidental or consequential provision which may cause a chargeable transaction to be a higher rates transaction for the purposes of paragraph 1.

• (4) In paragraph 5 of Schedule 6B (relief for transfers involving multiple dwellings) after sub-paragraph (6) insert—

(6A) In the application of sub-paragraph (1), account is to be taken of paragraph 1 of Schedule 4ZA if the relevant transaction is a higher rates transaction for the purposes of that paragraph.

• (5) The amendments made by this section have effect in relation to any land transaction of which the effective date is, or is after, 1 April 2016.

• (6) But those amendments do not have effect in relation to a transaction—

• (a) effected in pursuance of a contract entered into and substantially performed before 26 November 2015, or

• (b) effected in pursuance of a contract entered into before that date and not excluded by subsection (7).

• (7) A transaction effected in pursuance of a contract entered into before 26 November 2015 is excluded by this subsection if—

• (a) there is any variation of the contract, or assignment of rights under the contract, on or after 26 November 2015,

• (b) the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or

• (c) on or after that date there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.

• (8) Subsection (9) applies in relation to a land transaction of which the effective date is or is before 26 November 2018.

• (9) In its application for the purpose of determining whether a land transaction to which this subsection applies is a higher rates transaction, paragraph 3(6) of Schedule 4ZA to FA 2003 has effect with the following modifications—

• (a) in paragraph (b) for “during the period of three years ending with” substitute “ the same as or before ”,

• (b) in paragraph (c) for the words from “during” to “paragraph (b)” substitute “ before the effective date of the transaction concerned ”.

• (10) Paragraph 15 of Schedule 4ZA to FA 2003 does not apply in relation to a land transaction of which the effective date is, or is before, the date on which this Act is passed if the effect of its application would be that the transaction is a higher rates transaction for the purposes of paragraph 1 of that Schedule.

SDLT higher rate: land purchased for commercial use

129

• (1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended in accordance with subsections (2) to (4).

• (2) In paragraph 5—

• (a) in sub-paragraph (1)—

• (i) after paragraph (a) insert—

(aa) use as business premises for the purposes of a qualifying property rental business (other than one which gives rise to income consisting wholly or mainly of excluded rents); (ab) use for the purposes of a relievable trade;

;

• (ii) for paragraph (b) substitute—

(b) development or redevelopment and— (i) resale in the course of a property development trade, or (ii) exploitation falling within paragraph (a) or use falling within paragraph (aa) or (ab);

;

• (b) in sub-paragraph (2), for “the dwelling” substitute “ a dwelling on the land ”;

• (c) in sub-paragraph (3), at the appropriate place insert—

“relievable trade” means a trade that is run on a commercial basis and with a view to profit.

• (3) In paragraph 5G, in sub-paragraph (3)(c) for “the dwelling” substitute “ any dwelling on the land ”.

• (4) In paragraph 6D(3)(b), for “the dwelling” substitute “ any dwelling on the land concerned ”.

• (5) The amendments made by this section have effect in relation to any land transaction of which the effective date is on or after 1 April 2016.

SDLT higher rate: acquisition under regulated home reversion plan

130

• (1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended as follows.

• (2) After paragraph 5C insert—

(5CA) (1) Paragraph 3 does not apply to a chargeable transaction if (and so far as) the purchaser— (a) is an authorised plan provider, and (b) acquires the subject-matter of the chargeable transaction as a plan provider. (2) For the purposes of this paragraph the purchaser acquires the subject-matter of the chargeable transaction “as a plan provider” so far as the purchaser acquires it under a regulated home reversion plan which the purchaser enters into as plan provider. (3) In this paragraph— - “authorised plan provider” means a person authorised under the Financial Services and Markets Act 2000 to carry on in the United Kingdom the regulated activity specified in article 63B(1) of the Regulated Activities Order (entering into regulated home reversion plan as plan provider); - “the Regulated Activities Order” means the Financial Services and Markets (Regulated Activities) Order 2001 (S.I. 2001/544); - “regulated home reversion plan” means an arrangement which is a regulated home reversion plan for the purposes of Chapter 15A of Part 2 of the Regulated Activities Order. (4) In this section references to entering into a regulated home reversion plan “as plan provider” are to be interpreted as if the references were in the Regulated Activities Order.

• (3) After paragraph 5I insert—

(5IA) (1) This paragraph applies where relief under paragraph 5CA (acquisition under a regulated home reversion plan) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction. (2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction the purchaser holds the higher threshold interest otherwise than for the purposes of the regulated home reversion plan (as defined in paragraph 5CA). (3) But sub-paragraph (2) does not apply if— (a) after ceasing to hold the higher threshold interest for the purposes of the regulated home reversion plan, the purchaser sells the higher threshold interest without delay (except so far as delay is justified by commercial considerations or cannot be avoided), and (b) at no time when the higher threshold interest is held by the purchaser as mentioned in sub-paragraph (2) is the dwelling (or any part of the dwelling) occupied by a non-qualifying individual. (4) In this paragraph— - “the dwelling” means the dwelling to which the relief under paragraph 5CA relates; - “non-qualifying individual” is to be interpreted in accordance with paragraph 5A.

• (4) The amendments made by this section have effect in relation to any land transaction of which the effective date is on or after 1 April 2016.

SDLT higher rate: properties occupied by certain employees etc

131

• (1) Schedule 4A to FA 2003 (SDLT: higher rate for certain transactions) is amended as follows.

• (2) In paragraph 5D (dwellings for occupation by certain employees etc)—

• (a) in sub-paragraph (1), for “trade” substitute “ business ”;

• (b) in sub-paragraph (2)(b) for “trade” substitute “ business ”;

• (c) for sub-paragraph (4) substitute—

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

• (3) The heading before paragraph 5D becomes “ Dwellings for occupation by certain employees etc of a relievable business ”.

• (4) After paragraph 5E insert—

(5EA) (1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in or over a flat which— (a) is one of at least three flats contained in the same premises, and (b) is acquired by a tenants' management company for the purpose of making the flat available for use as caretaker accommodation. (2) For the purposes of this paragraph a tenants' management company makes a flat available for use “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises. (3) In relation to the acquisition of a flat, a company is a “tenants' management company” if— (a) the tenants of two or more other flats contained in the premises are members of the company, and (b) the company owns, or it is intended that the company will acquire, the freehold of the premises; but a company which carries on a relievable business is not a tenants' management company. (4) In this paragraph “premises” means premises constituting the whole or part of a building.

• (5) After paragraph 5J insert—

(5JA) (1) This paragraph applies where relief under paragraph 5EA (acquisition by management company of flat for occupation by caretaker) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction. (2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction the purchaser holds the higher threshold interest otherwise than for the purpose of making the flat available for use as caretaker accommodation. (3) For the purposes of this paragraph a tenants' management company makes a flat available for use “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises.

• (6) In paragraph 5E (meaning of “qualifying partner”, “qualifying employee” etc)—

• (a) in sub-paragraph (1) for “trade” substitute “ business ”;

• (b) in sub-paragraph (2) for “qualifying trade” substitute “ relievable business ”;

• (c) in sub-paragraph (4)—

• (i) in the words before paragraph (a), for “trade” substitute “ relievable business ”;

• (ii) in paragraph (a)(i), for “trade” substitute “ relievable business ”.

• (7) In paragraph 5J (withdrawal of relief under paragraph 5D), in sub-paragraph (3)—

• (a) in paragraph (a), for the words from “trade” to the end substitute “ relievable business ”;

• (b) in paragraph (c), for the words from “trade” to the end substitute “ relievable business ”.

• (8) In paragraph 6G (withdrawal of relief under paragraph 5D in cases involving alternative finance arrangements), in sub-paragraph (4)—

• (a) in paragraph (a), for “qualifying trade” substitute “ relievable business ”;

• (b) in paragraph (c) for “trade” substitute “ relievable business ”.

• (9) In paragraph 9 (interpretation), at the appropriate place insert—

“relievable business” has the meaning given by paragraph 5D(4).

• (10) The amendments made by this section have effect in relation to any land transaction of which the effective date is on or after 1 April 2016.

SDLT: minor amendments of section 55 of FA 2003

132

In section 55 of FA 2003 (general rules on calculating the amount of stamp duty land tax chargeable), in subsection (5)—

• (a) for “74(2) and (3)” substitute “ 74(1B) ”, and

• (b) for “rate” substitute “ amount ”.

SDLT: property authorised investment funds and co-ownership authorised contractual schemes

133

Schedule 16 contains provision about—

• (a) the stamp duty land tax treatment of co-ownership authorised contractual schemes, and

• (b) relief from stamp duty land tax for certain acquisitions by such schemes and by property authorised investment funds.

Annual tax on enveloped dwellings

ATED: regulated home reversion plans

134

• (1) Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows.

• (2) After section 144 insert—

(144A) (1) A day in a chargeable period is relievable in relation to a single dwelling interest held by a person (“P”) who is an authorised plan provider if— (a) P has, as plan provider, entered into a regulated home reversion plan relating to the single dwelling interest, and (b) the occupation condition is met on that day. (2) If no qualifying termination event has occurred, the “occupation condition” is that a person who was originally entitled to occupy the dwelling (or any part of it) under the regulated home reversion plan is still entitled to do so. (3) If a qualifying termination event has occurred, the “occupation condition” is that— (a) the single dwelling interest is being held with the intention that it will be sold without delay (except so far as delay is justified by commercial considerations or cannot be avoided), and (b) no non-qualifying individual is permitted to occupy the dwelling (or any part of it). (4) In this section— - “authorised plan provider” means a person authorised under the Financial Services and Markets Act 2000 to carry on in the United Kingdom the regulated activity specified in article 63B(1) of the Regulated Activities Order (entering into regulated home reversion plan as plan provider); - “qualifying termination event” is to be interpreted in accordance with article 63B of the Regulated Activities Order; - “the Regulated Activities Order” means the Financial Services and Markets (Regulated Activities) Order 2001 (S.I. 2001/544); - “regulated home reversion plan” means an arrangement which is a regulated home reversion plan for the purposes of Chapter 15A of Part 2 of the Regulated Activities Order (but see also subsection (6)). (5) In this section references to entering into a regulated home reversion plan “as plan provider” are to be interpreted as if the references were in the Regulated Activities Order (but see also subsection (6)). (6) For the purposes of this section— (a) an arrangement which P entered into before 6 April 2007 is treated for the purposes of this section as a regulated home reversion plan entered into by P as plan provider if that arrangement would have been so treated for the purposes of article 63B(1) of the Regulated Activities Order had P entered into that arrangement on the day mentioned in subsection (1); (b) an arrangement in relation to which P acquired rights or obligations before 6 April 2007 is treated for the purposes of this section as a regulated home reversion plan entered into by P as plan provider if that arrangement would have been so treated for the purposes of article 63B(1) of the Regulated Activities Order had P acquired those rights or obligations on the day mentioned in subsection (1). (7) Section 136 (meaning of “non-qualifying individual”) applies in relation to this section as in relation to sections 133 and 135.

• (3) In section 116 (dwelling in grounds of another dwelling), in the list in subsection (6), at the appropriate place insert— “ section 144A (regulated home reversion plans); ”.

• (4) In section 117 (dwellings in the same building), in the list in subsection (5), at the appropriate place insert— “ section 144A (regulated home reversion plans); ”.

• (5) In section 132 (effect of reliefs under sections 133 to 150), in the list in subsection (3), at the appropriate place insert— “ section 144A (regulated home reversion plans); ”.

• (6) In section 159A (relief declaration returns), in the table in subsection (9), at the appropriate place insert—

144A (regulated home reversion plans)	5A

.

• (7) The amendments made by this section have effect for chargeable periods beginning on or after 1 April 2016.

ATED: properties occupied by certain employees etc

135

• (1) Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows.

• (2) Section 145 (occupation by certain employees or partners) is amended in accordance with subsections (3) to (5).

• (3) In subsection (1)—

• (a) in paragraph (b), after “qualifying trade” insert “ or qualifying property rental business ”;

• (b) in paragraph (d) for “trade” substitute “ qualifying trade or qualifying property rental business ”.

• (4) After subsection (4) insert—

(5) For the meaning of “qualifying property rental business” see section 133(3).

• (5) The heading of that section becomes “ Occupation by employees or partners of a qualifying trade or property rental business ”.

• (6) In section 146 (meaning of “qualifying employee” and “qualifying partner” in section 145)—

• (a) in subsection (1), after “trade” insert “ or property rental business ”;

• (b) in subsection (2)—

• (i) in the words before paragraph (a), after “qualifying trade” insert “ or qualifying property rental business ”, and

• (ii) in paragraph (a)(i), after “trade” insert “ or (as the case may be) property rental business ”.

• (7) After section 147 insert—

(147A) (1) A day in a chargeable period is relievable in relation to a single-dwelling interest if the dwelling in question is a flat in relation to which the conditions in subsection (2) are met. (2) The conditions are that on that day— (a) a company (“the management company”) holds the single-dwelling interest for the purpose of making the flat available as caretaker accommodation, (b) the flat is contained in premises which also contain two or more other flats, (c) the tenants of at least two of the other flats in the premises are members of the management company, (d) the management company owns the freehold of the premises, and (e) the management company is not carrying on a trade or property rental business. (3) For the purposes of subsection (2), the management company makes a flat available “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises. (4) In this section “premises” means premises constituting the whole or part of a building.

• (8) In section 116 (dwelling in grounds of another dwelling), in the list in subsection (6)—

• (a) in the entry relating to section 145, for “certain employees or partners” substitute “ employees or partners of a qualifying trade or property rental business ”;

• (b) at the appropriate place insert— “ section 147A (caretaker flat owned by management company); ”.

• (9) In section 117 (dwellings in the same building), in the list in subsection (5)—

• (a) in the entry relating to section 145, for “certain employees or partners” substitute “ employees or partners of a qualifying trade or property rental business ”;

• (b) at the appropriate place insert— “ section 147A (caretaker flat owned by management company); ”.

• (10) In section 132 (effect of reliefs under sections 133 to 150), in the list in subsection (3)—

• (a) in the entry relating to section 145, for “certain employees or partners” substitute “ employees or partners of a qualifying trade or property rental business ”;

• (b) at the appropriate place insert— “ section 147A (caretaker flat owned by management company); ”.

• (11) In section 159A (relief declaration returns), in the table in subsection (9), in the entry relating to section 145, for “(dwellings used for trade purposes: occupation by certain employees or partners)” substitute “ or 147A (occupation by certain employees etc) ”.

• (12) The amendments made by this section have effect for chargeable periods beginning on or after 1 April 2016.

ATED: alternative property finance - land in Scotland

136

• (1) Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows.

• (2) Section 157 (land sold to financial institution and leased to person) is amended in accordance with subsections (3) to (6).

• (3) In subsection (1)—

• (a) in paragraph (a), omit “or section 72 of that Act (land in Scotland sold to financial institution and leased to person)”;

• (b) in paragraph (b), after “transaction” insert “ is in England, Wales or Northern Ireland and ”.

• (4) In subsection (7)—

• (a) in the definition of “the first transaction” omit “or (as the case requires) 72”;

• (b) in the definition of “the second transaction” omit “or (as the case requires) 72”.

• (5) Omit subsection (10).

• (6) The heading of that section becomes “ Land in England, Wales or Northern Ireland sold to financial institution and leased to person ”.

• (7) After section 157 insert—

(157A) (1) This section applies where Conditions A and B are met. (2) Condition A is that arrangements are entered into between a person (“the lessee”) and a financial institution under which the institution— (a) purchases a major interest in land (“the first transaction”), (b) grants to the lessee out of that interest a lease (if the interest acquired is the interest of the owner) or a sub-lease (if the interest acquired is the tenant's right over or interest in a property subject to a lease) (“the second transaction”), and (c) enters into an agreement under which the lessee has a right to require the institution to transfer the major interest purchased by the institution under the first transaction. (3) Condition B is that the land in which the institution purchases a major interest under the first transaction is in Scotland and consists of or includes one or more dwellings or parts of a dwelling. (4) If the lessee is a company, this Part has effect in relation to times when the arrangements are in operation (see subsection (5)) as if— (a) the interest held by the financial institution as mentioned in subsection (5)(b) were held by the lessee (and not by the financial institution), and (b) the lease or sub-lease granted under the second transaction had not been granted. (5) The reference in subsection (4) to times when the arrangements are in operation is to times when— (a) the lessee holds the interest granted to it under the second transaction, and (b) the interest purchased under the first transaction is held by a financial institution. (6) A company treated under subsection (4)(a) as holding an interest at a particular time is treated as holding it as a member of a partnership if at the time in question the company holds the interest granted to it under the second transaction as a member of the partnership (and this Part has effect accordingly in relation to the other members of the partnership). (7) In relation to times when the arrangements operate for the benefit of a collective investment scheme (see subsection (8)), this Part has effect as if— (a) the interest held by the financial institution as mentioned in subsection (8)(b) were held by the lessee for the purposes of a collective investment scheme (and were not held by the financial institution), and (b) the lease or sub-lease granted under the second transaction had not been granted. (8) The reference in subsection (7) to times when the arrangements operate for the benefit of a collective investment scheme is to times when— (a) the lessee holds the interest granted to it under the second transaction for the purposes of a collective investment scheme, and (b) the interest purchased under the first transaction is held by a financial institution. (9) In this section “financial institution” has the same meaning as in section 71A of FA 2003 (see section 73BA of that Act). (10) References in this section to a “major interest” in land are to— (a) ownership of land, or (b) the tenant's right over or interest in land subject to a lease. (11) Where the lessee is an individual, references in subsections (7) and (8) to the lessee are to be read, in relation to times after the death of the lessee, as references to the lessee's personal representatives.

• (8) The amendments made by this section have effect for chargeable periods beginning on or after 1 April 2016.

PART 9 — Other taxes and duties

Stamp duty and stamp duty reserve tax

Stamp duty: acquisition of target company’s share capital

137

• (1) Section 77 of FA 1986 (acquisition of target company's share capital) is amended as follows.

• (2) In subsection (3), omit the “and” at the end of paragraph (g) and after paragraph (h) insert

, and (i) at the time the instrument mentioned in subsection (1) is executed there are no disqualifying arrangements, within the meaning given by section 77A, in existence.

• (3) In subsection (3A) for “(3)” substitute “ (3)(b) to (h) ”.

• (4) In subsection (4) after “this section” insert “ and section 77A ”.

• (5) After section 77 of FA 1986 insert—

(77A) (1) This section applies for the purposes of section 77(3)(i). (2) Arrangements are “disqualifying arrangements” if it is reasonable to assume that the purpose, or one of the purposes, of the arrangements is to secure that— (a) a particular person obtains control of the acquiring company, or (b) particular persons together obtain control of that company. (3) But neither of the following are disqualifying arrangements— (a) the arrangements for the issue of shares in the acquiring company which is the consideration for the acquisition mentioned in section 77(3); (b) any relevant merger arrangements. (4) In subsection (3) “relevant merger arrangements” means arrangements for the issue of shares in the acquiring company to the shareholders of a company (“company B”) other than the target company (“company A”) in a case where— (a) that issue of shares to the shareholders of company B would be the only consideration for the acquisition by the acquiring company of the whole of the issued share capital of company B, (b) the conditions in section 77(3)(c) and (e) would be met in relation to that acquisition (if that acquisition were made in accordance with the arrangements), and (c) the conditions in paragraphs (f) to (h) of section 77(3) would be met in relation to that acquisition if— (i) that acquisition were made in accordance with the arrangements, and (ii) the shares in the acquiring company issued as consideration for the acquisition of the share capital of company A were ignored for the purposes of those paragraphs; and in section 77(3)(e) to (h) and (3A) as they apply by virtue of this subsection, references to the target company are to be read as references to company B. (5) Where— (a) arrangements within any paragraph of subsection (3) are part of a wider scheme or arrangement, and (b) that scheme or arrangement includes other arrangements which— (i) fall within subsection (2), and (ii) do not fall within any paragraph of subsection (3), those other arrangements are disqualifying arrangements despite anything in subsection (3). (6) In this section— - “the acquiring company” has the meaning given by section 77(1); - “arrangements” includes any agreement, understanding or scheme (whether or not legally enforceable); - “control” is to be read in accordance with section 1124 of the Corporation Tax Act 2010; - “the target company” has the meaning given by section 77(1).

• (6) The amendments made by this section have effect in relation to any instrument executed on or after 29 June 2016 (and references to arrangements in any provision inserted by this section include arrangements entered into before that date).

Stamp duty: transfers to depositaries or providers of clearance services

138

• (1) Part 3 of FA 1986 (stamp duty) is amended as follows.

• (2) In section 67 (depositary receipts)—

• (a) in subsection (2), for the words from “1.5% of” to the end substitute

1.5% of— (a) the amount or value of the consideration for the sale to which the instrument gives effect, or (b) where subsection (2A) applies— (i) the amount or value of the consideration for the sale to which the instrument gives effect, or (ii) if higher, the value of the securities at the date the instrument is executed.

,

• (b) after subsection (2) insert—

(2A) This subsection applies where the instrument transferring the securities is executed pursuant to— (a) the exercise of an option to buy or to sell the securities, and (b) either— (i) a term of the option which provides for the securities to be transferred to the person falling within subsection (6), (7) or (8), or (ii) a direction, given by or on behalf of the person entitled or bound to acquire the securities pursuant to the exercise of the option, for the securities to be so transferred.

, and

• (c) in subsection (3), for “In any other case” substitute “ If stamp duty is not chargeable on the instrument under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) ”.

• (3) In section 69 (depositary receipts: supplementary), in subsection (4), for “section 67(3)” substitute “ section 67(2)(b)(ii) and (3) ”.

• (4) In section 70 (clearance services)—

• (a) in subsection (2), for the words from “1.5% of” to the end substitute

1.5% of— (a) the amount or value of the consideration for the sale to which the instrument gives effect, or (b) where subsection (2A) applies— (i) the amount or value of the consideration for the sale to which the instrument gives effect, or (ii) if higher, the value of the securities at the date the instrument is executed.

,

• (b) after subsection (2) insert—

(2A) This subsection applies where the instrument transferring the securities is executed pursuant to— (a) the exercise of an option to buy or to sell the securities, and (b) either— (i) a term of the option which provides for the securities to be transferred to the person falling within subsection (6), (7) or (8), or (ii) a direction, given by or on behalf of the person entitled or bound to acquire the securities pursuant to the exercise of the option, for the securities to be so transferred.

, and

• (c) in subsection (3), for “In any other case” substitute “ If stamp duty is not chargeable on the instrument under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) ”.

• (5) In section 72 (clearance services: supplementary), in subsection (2), for “section 70(3)” substitute “ section 70(2)(b)(ii) and (3) ”.

• (6) The amendments made by this section have effect in relation to an instrument which transfers securities pursuant to the exercise of an option where—

• (a) the option was granted on or after 25 November 2015, and

• (b) the option was exercised on or after 23 March 2016.

SDRT: transfers to depositaries or providers of clearance services

139

• (1) Part 4 of FA 1986 (stamp duty reserve tax) is amended as follows.

• (2) In section 93 (depositary receipts)—

• (a) in subsection (4)(b), for the words from “worth,” to the end substitute

worth— (i) the amount or value of the consideration, or (ii) where subsection (4A) applies, the amount or value of the consideration or, if higher, the value of the securities;

, and

• (b) after subsection (4) insert—

(4A) This subsection applies where the transfer of the securities is pursuant to— (a) the exercise of an option to buy or to sell the securities, and (b) either— (i) a term of the option which provides for the securities to be transferred to the person falling within subsection (2) or (3), or (ii) a direction, given by or on behalf of the person entitled or bound to acquire the securities pursuant to the exercise of the option, for the securities to be so transferred.

• (3) In section 94 (depositary receipts: supplementary), in subsection (4), for “section 93(4)(c)” substitute “ section 93(4)(b)(ii) and (c) ”.

• (4) In section 96 (clearance services)—

• (a) in subsection (2)(b), for the words from “worth,” to the end substitute

worth— (i) the amount or value of the consideration, or (ii) where subsection (2A) applies, the amount or value of the consideration or, if higher, the value of the securities;

,

• (b) after subsection (2) insert—

(2A) This subsection applies where the transfer of the securities is pursuant to— (a) the exercise of an option to buy or to sell the securities, and (b) either— (i) a term of the option which provides for the securities to be transferred to A or (as the case may be) to the person whose business is or includes holding chargeable securities as nominee for A, or (ii) a direction, given by or on behalf of the person entitled or bound to acquire the securities pursuant to the exercise of the option, for the securities to be so transferred.

, and

• (c) in subsection (10), for “subsection (2)(c)” substitute “ subsection (2)(b)(ii) and (c) ”.

• (5) The amendments made by this section have effect in relation to a transfer pursuant to the exercise of an option where—

• (a) the option was granted on or after 25 November 2015, and

• (b) the option was exercised on or after 23 March 2016.

Petroleum revenue tax

Petroleum revenue tax: rate

140

• (1) In section 1(2) of OTA 1975 (rate of petroleum revenue tax) for “35” substitute “ 0 ”.

• (2) In paragraph 17 of Schedule 2 to that Act (cap on interest on repayments of tax), in sub-paragraph (5)(b) omit the words from “if that” to the end.

• (3) In paragraph 2 of Schedule 19 to FA 1982 (duty to pay instalments based on amount of tax payable in previous chargeable period), after sub-paragraph (4) insert—

(4A) In sub-paragraph (1) the reference to any chargeable period for an oil field ending on or after 30th June 1983 does not include a chargeable period ending on 31st December 2015.

• (4) The amendment made by subsection (1) has effect with respect to chargeable periods ending after 31 December 2015.

Insurance premium tax

Insurance premium tax: standard rate

141

• (1) In section 51(2)(b) of FA 1994 (standard rate of insurance premium tax), for “9.5 per cent” substitute “ 10 per cent ”.

• (2) The amendment made by subsection (1) has effect in relation to a premium falling to be regarded for the purposes of Part 3 of FA 1994 as received under a taxable insurance contract by an insurer on or after 1 October 2016.

• (3) The amendment made by subsection (1) does not have effect in relation to a premium which—

• (a) is in respect of a contract made before 1 October 2016, and

• (b) falls to be regarded for the purposes of Part 3 of FA 1994 as received under the contract by the insurer before 1 February 2017 by virtue of regulations under section 68 of that Act (special accounting schemes).

• (4) Subsection (3) does not apply in relation to a premium which—

• (a) is an additional premium under a contract,

• (b) falls to be regarded for the purposes of Part 3 of FA 1994 as received under the contract by the insurer on or after 1 October 2016 by virtue of regulations under section 68 of that Act, and

• (c) is in respect of a risk which was not covered by the contract before that date.

• (5) In the application of sections 67A to 67C of FA 1994 (announced increase in rate) in relation to the increase made by this section—

• (a) the announcement for the purposes of sections 67A(1) and 67B(1) is to be taken to have been made on 16 March 2016,

• (b) the date of the change is 1 October 2016, and

• (c) the concessionary date is 1 February 2017.

Landfill tax

Landfill tax: rates from 1 April 2017

142

• (1) Section 42 of FA 1996 (amount of landfill tax) is amended as follows.

• (2) In subsection (1)(a) (standard rate), for “£84.40” substitute “ £86.10 ”.

• (3) In subsection (2) (reduced rate for certain disposals)—

• (a) for “£84.40” substitute “ £86.10 ”, and

• (b) for “£2.65” substitute “ £2.70 ”.

• (4) The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2017.

Landfill tax: rates from 1 April 2018

143

• (1) Section 42 of FA 1996 (amount of landfill tax) (as amended by section 142) is amended as follows.

• (2) In subsection (1)(a) (standard rate), for “£86.10” substitute “ £88.95 ”.

• (3) In subsection (2) (reduced rate for certain disposals)—

• (a) for “£86.10” substitute “ £88.95 ”, and

• (b) for “£2.70” substitute “ £2.80 ”.

• (4) The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2018.

Climate change levy

CCL: abolition of exemption for electricity from renewable sources

144

• (1) In Schedule 6 to FA 2000 (climate change levy), in paragraph 19(1) (exemption for electricity from renewable sources)—

• (a) in paragraph (c), omit the final “and”;

• (b) after paragraph (d) insert

, and (e) the electricity is actually supplied before 1 April 2018.

• (2) In that Schedule omit the following—

• (a) in paragraph 5(3), “20(6)(a),”;

• (b) paragraphs 19 and 20;

• (c) paragraph 24(2).

• (3) The repeals made by subsection (2) come into force on the day appointed by the Treasury by regulations made by statutory instrument.

CCL: main rates from 1 April 2017

145

• (1) In paragraph 42(1) of Schedule 6 to FA 2000 (climate change levy: amount payable by way of levy) for the table substitute—

Taxable commodity supplied	Rate at which levy payable if supply is not a reduced-rate supply
Electricity	£0.00568 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00198 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.01272 per kilogram
Any other taxable commodity	£0.01551 per kilogram

.

• (2) The amendment made by this section has effect in relation to supplies treated as taking place on or after 1 April 2017.

CCL: main rates from 1 April 2018

146

• (1) In paragraph 42(1) of Schedule 6 to FA 2000 (climate change levy: amount payable by way of levy) for the table substitute—

Taxable commodity supplied	Rate at which levy payable if supply is not a reduced-rate supply
Electricity	£0.00583 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00203 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.01304 per kilogram
Any other taxable commodity	£0.01591 per kilogram

.

• (2) The amendment made by this section has effect in relation to supplies treated as taking place on or after 1 April 2018.

CCL: main rates from 1 April 2019

147

• (1) In paragraph 42(1) of Schedule 6 to FA 2000 (climate change levy: amount payable by way of levy) for the table substitute—

Taxable commodity supplied	Rate at which levy payable if supply is not a reduced-rate supply
Electricity	£0.00847 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00339 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.02175 per kilogram
Any other taxable commodity	£0.02653 per kilogram

.

• (2) The amendment made by this section has effect in relation to supplies treated as taking place on or after 1 April 2019.

CCL: reduced rates from 1 April 2019

148

• (1) In paragraph 42(1) of Schedule 6 to FA 2000 (climate change levy: amount payable by way of levy)—

• (a) in paragraph (ba) (reduced-rate supplies of electricity), for “10” substitute “ 7 ”;

• (b) in paragraph (c) (other reduced-rate supplies), for “35” substitute “ 22 ”.

• (2) The amendments made by this section have effect in relation to supplies treated as taking place on or after 1 April 2019.

Air passenger duty

APD: rates from 1 April 2016

149

• (1) In section 30 of FA 1994 (air passenger duty: rates of duty) in subsection (4A) (long haul rates of duty)—

• (a) in paragraph (a), for “£71” substitute “ £73 ”, and

• (b) in paragraph (b), for “£142” substitute “ £146 ”.

• (2) The amendments made by this section have effect in relation to the carriage of passengers beginning on or after 1 April 2016.

Vehicle excise duty

VED: rates for light passenger vehicles, light goods vehicles, motorcycles etc

150

• (1) Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.

• (2) In paragraph 1(2) (vehicle not covered elsewhere in Schedule with engine cylinder capacity exceeding 1,549cc), for “£230” substitute “ £235 ”.

• (3) In paragraph 1B (graduated rates of duty for light passenger vehicles)—

• (a) for the tables substitute—

CO₂ emissions figure	CO₂ emissions figure	Rate	Rate
(1)	(2)	(3)	(4)
Exceeding	Not exceeding	Reduced rate	Standard rate
g/km	g/km	£	£
130	140	120	130
140	150	135	145
150	165	175	185
165	175	290	300
175	185	345	355
185	200	490	500
200	225	640	650
225	255	875	885
255		1110	1120
CO₂ emissions figure	CO₂ emissions figure	Rate	Rate
---	---	---	---
(1)	(2)	(3)	(4)
Exceeding	Not exceeding	Reduced rate	Standard rate
g/km	g/km	£	£
100	110	10	20
110	120	20	30
120	130	100	110
130	140	120	130
140	150	135	145
150	165	175	185
165	175	200	210
175	185	220	230
185	200	260	270
200	225	285	295
225	255	490	500
255		505	515”;

• (b) in the sentence immediately following the tables, for paragraphs (a) and (b) substitute—

(a) in column (3), in the last two rows, “285” were substituted for “490” and “ 505 ”, and (b) in column (4), in the last two rows, “295” were substituted for “500” and “ 515 ”.

• (4) In paragraph 1J (VED rates for light goods vehicles), in paragraph (a), for “£225” substitute “ £230 ”.

• (5) In paragraph 2(1) (VED rates for motorcycles)—

• (a) in paragraph (b), for “£38” substitute “ £39 ”,

• (b) in paragraph (c), for “£59” substitute “ £60 ”, and

• (c) in paragraph (d), for “£81” substitute “ £82 ”.

• (6) The amendments made by this section have effect in relation to licences taken out on or after 1 April 2016.

VED: extension of old vehicles exemption from 1 April 2017

151

• (1) Paragraph 1A of Schedule 2 to VERA 1994 (exemption for old vehicles) is amended as follows.

• (2) In sub-paragraph (1) for the words from “if” to the end substitute “ during the period of 12 months beginning with 1 April in any year if it was constructed more than 40 years before 1 January in that year. ”

• (3) After that sub-paragraph insert—

(1A) But nothing in sub-paragraph (1) has the effect that a nil licence is required to be in force in respect of a vehicle while a vehicle licence is in force in respect of it.

• (4) The amendments made by this section come into force on 1 April 2017.

Other excise duties

Gaming duty: rates

152

• (1) In section 11(2) of FA 1997 (rates of gaming duty), for the table substitute—

Part of gross gaming yield	Rate
The first £2,370,500	15 per cent
The next £1,634,000	20 per cent
The next £2,861,500	30 per cent
The next £6,040,000	40 per cent
The remainder	50 per cent

.

• (2) The amendment made by this section has effect in relation to accounting periods beginning on or after 1 April 2016.

Fuel duties: aqua methanol etc

153

• (1) Schedule 17 contains provision relating to fuel duties.

• (2) Part 1 of the Schedule provides for charging excise duty on aqua methanol.

• (3) Part 2 of the Schedule contains miscellaneous amendments.

• (4) Part 3 of the Schedule makes provision about commencement.

Tobacco products duty: rates

154

• (1) For the table in Schedule 1 to TPDA 1979 substitute—

1. Cigarettes	An amount equal to 16.5% of the retail price plus £196.42 per thousand cigarettes
2. Cigars	£245.01 per kilogram
3. Hand-rolling tobacco	£198.10 per kilogram
4. Other smoking tobacco and chewing tobacco	£107.71 per kilogram

.

• (2) The amendment made by this section is treated as having come into force at 6pm on 16 March 2016.

Alcoholic liquor duties: rates

155

• (1) ALDA 1979 is amended as follows.

• (2) In section 62(1A)(a) (rate of duty on sparkling cider of a strength exceeding 5.5%) for “£264.61” substitute “ £268.99 ”.

• (3) For Part 1 of the table in Schedule 1 substitute—

Description of wine or made-wine	Rates of duty per hectolitre £
Wine or made-wine of a strength not exceeding 4%	£85.60
Wine or made-wine of a strength exceeding 4% but not exceeding 5.5%	£117.72
Wine or made-wine of a strength exceeding 5.5% but not exceeding 15% and not being sparkling	£277.84
Sparkling wine or sparkling made-wine of a strength exceeding 5.5% but less than 8.5%	£268.99
Sparkling wine or sparkling made-wine of a strength of at least 8.5% but not exceeding 15%	£355.87
Wine or made-wine of a strength exceeding 15% but not exceeding 22%	£370.41

.

• (4) The amendments made by this section are treated as having come into force on 21 March 2016.

PART 10 — Tax avoidance and evasion

General anti-abuse rule

General anti-abuse rule: provisional counteractions

156

• (1) In Part 5 of FA 2013 (general anti-abuse rule), after section 209 insert—

(209A) (1) Adjustments made by an officer of Revenue and Customs which— (a) are specified in a provisional counteraction notice given to a person by the officer (and have not been cancelled: see sections 209B to 209E), (b) are made in respect of a tax advantage that would (ignoring this Part) arise from tax arrangements that are abusive, and (c) but for section 209(6)(a), would have effected a valid counteraction of that tax advantage under section 209, are treated for all purposes as effecting a valid counteraction of the tax advantage under that section. (2) A “provisional counteraction notice” is a notice which— (a) specifies adjustments (the “notified adjustments”) which the officer reasonably believes may be required under section 209(1) to counteract a tax advantage that would (ignoring this Part) arise to the person from tax arrangements; (b) specifies the arrangements and the tax advantage concerned, and (c) notifies the person of the person's rights of appeal with respect to the notified adjustments (when made) and contains a statement that if an appeal is made against the making of the adjustments— (i) no steps may be taken in relation to the appeal unless and until the person is given a notice referred to in section 209F(2), and (ii) the notified adjustments will be cancelled if HMRC fails to take at least one of the actions mentioned in section 209B(4) within the period specified in section 209B(2). (3) It does not matter whether the notice is given before or at the same time as the making of the adjustments. (4) In this section “adjustments” includes adjustments made in any way permitted by section 209(5). (209B) (1) This section applies where a person (the “taxpayer”) to whom a provisional counteraction notice has been given appeals against the making of the notified adjustments. (2) The notified adjustments are to be treated as cancelled with effect from the end of the period of 12 months beginning with the day on which the provisional counteraction notice is given unless an action mentioned in subsection (4) is taken before that time. (3) For the purposes of subsection (2) it does not matter whether the action mentioned in subsection (4)(c), (d) or (e) is taken before or after the provisional counteraction notice is given (but if that action is taken before the provisional counteraction notice is given subsection (5) does not have effect). (4) The actions are— (a) an officer of Revenue and Customs notifying the taxpayer that the notified adjustments are cancelled; (b) an officer of Revenue and Customs giving the taxpayer written notice of the withdrawal of the provisional counteraction notice (without cancelling the notified adjustments); (c) a designated HMRC officer giving the taxpayer a notice under paragraph 3 of Schedule 43 which— (i) specifies the arrangements and the tax advantage which are specified in the provisional counteraction notice, and (ii) specifies the notified adjustments (or lesser adjustments) as the counteraction that the officer considers ought to be taken (see paragraph 3(2)(c) of that Schedule); (d) a designated HMRC officer giving the taxpayer a pooling notice or a notice of binding under Schedule 43A which— (i) specifies the arrangements and the tax advantage which are specified in the provisional counteraction notice, and (ii) specifies the notified adjustments (or lesser adjustments) as the counteraction that the officer considers ought to be taken; (e) a designated HMRC officer giving the taxpayer a notice under paragraph 1(2) of Schedule 43B which— (i) specifies the arrangements and the tax advantage which are specified in the provisional counteraction notice, and (ii) specifies the notified adjustments (or lesser adjustments) as the counteraction that the officer considers ought to be taken. (5) In a case within subsection (4)(c), (d) or (e), if— (a) the notice under paragraph 3 of Schedule 43, or (b) the pooling notice or notice of binding, or (c) the notice under paragraph 1(2) of Schedule 43B, (as the case may be) specifies lesser adjustments the officer must modify the notified adjustments accordingly. (6) The officer may not take the action in subsection (4)(b) unless the officer was authorised to make the notified adjustments otherwise than under this Part. (7) In this section “lesser adjustments” means adjustments which assume a smaller tax advantage than was assumed in the provisional counteraction notice. (209C) (1) This section applies if the action in section 209B(4)(c) (notice to taxpayer of proposed counteraction of tax advantage) is taken. (2) If the matter is not referred to the GAAR Advisory Panel, the notified adjustments are to be treated as cancelled with effect from the date of the designated HMRC officer's decision under paragraph 6(2) of Schedule 43 unless the notice under paragraph 6(3) of Schedule 43 states that the adjustments are not to be treated as cancelled under this section. (3) A notice under paragraph 6(3) of Schedule 43 may not contain the statement referred to in subsection (2) unless HMRC would have been authorised to make the adjustments if the general anti-abuse rule did not have effect. (4) If the taxpayer is given a notice under paragraph 12 of Schedule 43 which states that the specified tax advantage is not to be counteracted under the general anti-abuse rule, the notified adjustments are to be treated as cancelled unless that notice states that those adjustments are not to be treated as cancelled under this section. (5) A notice under paragraph 12 of Schedule 43 may not contain the statement referred to in subsection (4) unless HMRC would have been authorised to make the adjustments if the general anti-abuse rule did not have effect. (6) If the taxpayer is given a notice under paragraph 12 of Schedule 43 stating that the specified tax advantage is to be counteracted— (a) the notified adjustments are confirmed only so far as they are specified in that notice as adjustments required to give effect to the counteraction, and (b) so far as they are not confirmed, the notified adjustments are to be treated as cancelled. (209D) (1) This section applies if the action in section 209B(4)(d) (pooling notice or notice of binding) is taken. (2) If the taxpayer is given a notice under paragraph 8(2) or 9(2) of Schedule 43A which states that the specified tax advantage is not to be counteracted under the general anti-abuse rule, the notified adjustments are to be treated as cancelled, unless that notice states that those adjustments are not to be treated as cancelled under this section. (3) A notice under paragraph 8(2) or 9(2) of Schedule 43A may not contain the statement referred to in subsection (2) unless HMRC would have been authorised to make the adjustments if the general anti-abuse rule did not have effect. (4) If the taxpayer is given a notice under paragraph 8(2) or 9(2) of Schedule 43A stating that the specified tax advantage is to be counteracted— (a) the notified adjustments are confirmed only so far as they are specified in that notice as adjustments required to give effect to the counteraction, and (b) so far as they are not confirmed, the notified adjustments are to be treated as cancelled. (209E) (1) This section applies if the action in section 209B(4)(e) (notice of proposal to make generic referral) is taken. (2) If the notice under paragraph 1(2) of Schedule 43B is withdrawn, the notified adjustments are to be treated as cancelled unless the notice of withdrawal states that the adjustments are not to be treated as cancelled under this section. (3) The notice of withdrawal may not contain the statement referred to in subsection (2) unless HMRC was authorised to make the notified adjustments otherwise than under this Part. (4) If the taxpayer is given a notice under paragraph 8(2) of Schedule 43B, which states that the specified tax advantage is not to be counteracted under the general anti-abuse rule, the notified adjustments are to be treated as cancelled, unless that notice states that those adjustments are not to be treated as cancelled under this section. (5) A notice under paragraph 8(2) of Schedule 43B may not contain the statement referred to in subsection (4) unless HMRC was authorised to make the adjustments otherwise than under this Part. (6) If the taxpayer is given a notice under paragraph 8(2) of Schedule 43B stating that the specified tax advantage is to be counteracted— (a) the notified adjustments are confirmed only so far as they are specified in that notice as adjustments required to give effect to the counteraction, and (b) so far as they are not confirmed, the notified adjustments are to be treated as cancelled. (209F) (1) Subsections (2) to (5) have effect in relation to an appeal by a person (“the taxpayer”) against the making of adjustments which are specified in a provisional counteraction notice. (2) No steps after the initial notice of appeal are to be taken in relation to the appeal unless and until the taxpayer is given— (a) a notice under section 209B(4)(b), (b) a notice under paragraph 6(3) of Schedule 43 (notice of decision not to refer matter to GAAR advisory panel) containing the statement described in section 209C(2) (statement that adjustments are not to be treated as cancelled), (c) a notice under paragraph 12 of Schedule 43, (d) a notice under paragraph 8(2) or 9(2) of Schedule 43A, or (e) a notice under paragraph 8 of Schedule 43B, in respect of the tax arrangements concerned. (3) The taxpayer has until the end of the period mentioned in subsection (4) to comply with any requirement to specify the grounds of appeal. (4) The period mentioned in subsection (3) is the 30 days beginning with the day on which the taxpayer receives the notice mentioned in subsection (2). (5) In subsection (2) the reference to “steps” does not include the withdrawal of the appeal.

• (2) In section 214(1) of FA 2013 (interpretation of Part 5), at the appropriate place insert—

“notified adjustments”, in relation to a provisional counteraction notice, has the meaning given by section 209A(2);

“provisional counteraction notice” has the meaning given by section 209A(2);

.

• (3) The amendments made by this section have effect in relation to tax arrangements (within the meaning of Part 5 of FA 2013) entered into at any time (whether before or on or after the day on which this Act is passed).

General anti-abuse rule: binding of tax arrangements to lead arrangements

157

• (1) Part 5 of FA 2013 (general anti-abuse rule) is amended in accordance with subsections (2) to (11).

• (2) After Schedule 43 insert—

SCHEDULE 43A (1) (1) This paragraph applies where a person has been given a notice under paragraph 3 of Schedule 43 in relation to any tax arrangements (the “lead arrangements”) and the condition in sub-paragraph (2) is met. (2) The condition is that the period of 45 days mentioned in paragraph 4(1) of Schedule 43 has expired but no notice under paragraph 12 of Schedule 43 or paragraph 8 of Schedule 43B has yet been given in respect of the matter. (3) If a designated HMRC officer considers— (a) that a tax advantage has arisen to another person (“R”) from tax arrangements that are abusive, (b) that those tax arrangements (“R's arrangements”) are equivalent to the lead arrangements, and (c) that the advantage ought to be counteracted under section 209, the officer may give R a notice (a “pooling notice”) which places R's arrangements in a pool with the lead arrangements. (4) There is one pool for any lead arrangements, so all tax arrangements placed in a pool with the lead arrangements (as well as the lead arrangements themselves) are in one and the same pool. (5) Tax arrangements which have been placed in a pool do not cease to be in the pool except where that is expressly provided for by this Schedule (regardless of whether or not the lead arrangements or any other tax arrangements remain in the pool). (6) The officer may not give R a pooling notice if R has been given in respect of R's arrangements a notice under paragraph 3 of Schedule 43. (2) (1) This paragraph applies where a counteraction notice has been given to a person in relation to any tax arrangements (the “counteracted arrangements”) which are in a pool created under paragraph 1. (2) If a designated HMRC officer considers— (a) that a tax advantage has arisen to another person (“R”) from tax arrangements that are abusive, (b) that those tax arrangements (“R's arrangements”) are equivalent to the counteracted arrangements, and (c) that the advantage ought to be counteracted under section 209, the officer may give R a notice (a “notice of binding”) in relation to R's arrangements. (3) The officer may not give R a notice of binding if R has been given in respect of R's arrangements a notice under— (a) paragraph 1, or (b) paragraph 3 of Schedule 43. (4) In this paragraph “counteraction notice” means a notice such as is mentioned in sub-paragraph (2) of paragraph 12 of Schedule 43 or sub-paragraph (3) of paragraph 8 of Schedule 43B (notice of final decision to counteract). (3) (1) The decision whether or not to give R a pooling notice or notice of binding must be taken, and any notice must be given, as soon as is reasonably practicable after HMRC becomes aware of the relevant facts. (2) A pooling notice or notice of binding must— (a) specify the tax arrangements in relation to which the notice is given and the tax advantage, (b) explain why the officer considers R's arrangements to be equivalent to the lead arrangements or the counteracted arrangements (as the case may be), (c) explain why the officer considers that a tax advantage has arisen to R from tax arrangements that are abusive, (d) set out the counteraction that the officer considers ought to be taken, and (e) explain the effect of— (i) paragraphs 4 to 10, (ii) subsection (9) of section 209, and (iii) section 212A. (3) A pooling notice or notice of binding may set out steps that R may (subject to subsection (9) of section 209) take to avoid the proposed counteraction. (4) (1) If a person to whom a pooling notice or notice of binding has been given takes the relevant corrective action in relation to the tax arrangements and tax advantage specified in the notice before the beginning of the closed period mentioned in section 209(9), the person is to be treated for the purposes of paragraphs 8 and 9 and Schedule 43B (generic referral of tax arrangements) as not having been given the notice in question (and accordingly the tax arrangements in question are no longer in the pool). (2) For the purposes of this Schedule the “relevant corrective action” is taken if (and only if) the person takes the steps set out in sub-paragraphs (3) and (4). (3) The first step is that— (a) the person amends a return or claim to counteract the tax advantage specified in the pooling notice or notice of binding, or (b) if the person has made a tax appeal (by notifying HMRC or otherwise) on the basis that the tax advantage specified in the pooling notice or notice of binding arises from the tax arrangements specified in that notice, the person takes all necessary action to enter into an agreement with HMRC (in writing) for the purpose of relinquishing that advantage. (4) The second step is that the person notifies HMRC— (a) that the first step has been taken, and (b) of any additional amount which has or will become due and payable in respect of tax by reason of the first step being taken. (5) Where a person takes the first step described in sub-paragraph (3)(b), HMRC may proceed as if the person had not taken the relevant corrective action if the person fails to enter into the written agreement. (6) In determining the additional amount which has or will become due and payable in respect of tax for the purposes of sub-paragraph (4)(b), it is to be assumed that, where the person takes the necessary action as mentioned in sub-paragraph (3)(b), the agreement is then entered into. (7) No enactment limiting the time during which amendments may be made to returns or claims operates to prevent the person taking the first step mentioned in sub-paragraph (3)(a) before the tax enquiry is closed. (8) No appeal may be brought, by virtue of a provision mentioned in sub-paragraph (9), against an amendment made by a closure notice in respect of a tax enquiry to the extent that the amendment takes into account an amendment made by the taxpayer to a return or claim in taking the first step mentioned in sub-paragraph (3)(a). (9) The provisions are— (a) paragraph 35(1)(b) of Schedule 33, (b) section 31(1)(b) or (c) of TMA 1970, (c) paragraph 9 of Schedule 1A to TMA 1970, (d) paragraph 34(3) of Schedule 18 to FA 1998, and (e) paragraph 35(1)(b) of Schedule 10 to FA 2003. (5) If the person mentioned in paragraph 1(1) takes the relevant corrective action (as defined in paragraph 4A of Schedule 43) before the end of the period of 75 days beginning with the day on which the notice mentioned in paragraph 1(1) was given to that person, the lead arrangements are treated as ceasing to be in the pool. (6) (1) Sub-paragraph (2) applies where— (a) a pooling notice is given to a person in relation to any tax arrangements, and (b) an opinion notice (or opinion notices) under paragraph 11(2) of Schedule 43 about another set of tax arrangements in the pool (“the referred arrangements”) is subsequently given to a designated HMRC officer. (2) The officer must give the person a pooled arrangements opinion notice. (3) No more than one pooled arrangements opinion notice may be given to a person in respect of the same tax arrangements. (4) Where a designated HMRC officer gives a person a notice of binding, the officer must, at the same time, give the person a bound arrangements opinion notice. (7) (1) In relation to a person who is, or has been, given a pooling notice, “pooled arrangements opinion notice” means a written notice which— (a) sets out a report prepared by HMRC of any opinion of the GAAR Advisory Panel about the referred arrangements, (b) explains the person's right to make representations falling within sub-paragraph (3), and (c) sets out the period in which those representations may be made. (2) In relation to a person who is given a notice of binding “bound arrangements opinion notice” means a written notice which— (a) sets out a report prepared by HMRC of any opinion of the GAAR Advisory Panel about the counteracted arrangements (see paragraph 2(1)), (b) explains the person's right to make representations falling within sub-paragraph (3), and (c) sets out the period in which those representations may be made. (3) A person who is given a pooled arrangements opinion notice or a bound arrangements opinion notice has 30 days beginning with the day on which the notice is given to make representations in any of the following categories— (a) representations that no tax advantage has arisen to the person from the arrangements to which the notice relates; (b) representations as to why the arrangements to which the notice relates are or may be materially different from— (i) the referred arrangements (in the case of a pooled arrangements opinion notice), or (ii) the counteracted arrangements (in the case of a bound arrangements opinion notice). (4) In sub-paragraph (3)(b) references to “arrangements” include any circumstances which would be relevant in accordance with section 207 to a determination of whether the tax arrangements in question are abusive. (8) (1) This paragraph applies where— (a) any tax arrangements have been placed in a pool by a notice given to a person under paragraph 1, and (b) a designated HMRC officer has given a notice under paragraph 12 of Schedule 43 in relation to any other arrangements in the pool (the “referred arrangements”). (2) The officer must, having considered any opinion of the GAAR Advisory Panel about the referred arrangements and any representations made under paragraph 7(3) in relation to the arrangements mentioned in sub-paragraph (1)(a), give the person a written notice setting out whether the tax advantage arising from those arrangements is to be counteracted under the general anti-abuse rule. (9) (1) This paragraph applies where— (a) a person has been given a notice of binding under paragraph 2, and (b) the period of 30 days for making representations under paragraph 7(3) has expired. (2) A designated HMRC officer must, having considered any opinion of the GAAR Advisory Panel about the counteracted arrangements and any representations made under paragraph 7(3) in relation to the arrangements specified in the notice of binding, give the person a written notice setting out whether the tax advantage arising from the arrangements specified in the notice of binding is to be counteracted under the general anti-abuse rule. (10) If a notice under paragraph 8(2) or 9(2) states that a tax advantage is to be counteracted, it must also set out— (a) the adjustments required to give effect to the counteraction, and (b) if relevant, any steps the person concerned is required to take to give effect to it. (11) (1) For the purposes of paragraph 1, tax arrangements are “equivalent” to one another if they are substantially the same as one another having regard to— (a) their substantive results, (b) the means of achieving those results, and (c) the characteristics on the basis of which it could reasonably be argued, in each case, that the arrangements are abusive tax arrangements under which a tax advantage has arisen to a person. (12) (1) A designated HMRC officer may give a notice, or do anything else, under this Schedule where the officer considers that a tax advantage might have arisen to the person concerned. (2) Accordingly, any notice given by a designated HMRC officer under this Schedule may be expressed to be given on the assumption that a tax advantage does arise (without conceding that it does). (13) (1) The Treasury may by regulations amend this Schedule (apart from this paragraph). (2) Regulations under sub-paragraph (1) may include— (a) any amendment of this Part that is appropriate in consequence of an amendment by virtue of sub-paragraph (1); (b) transitional provision. (3) Regulations under sub-paragraph (1) are to be made by statutory instrument. (4) A statutory instrument containing regulations under sub-paragraph (1) is subject to annulment in pursuance of a resolution of the House of Commons.

• (3) After Schedule 43A insert—