Finance Act 2013

2013 c. 29

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

Enacted[17th July 2013]

Most Gracious Sovereign

WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

PART 1 Income Tax, Corporation Tax and Capital Gains Tax¶

CHAPTER 1 Charges, rates etc¶

Income tax¶

1 Charge for 2013-14¶

Income tax is charged for the tax year 2013-14.

2 Personal allowance for 2013-14 for those born after 5 April 1948¶

1 For the tax year 2013-14 the amount specified in section 35(1) of ITA 2007 (personal allowance for those born after 5 April 1948) is replaced with “ £9,440 ”.

2 Accordingly section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply for that tax year.

3 Basic rate limit for 2013-14¶

1 For the tax year 2013-14 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “ £32,010 ”.

2 Accordingly section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.

Corporation tax¶

4 Charge and main rate for financial year 2014¶

1 Corporation tax is charged for the financial year 2014.

2 For that year the rate of corporation tax is—

a 21% on profits of companies other than ring fence profits, and

b 30% on ring fence profits of companies.

3 In subsection (2) “ring fence profits” has the same meaning as in Part 8 of CTA 2010 (see section 276 of that Act).

5 Small profits rate and fractions for financial year 2013¶

1 For the financial year 2013 the small profits rate is—

a 20% on profits of companies other than ring fence profits, and

b 19% on ring fence profits of companies.

2 For the purposes of Part 3 of CTA 2010, for that year—

a the standard fraction is 3/400ths, and

b the ring fence fraction is 11/400ths.

3 In subsection (1) “ring fence profits” has the same meaning as in Part 8 of that Act (see section 276 of that Act).

6 Main rate for financial year 2015¶

1 For the financial year 2015 the main rate of corporation tax is 20% ^F7....

^F82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital allowances¶

7 Temporary increase in annual investment allowance¶

1 In relation to expenditure incurred during the period beginning with 1 January 2013 and ending with the specified date , section 51A of CAA 2001 (entitlement to annual investment allowance) has effect as if in subsection (5) for “£25,000” there were substituted “ £250,000 ”.

1A The specified date is —

a for the purposes of corporation tax, 31 March 2014, and

b for the purposes of income tax, 5 April 2014.

2 Schedule 1 contains provision about chargeable periods which straddle 1 January 2013 ^F11....

CHAPTER 2 Income tax: general¶

Exemptions and reliefs¶

8 London Anniversary Games¶

1 An accredited competitor who performs an Anniversary Games activity is not liable to income tax in respect of any income arising from the activity if the non-residence condition is met.

2 The following are Anniversary Games activities—

a competing at the Anniversary Games, and

b any activity that is performed during the games period the main purpose of which is to support or promote the Anniversary Games.

3 The non-residence condition is that—

a the accredited competitor is non-UK resident for the tax year 2013-14, or

b the accredited competitor is UK resident for the tax year 2013-14 but the year is a split year as respects the competitor and the activity is performed in the overseas part of the year.

4 Section 966 of ITA 2007 (deduction of sums representing income tax) does not apply to any payment or transfer which gives rise to income benefiting from the exemption under subsection (1).

5 In this section—

“accredited competitor” means a person to whom an accreditation card in the athletes' category has been issued by the company named UK Athletics Limited which was incorporated on 16 December 1998;
“the Anniversary Games” means the British Athletics London Anniversary Games held at the Olympic Stadium in London in July 2013;
“the games period” means the period—
1. beginning with 21 July 2013, and
2. ending with 29 July 2013;
“income” means employment income or profits of a trade, profession or vocation (including profits treated as arising as a result of section 13 of ITTOIA 2005).

6 This section is treated as having come into force on 6 April 2013.

9 Glasgow Commonwealth Games¶

1 An accredited competitor who performs a Commonwealth Games activity is not liable to income tax in respect of any income arising from the activity if the non-residence condition is met.

2 The following are Commonwealth Games activities—

a competing at the Glasgow Commonwealth Games, and

b any activity that is performed during the games period the main purpose of which is to support or promote the Glasgow Commonwealth Games or any future Commonwealth Games.

3 The non-residence condition is that—

a the accredited competitor is non-UK resident for the tax year in which the Commonwealth Games activity is performed, or

b the accredited competitor is UK resident for the tax year in which the activity is performed but the year is a split year as respects the competitor and the activity is performed in the overseas part of the year.

4 Section 966 of ITA 2007 (deduction of sums representing income tax) does not apply to any payment or transfer which gives rise to income benefiting from the exemption under subsection (1).

5 In this section—

“accredited competitor” means a person to whom a Glasgow 2014 accreditation card in the athletes' category has been issued by the company named Glasgow 2014 Limited which was incorporated on 11 June 2007;
“the games period” means the period—
1. beginning with 4 March 2014, and
2. ending with 3 September 2014;
“the Glasgow Commonwealth Games” means the Commonwealth Games held in Scotland in 2014;
“income” means employment income or profits of a trade, profession or vocation (including profits treated as arising as a result of section 13 of ITTOIA 2005).

10 Expenses of elected representatives¶

1 After section 293A of ITEPA 2003 insert—

293B UK travel expenses of other elected representatives

1 No liability to income tax arises in respect of a payment to which this section applies if it is expressed to be made in respect of relevant UK travel expenses.

2 This section applies to payments—

a made to members of the Scottish Parliament under section 81(2) of the Scotland Act 1998,

b made to members of the National Assembly for Wales under section 20(2) of the Government of Wales Act 2006 or to a member of the Welsh Assembly Government under section 53(2) of that Act, or

c made to members of the Northern Ireland Assembly under section 47(2) of the Northern Ireland Act 1998.

3 In this section “relevant UK travel expenses” means expenses necessarily incurred on journeys of the following kinds within the United Kingdom—

a journeys within subsection (4) made by the member that are necessary for the performance of his or her duties as a member;

b if the member shares caring responsibilities with a spouse or partner, journeys made by the spouse or partner between the constituency or region and the member's parliamentary home.

4 The journeys referred to in subsection (3)(a) are those—

a between the constituency or region and the Parliament or Assembly to which the member belongs,

b between the constituency or region and the member's parliamentary home, or

c within the constituency or region, but not excluded by subsection (5).

5 A journey is excluded if—

a in the case of a member who has only one local office, it is between the member's local home and that office, and

b in any other case, it is between the member's local home and the principal local office.

6 In this section—

“constituency or region”, in relation to a member, means the constituency or region which the member represents and the area within 20 miles of the boundary of that constituency or region;
“local office”, in relation to a member, means an office which is situated in the constituency or region and occupied by the member for the purposes of performing duties as a member;
“the member's local home” means a residence of the member situated in the constituency or region;
“the member's parliamentary home” means the member's only or main residence in the area comprising—
1. the main site of the Parliament or Assembly to which the member belongs, and
2. the area within 20 miles of that site;
“principal local office”, in relation to a member, means the local office most frequently occupied by the member for the purposes of performing duties as a member.

7 A person has “caring responsibilities” if the person—

a has parental responsibility for a dependent child aged under 17 or for a child aged 17 or 18 who is in full-time education, or

b is the primary carer for a family member in receipt of—

i attendance allowance,

ii disability living allowance at the middle or highest rate for personal care,

iii the daily living component of personal independence payment, or

iv constant attendance allowance at or above the maximum rate with an industrial injuries disablement benefit, or the basic (full day) rate with a war disablement pension.

8 The Treasury may by order amend the definition of “caring responsibilities” in subsection (7).

2 The amendment made by this section has effect in relation to payments made on or after 6 April 2013.

11 Exemption from income tax of contributions to pension schemes¶

1 In Chapter 9 of Part 4 of ITEPA 2003 (exemptions from income tax for pension provision), in section 308 (exemption of contributions to registered pension scheme), at the end insert “ in respect of the employee ”.

2 The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.

12 Childcare exemptions: meaning of disabled child¶

1 In section 318B of ITEPA 2003 (childcare: meaning of “disabled” etc), in subsection (3)(a), after “allowance” insert “ or personal independence payment ”.

2 The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.

13 Income tax exemption for universal credit¶

1 In section 677(1) of ITEPA 2003 (UK social security benefits wholly exempt from tax), in Part 1 of Table B (benefits payable under primary legislation), insert at the appropriate place—

2 The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.

14 Tax advantaged employee share schemes¶

Schedule 2 amends the SIP code, the SAYE code, the CSOP code and the EMI code.

15 Abolition of tax relief for patent royalties¶

1 Chapter 4 of Part 8 of ITA 2007 (reliefs: annual payments and patent royalties) is amended in accordance with subsections (2) and (3).

2 In section 448 (relief for individuals), in subsection (1)(b) omit “or 903(5)” and “and patent royalties”.

3 In section 449 (relief for other persons), in subsection (1)(b) omit “or 903(6)” and “and patent royalties”.

4 Accordingly, that Act is amended as follows—

a in section 2 (overview of Act), in subsection (8)(c) omit “and patent royalties”,

b in section 24 (reliefs deductible at Step 2), in subsection (1)(b) omit “and patent royalties”, and

c in the heading for Chapter 4 of Part 8 of that Act omit “AND PATENT ROYALTIES”.

5 The amendments made by this section have effect in relation to payments made on or after 5 December 2012.

16 Limit on income tax reliefs¶

Schedule 3 contains provision limiting the deductions which may be made at Step 2 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).

Trade profits¶

17 Cash basis for small businesses¶

Schedule 4 contains provision enabling the profits of a trade, profession or vocation to be calculated on the cash basis.

18 Deductions allowable at a fixed rate¶

Schedule 5 contains provision enabling persons carrying on a trade, profession or vocation to claim deductions for certain expenses at a fixed rate.

Other provisions¶

19 Employment income: duties performed in the UK and overseas¶

Schedule 6 contains provision about employment income in cases where duties are performed in the UK and overseas.

20 Remittance basis: exempt property¶

Schedule 7 contains provision about the application of the remittance basis in relation to exempt property.

21 Payments on account¶

1 ITA 2007 is amended as follows.

2 In section 809K (sections 809L to 809Z6: introduction), in subsection (2)(e), for “809V” substitute “ 809UA ”.

3 Before section 809V (but after the italic heading) insert—

809UA Money used for payments on account

1 Subsection (2) applies to income or chargeable gains of an individual if—

a the income or gains would (but for subsection (2)) be regarded as remitted to the United Kingdom by virtue of the bringing of money to the United Kingdom,

b the money is brought to the United Kingdom by way of direct payments to the Commissioners on account of income tax,

c the tax year (“tax year 2”) in respect of which the payments on account are made is a tax year for which section 809H (remittance basis charge for long-term UK resident) does not apply as respects the individual, and

d that section applied as respects the individual for the previous tax year (“tax year 1”).

2 The relevant amount of income or chargeable gains is to be treated as not remitted to the United Kingdom if money equal to the relevant amount is taken offshore by—

a the 15 March following the end of tax year 2, or

b such later date as the Commissioners may allow on a claim made by the individual.

3 A claim under subsection (2)(b)—

a may be made only if the individual has made and delivered a return under section 8 of TMA 1970 for tax year 2 and reasonably expects to receive from the Commissioners a repayment of tax paid in respect of that tax year, and

b may be made no later than the 5 April following the end of tax year 2.

4 Money that is taken offshore in accordance with subsection (2) is to be treated as having the same composition of kinds of income and capital as the money used to make the payments on account.

5 In this section “the relevant amount” means the lower of the following—

a the amount brought to the United Kingdom as mentioned in subsection (1)(b), and

b the applicable amount (as defined in section 809H) for tax year 1.

4 In section 809Z9(11) (taking proceeds etc offshore or investing them: modification of general provisions)—

a for “section 809VB(2) but in that case” substitute “ sections 809UA(2) and 809VB(2), but in those cases ”, and

b at the beginning of paragraph (b) insert “ in the case of section 809VB(2), ”.

5 The amendments made by this section have effect in relation to payments on account made in respect of the tax year 2012-13 and subsequent tax years.

22 Arrangements made by intermediaries¶

1 In Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers under arrangements made by intermediaries), in section 49 (engagements to which Chapter applies), for subsection (1)(c) substitute—

2 This section has effect for the tax year 2013-14 and subsequent tax years.

23 Taxable benefit of cars: the appropriate percentage¶

1 Section 139 of ITEPA 2003 (car with CO₂ figure: the appropriate percentage) is amended in accordance with subsections (2) to (6).

2 In subsection (2), after “the relevant threshold” omit “for the year”.

3 For subsection (2)(a) substitute—

^F34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 In subsection (3)—

a after “the relevant threshold” omit “for the year”, and

^F4b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 In subsection (4)—

a after “the relevant threshold” (in both places) omit “for the year”, and

b in paragraph (b), for “35%” substitute “ 37% ”.

7 Section 140 of that Act (car without CO₂ figure: the appropriate percentage) is amended in accordance with subsections (8) to (11).

8 In the Table in subsection (2), for “35%” substitute “ 37% ”.

9 For subsection (3)(a) substitute—

10 In subsection (3)(b), for “35%” substitute “ 37% ”.

11 Omit subsection (3A).

12 The amendments made by this section have effect for the tax year 2015-16 and subsequent tax years.

24 Gains from contracts for life insurance etc¶

Schedule 8 amends Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc).

25 Qualifying insurance policies¶

Schedule 9 amends Schedule 15 to ICTA (qualifying insurance policies) and makes other provision relating to qualifying policies under Schedule 15 to ICTA.

26 Transfer of assets abroad¶

Schedule 10 amends Chapter 2 of Part 13 of ITA 2007 (tax avoidance: transfer of assets abroad).

27 Payments of interest¶

Schedule 11 contains provision in connection with the payment of interest for the purposes of income tax.

28 Disguised interest¶

Schedule 12 contains provision about returns which are economically equivalent to interest.

CHAPTER 3 Corporation tax: general¶

Losses, other reliefs and deductions¶

29 Restriction on surrender of losses: controlled foreign company cases¶

1 Section 105 of CTA 2010 (restriction on surrender of losses etc within section 99(1)(d) to (g)) is amended as follows.

2 In subsection (2), for “the surrendering company's gross profits of the surrender period” substitute “ the profit-related threshold ”.

3 In subsection (3), for “those gross profits” substitute “ the profit-related threshold ”.

4 After subsection (3) insert—

3A The profit-related threshold” is the sum of—

a the surrendering company's gross profits of the surrender period, and

b where chargeable profits of a CFC for an accounting period ending in the surrender period are apportioned to the surrendering company in accordance with step 3 in subsection (1) of 371BC of TIOPA 2010 and the surrendering company is in relation to that accounting period of the CFC a chargeable company for the purposes of step 4 in that subsection, the total of the chargeable profits so apportioned.

3B Where—

a an accounting period of a CFC ending in the surrender period is one to which (because of paragraph 50 of Schedule 20 of FA 2012) the repeal of Chapter 4 of Part 17 of ICTA does not apply,

b chargeable profits of the CFC for that accounting period are apportioned to the surrendering company in accordance with sections 747(3) and 752 of ICTA, and

c the surrendering company is not prevented by section 747(5) of ICTA from being chargeable to tax in respect of the CFC for that accounting period,

the profit-related threshold also includes the total of the chargeable profits so apportioned.

5 After subsection (5) insert—

6 The amendments made by this section have effect where the surrender period of the surrendering company ends on or after 20 March 2013, but subject to the following.

7 For the purposes of section 105(3A)(b) and (3B)(b) of CTA 2010, chargeable profits do not include—

a chargeable profits for an accounting period within the meaning of Part 9A of TIOPA 2010 ending before 20 March 2013, or

b chargeable profits for an accounting period within the meaning of Chapter 4 of Part 17 of ICTA ending before that date.

8 Subsection (9) applies where—

a an accounting period within the meaning of Part 9A of TIOPA 2010, or

b an accounting period within the meaning of Chapter 4 of Part 17 of ICTA,

falls partly before and partly on or after 20 March 2013.

9 For the purposes of section 105 of CTA 2010, the chargeable profits of the CFC for that period, so far as apportioned to the surrendering company as mentioned in subsection (3A)(b) or (3B)(b) of that section (as the case requires), are to be further apportioned on a just and reasonable basis between the two parts of the period, and the chargeable profits referred to in subsection (3A)(b) or (3B)(b) are not to include the chargeable profits apportioned to the part ending before 20 March 2013.

^F18530 Loss relief surrenderable by non-UK resident established in EEA state¶

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

31 Arrangements for transfers of companies¶

1 In section 156 of CTA 2010 (definition of “arrangements” for purposes of sections 154 to 155B, etc)—

a in subsection (2), in paragraph (b), after “include” insert

b at the end of that paragraph insert

, and

c after that subsection insert—

2 In sections 154(3) and 155(3) of that Act (arrangements for transfers), for “154A” substitute “ 155A ”.

3 In section 188 of that Act (other definitions for Part 5), in subsection (1), after “ “company”” insert “ (except in section 156(2A) ”.

4 The amendments made by this section have effect in relation to accounting periods ending on or after 1 April 2013.

32 Change in company ownership: company reconstructions¶

1 For section 676 of CTA 2010 (disallowance of trading losses where company reconstruction without a change of ownership) substitute—

676 Company reconstructions

1 Subsection (2) applies if, before the change in ownership—

a a trade carried on by another company (“the predecessor company”) is transferred to the company, and

b the transfer is a transfer to which Chapter 1 of Part 22 applies (transfers of trade without a change of ownership).

2 In determining any relief available to the company by virtue of section 944(3) (carry forward of trading losses in successor company), this Chapter applies as if—

a references to a trade carried on by the company included the trade as carried on by the predecessor company or by any predecessor of that company, and

b any loss sustained by the predecessor company or any predecessor of that company had been sustained by the company.

3 Subsection (4) applies if, after the change in ownership—

a a trade carried on by the company is transferred to another company (“the successor company”), and

b the transfer is a transfer to which Chapter 1 of Part 22 applies.

4 In determining—

a any relief available to the company under section 45 (carry forward of trading losses), or

b any relief available to the successor company or any successor of that company by virtue of section 944(3),

this Chapter applies as if references to a trade carried on by the company included the trade as carried on by the successor company or by any successor of that company.

5 For the purposes of this section a company (“company A”) is a predecessor of another company (“company B”), and company B is a successor of company A, if the first or second condition is met.

6 The first condition is that Chapter 1 of Part 22 applies in relation to company A and company B as respectively the predecessor and the successor within the meaning of that Chapter.

7 The second condition is that—

a Chapter 1 of Part 22 applies in relation to company A and a third company (“company C”) as respectively the predecessor and the successor within the meaning of that Chapter, and

b company C is (whether by virtue of the first condition or this condition) a predecessor of company B.

2 The amendment made by this section has effect in relation to changes in ownership that occur on or after 20 March 2013.

33 Change in company ownership: shell companies¶

Schedule 13—

a inserts into Part 14 of CTA 2010 (change in company ownership) a new Chapter 5A (shell companies: restrictions on relief), and

b makes consequential provision.

34 Transfer of deductions¶

Schedule 14—

a inserts into CTA 2010 a new Part 14A (transfer of deductions), and

b makes consequential provision.

35 R&D expenditure credits¶

Schedule 15 contains provision about R&D expenditure credits.

36 Relief for television production and video games development¶

1 Schedule 16 contains provision about television production.

2 Schedule 17 contains provision about video games development.

3 Schedule 18 contains consequential amendments.

Exemption from charge¶

37 Health service bodies: exemption¶

In section 986 of CTA 2010 (exemption from corporation tax: meaning of “health service body”), insert the following entries at the appropriate places in the table—

38 Chief constables etc (England and Wales): exemption¶

1 In Chapter 8 of Part 22 of CTA 2010 (exemptions), after section 987 insert—

2 The amendment made by this section is treated as having come into force on 16 January 2012, but, in relation to any time before 22 November 2012, section 987A of CTA 2010 has effect as if paragraph (a) were omitted.

Other provisions¶

39 Real estate investment trusts: UK REITs which invest in other UK REITs¶

Schedule 19 amends Part 12 of CTA 2010 (real estate investment trusts).

40 Corporation tax relief for employee share acquisitions etc¶

1 Chapter 6 of Part 12 of CTA 2009 (relief for employee share acquisitions: relationship between relief under Part 12 and other reliefs) is amended as follows.

2 For section 1038 substitute—

1038 Exclusion of other deductions

1 Subsection (2) applies if relief is or, apart from condition 2 in section 1009(1), would be available under this Part.For this purpose, it does not matter if the amount of the relief is or would be calculated as nil.

2 Except as provided for by this Part, for the purpose of calculating any company's profits for corporation tax purposes for any accounting period, no deduction is allowed—

a in relation to the provision of the shares or to any matter connected with the provision of the shares, or

b so far as not covered by paragraph (a) in a case in which the shares are acquired pursuant to an option, in relation to the option or to any matter connected with the option.

3 In a case in which section 1022 has applied, in subsection (2)(b) references to the option cover the new option and any relevant earlier qualifying option.

4 For the purposes of subsection (2) it does not matter if the accounting period in question falls wholly before or after the time at which the shares are acquired.

5 In a case in which the shares are acquired under an employee share scheme, the deductions disallowed by subsection (2) include (in particular) deductions for amounts paid or payable by the employing company in relation to the participation of the employee in the scheme.

6 But subsection (2) does not disallow deductions for—

a expenses incurred in setting up the scheme,

b expenses incurred in meeting, or contributing to, the costs of administering the scheme,

c the costs of borrowing for the purposes of the scheme, or

d fees, commission, stamp duty, stamp duty reserve tax, and similar incidental expenses of acquiring the shares.

7 “Employee share scheme” means a scheme or arrangement for enabling shares to be acquired because of persons' employment.

8 In a case in which relief is or, apart from condition 2 in section 1009(1), would be available under Chapter 5 by virtue of section 1030(2), subsection (2) does not disallow deductions in relation to the provision of the convertible securities.

3 After section 1038 insert—

1038A Exclusion of deductions for share options: shares not acquired

1 Subsection (2) applies if—

a a person obtains an option to acquire shares and the requirements of section 1015(1)(a) to (c) are met in relation to the obtaining of the option, or

b so far as not covered by paragraph (a), a person obtains an option to acquire shares and the obtaining of the option is connected with an option previously obtained in a case covered by paragraph (a) or this paragraph.

2 For the purpose of calculating any company's profits for corporation tax purposes for any accounting period, no deduction is allowed in relation to—

a the option, or

b any matter connected with the option,

unless the shares are acquired pursuant to the option.

3 For the purposes of subsection (2) it does not matter if the accounting period in question falls wholly before or after the time at which the option is obtained.

4 In a case in which the shares would be acquired under an employee share scheme, the deductions disallowed by subsection (2) include (in particular) deductions for amounts paid or payable by the employing company in relation to the participation of the employee in the scheme.

5 But subsection (2) does not disallow deductions for—

a expenses incurred in setting up the scheme,

b expenses incurred in meeting, or contributing to, the costs of administering the scheme,

c the costs of borrowing for the purposes of the scheme, or

d fees, commission, stamp duty, stamp duty reserve tax, and similar incidental expenses of acquiring the shares.

6 “Employee share scheme” means a scheme or arrangement for enabling shares to be acquired because of persons' employment.

7 Subsection (2) does not disallow deductions for—

a amounts on which the employee is subject to a charge under ITEPA 2003,

b amounts on which the employee would have been subject to a charge under ITEPA 2003 had the employee been a UK employee at all material times, or

c if the employee has died, amounts on which the employee would have been subject to a charge under ITEPA 2003 had the employee been alive.

8 “UK employee” is to be read in accordance with section 1017(4).

4 For the purposes of the following subsections—

“pre-20 March 2013 relevant accounting period” means an accounting period which begins before 20 March 2013 but ends on or after that date, and
“relevant accounting period” means an accounting period which ends on or after 20 March 2013.

5 The amendment made by subsection (2) above has effect for the purpose of disallowing deductions for relevant accounting periods.For this purpose, it does not matter if the acquisition of shares which gives rise, or would give rise, to the relief under Part 12 of CTA 2009 occurs before a company's first relevant accounting period.

6 But the amendment made by subsection (2) above has no effect for the purpose of disallowing a deduction for a pre-20 March 2013 relevant accounting period where the acquisition of shares which gives rise, or would give rise, to the relief under Part 12 of CTA 2009 occurs before 20 March 2013.

7 The amendment made by subsection (3) above has effect for the purpose of disallowing deductions for relevant accounting periods.For this purpose, it does not matter if the option is obtained before a company's first relevant accounting period.

8 But the amendment made by subsection (3) above has no effect for the purpose of disallowing a deduction for a pre-20 March 2013 relevant accounting period where—

a the option is obtained before 20 March 2013, and

b before that date, an event (for example, the lapse or cancellation of the option) occurs in consequence of which the shares cannot be acquired pursuant to the option.

41 Derivative contracts: property total return swaps etc¶

1 Chapter 7 of Part 7 of CTA 2009 (chargeable gains arising in relation to derivative contracts) is amended as follows.

2 In section 643 (contracts relating to land or certain tangible movable property)—

a in subsection (1), for “and C” substitute “ , C and D ”, and

b after subsection (4) insert—

3 In section 650 (property based total return swaps)—

a in subsection (1), for “to F” substitute “ to H ”, and

b after subsection (7) insert—

4 In section 659 (meaning of “relevant credits” and “relevant debits”), after subsection (4) insert—

5 The amendments made by this section have effect in relation to accounting periods beginning on or after 5 December 2012.

6 But, for the purposes of subsection (5), an accounting period beginning before, and ending on or after, 5 December 2012 is to be treated as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.

42 Corporation tax: tax mismatch schemes¶

Schedule 20 contains provision about tax mismatch schemes.

^F143 Tier two capital¶

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^F9444 Financing costs and income: group treasury companies¶

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

45 Condition for company to be an “investment trust”¶

1 In section 1158(2) of CTA 2010 (condition A for a company to be an “investment trust”), for “the business of the company consists of” substitute “ all, or substantially all, of the business of the company is ”.

2 The amendment made by this section has effect in relation to accounting periods beginning on or after 1 January 2012.

46 Community amateur sports clubs¶

Schedule 21 contains provision about community amateur sports clubs.

CHAPTER 4 Pensions¶

47 Lifetime allowance charge: power to amend the transitional provision in Part 2 of Schedule 18 to FA 2011 etc¶

1 Part 2 of Schedule 18 to FA 2011 (lifetime allowance charge: commencement and transitional provision relating to changes made for the tax year 2012-13 and onwards) is amended as follows.

2 In paragraph 14—

a omit sub-paragraphs (2) and (15) to (17) (which confer power on the HMRC Commissioners to make provision specifying how notices under paragraph 14 are to be given),

b in sub-paragraph (7) omit “the annual rate of” where it first appears, and

c in sub-paragraph (11) after “(5)(a)” insert “ and (c)(i) ”.

3 After paragraph 14 insert—

15

1 The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 14.

2 Regulations under this paragraph may (for example) add to the cases in which paragraph 14 is to apply or is to cease to apply.

3 Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made; but—

a the time must be no earlier than 6 April 2012, and

b the provision must not increase any person's liability to tax.

4 In relation to regulations under this paragraph made during 2013, sub-paragraph (3) has effect with the omission of paragraph (b) so long as the time in question is no earlier than 6 April 2013.

16

1 The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision specifying how any notice required to be given to an officer of Revenue and Customs under paragraph 14 is to be given.

2 In sub-paragraph (1) the reference to paragraph 14 is to that paragraph as amended from time to time by regulations under paragraph 15.

17

1 Regulations under paragraph 15 or 16 may include supplementary or incidental provision.

2 The powers to make regulations under paragraphs 15 and 16 are exercisable by statutory instrument.

3 A statutory instrument containing regulations under paragraph 15 or 16 is subject to annulment in pursuance of a resolution of the House of Commons.

4 The amendments made by subsection (2)(b) and (c) are treated as having come into force on 6 April 2012.

5 The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 (S.I. 2011/1752) are to continue to have effect and, so far as they were made under paragraph 14(2) and (15) of Schedule 18 to FA 2011, are to be treated as if they were made under paragraphs 16 and 17(1) of that Schedule (as inserted by subsection (3) above).

48 Lifetime allowance charge: new standard lifetime allowance for the tax year 2014-15 and subsequent tax years¶

1 Section 218 of FA 2004 (standard lifetime allowance etc) is amended as follows.

2 For subsection (2) substitute—

3 In subsection (3) for “the tax year 2012-13” substitute “ the tax year 2014-15 ”.

4 The amendments made by subsections (2) and (3) have effect for the tax year 2014-15 and subsequent tax years.

5 Schedule 22 contains transitional provision etc.

49 Annual allowance: new annual allowance for the tax year 2014-15 and subsequent tax years¶

1 Section 228 of FA 2004 (annual allowance) is amended as follows.

2 For subsection (1) substitute—

3 In subsection (2) for “2011-12” substitute “ 2014-15 ”.

4 The amendments made by this section have effect for the tax year 2014-15 and subsequent tax years.

50 Drawdown pensions and dependants' drawdown pensions¶

^F51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 In Schedule 16 to FA 2011 (benefits under pension schemes)—

a in paragraph 90(2)(a), after “year” insert “ beginning before 26 March 2013 and ”,

b in paragraph 90(3), omit paragraph (b) and the “and” before it,

c in paragraph 98(2)(a), after “year” insert “ beginning before 26 March 2013 and ”, and

d in paragraph 98(3), omit paragraph (b) and the “and” before it.

4 The amendments made by subsections (1) and (2) have effect in relation to drawdown pension years beginning on or after 26 March 2013.

5 The amendments made by subsection (3)(a) and (c) are treated as having come into force on 26 March 2013.

6 The amendments made by subsection (3)(b) and (d) have effect in relation to transfers within paragraph 90(5) or 98(5) of Schedule 16 to FA 2011 occurring during a drawdown pension year ending on or after 25 March 2013.

51 Bridging pensions¶

1 FA 2004 is amended as follows.

^F422 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 In paragraph 1 of Schedule 29 (pension commencement lump sums), in sub-paragraph (4)(a), omit the words from “at a time” to “65”.

4 In consequence of subsection (3), paragraph 21 of Schedule 23 to the FA 2006 is repealed.

5 The amendments made by this section have effect for the tax year 2013-14 and subsequent tax years.

52 Abolition of contracting out of state second pension: consequential amendments etc¶

1 FA 2004 is amended as follows.

2 In section 188 (relief for contributions), in subsection (3) (contributions excluded from relief), omit paragraph (c) and the word “and” immediately preceding that paragraph.

3 In that section, omit subsection (6) (which treats certain amounts recovered by individual's employer as contributions paid by individual).

4 Omit section 190(5) (certain reliefs not to count towards annual limit for relief).

5 Omit section 196(5) (references to contributions to include references to minimum payments when determining relief for employers).

6 Omit section 202 (minimum contributions under pensions legislation).

7 Omit section 233(2) (references to contributions not to include references to minimum payments when determining pension input amount).

8 In paragraph 5 of Schedule 29 (short service refund lump sum), after sub-paragraph (2) insert—

2A In sub-paragraph (2) the reference to the member's contributions includes—

a any amount paid under section 7 of the Social Security Act 1986 (incentive payments to schemes becoming contracted-out between 1986 and 1993),

b any amount paid by the Commissioners for Her Majesty's Revenue and Customs under section 42A(3) of the Pension Schemes Act 1993 or section 38A(3) of the Pension Schemes (Northern Ireland) Act 1993 (rebates), and

c any amount recovered by the member's employer under regulations falling within sub-paragraph (2B) in respect of minimum payments made to the scheme in relation to any period before 6 April 2012.

2B Those regulations are regulations which were made under—

a section 8(3) of the Pension Schemes Act 1993 (recovery of minimum payments), or

b section 4(3) of the Pension Schemes (Northern Ireland) Act 1993 (corresponding provision for Northern Ireland).

9 Omit paragraph 14(2) of Schedule 36 (which excludes minimum payments from being relevant contributions for the purposes of enhanced protection from lifetime allowance charge).

10 Subsections (1), (3) to (5) and (7) to (9) come into force on 6 April 2013.

11 Subsection (2) comes into force on 6 April 2015.

12 Subsection (6) comes into force on 6 April 2016, except that the repeal of section 202(5) of FA 2004 comes into force on such day as the Treasury may appoint by order made by statutory instrument.

53 Overseas pension schemes: general¶

1 In section 150(8) of FA 2004 (meaning of “recognised overseas pension scheme”), for the words from “which” to the end substitute “ which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners for Her Majesty's Revenue and Customs. ”

2 Section 169 of that Act (pension schemes: recognised transfers) is amended as follows.

3 In subsection (2)(c), for “any prescribed information requirements imposed on the scheme manager” substitute “ any requirements imposed under subsection (4) ”.

4 For subsection (4) substitute—

5 In subsection (5)—

a for “the Inland Revenue has” substitute “ the Commissioners have ”,

b for paragraph (a) (but not the “and” at the end of it) substitute—

, and

c in paragraph (b), for “the failure” substitute “ that condition being met ”.

6 For subsection (6) substitute—

7 After subsection (7) insert—

8 In section 280(1) of that Act (abbreviations), insert at the appropriate place—

54 Overseas pension schemes: information and inspection powers¶

1 Part 6 of Schedule 36 to FA 2008 (information and inspection powers: special cases) is amended as follows.

2 In paragraph 34B (registered pension schemes etc)—

a in sub-paragraph (2), omit the “or” at the end of paragraph (b) and, at the end of paragraph (c) insert—

;

b after sub-paragraph (4) insert—

;

c after sub-paragraph (7) insert—

;

d in sub-paragraph (8), for “and (7)” substitute “ to (7A) ”.

3 In paragraph 34C (registered pension schemes etc: interpretation), insert at the appropriate places—

;

4 In paragraphs 34B and 34C of Schedule 36 to FA 2008, references to a former QROPS include a scheme that ceased to be a QROPS before this Act was passed.

CHAPTER 5 Other provisions¶

Employee shareholder shares¶

55 Employee shareholder shares¶

Schedule 23 contains—

a provision about employee shareholder shares, and

b provision for an exemption from income tax in connection with advice relating to proposed employee shareholder agreements.

Seed enterprise investment scheme¶

56 SEIS: income tax relief¶

1 ITA 2007 is amended as follows.

2 In section 29 (tax reductions: supplementary), in subsection (4B), after the entry for Chapter 1 of Part 5 insert— “ Chapter 1 of Part 5A (SEIS relief), ”.

3 In section 32 (liability not dealt with in the calculation), after the entry for section 235 insert— “ under section 257G (withdrawal or reduction of SEIS relief), ”.

4 In section 257DG (the control and independence requirement), for subsection (2) substitute—

5 The amendments made by subsections (2) and (3) have effect for the tax year 2013-14 and subsequent tax years.

6 The amendment made by subsection (4) has effect in relation to shares issued on or after 6 April 2013.

57 SEIS: re-investment relief¶

1 Schedule 5BB to TCGA 1992 (seed enterprise investment scheme: re-investment) is amended as follows.

2 In paragraph 1 (SEIS re-investment relief)—

a in sub-paragraph (2)—

i in paragraph (a), after “the tax year 2012-13” insert “ or the tax year 2013-14 (the year in question being referred to in this Schedule as “the relevant year”) ”, and

ii in paragraph (b), for “that year” substitute “ the relevant year ”,

b in sub-paragraph (3)(a), for “tax year 2012-13” substitute “ relevant year ”, and

c for sub-paragraph (5) substitute—

3 In paragraph 2 (restrictions on relief under paragraph 1)—

a in sub-paragraph (1), for “tax year 2012-13” substitute “ relevant year ”, and

b in sub-paragraph (2)—

i for “tax year 2012-13” substitute “ relevant year ”, and

ii for “that tax year” substitute “ that year ”.

4 In paragraph 5 (removal or reduction of relief) in sub-paragraph (2) for “2012-13” substitute “ in which the shares were issued ”.

5 Accordingly, in section 150G of TCGA (which introduces Schedule 5BB), for “tax year 2012-13” substitute “ tax years 2012-13 and 2013-14 ”.

Disincorporation¶

58 Disincorporation relief¶

1 A claim for relief under this section (“disincorporation relief”) may be made where—

a a company transfers its business to some or all of the shareholders of the company,

b the transfer of the business is a qualifying business transfer (see section 59), and

c the business transfer date falls within the period of 5 years beginning with 1 April 2013.

2 As to the consequences of a claim for disincorporation relief being made, see—

sections 162B and 162C of TCGA 1992;
section 849A of CTA 2009.

3 In this section and sections 59 to 61 “the business transfer date”, in relation to the transfer of a business, is the date on which the business is transferred.For this purpose, where the business is transferred under a contract—

a the date on which the business is transferred is to be determined in accordance with section 28 of TCGA 1992, and

b if the business in question is transferred by more than one contract, then for the purposes of that section the contract under which the business is transferred is to be taken to be the contract under which the goodwill of the business is transferred.

4 This section and sections 59 and 60 apply to a transfer of a business with a business transfer date of 1 April 2013 or a later date.

59 Qualifying business transfer¶

1 The transfer of a business from a company to some or all of the shareholders of the company is a qualifying business transfer for the purposes of section 58 if conditions A to E are met.

2 Condition A is that the business is transferred as a going concern.

3 Condition B is that the business is transferred together with all of the assets of the business, or together with all of those assets other than cash.

4 Condition C is that the total market value of the qualifying assets of the business included in the transfer does not exceed £100,000.

5 Condition D is that all of the shareholders to whom the business is transferred are individuals.

6 Condition E is that each of those shareholders held shares in the company throughout the period of 12 months ending with the business transfer date.

7 For the purposes of condition D, the reference to individuals includes an individual acting as a member of a partnership, but does not include an individual acting as a member of a limited liability partnership.

8 Section 60 of TCGA 1992 (nominees and bare trustees) applies for the purposes of this section as it applies for the purposes of that Act.

9 In this section “market value”, in relation to an asset, means the price which the asset might reasonably be expected to fetch on a sale in the open market.

10 In this section a “qualifying asset” means—

a goodwill, or

b an interest in land which is not held as trading stock.

60 Making a claim¶

1 A claim for disincorporation relief under section 58—

a is to be made jointly by the company and all of the shareholders to whom the business is transferred, and

b is irrevocable.

2 Any claim for disincorporation relief must be made within the period of 2 years beginning with the business transfer date.

61 Effect of disincorporation relief¶

1 In Part 5 of TCGA 1992 (transfer of business assets), in Chapter 1 (general provisions), after section 162A insert—

Transfer of business from company to shareholders

162B Disincorporation relief: assets (including pre-FA 2002 goodwill)

1 This section applies where—

a a company transfers its business to some or all of the shareholders of the company, and

b a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013.

2 The disposal and acquisition of any qualifying asset of the business included in the transfer is to be deemed to be for a consideration equal to the lower of—

a the sums allowable under section 38 as a deduction in the computation of the gain accruing to the company on the disposal of the asset in question, and

b the market value of the asset.

3 In subsection (2) a “qualifying asset” means—

a goodwill, or

b an interest in land which is not held as trading stock.

4 But subsection (2) does not apply to the goodwill of the business if section 162C applies to it.

162C Disincorporation relief: post-FA 2002 goodwill

1 This section applies where—

a a company transfers its business to some or all of the shareholders of the company,

b a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013, and

c section 849A of CTA 2009 (disincorporation relief: transfer values for post-FA 2002 goodwill) applies to the transfer of the goodwill of the business.

2 The acquisition of the goodwill of the business is deemed to be for a consideration equal to the value at which the goodwill is treated as transferred by virtue of section 849A of CTA 2009.

2 In Part 8 of CTA 2009 (intangible fixed assets), Chapter 13 (transactions between related parties) is amended as follows.

3 In section 844 (overview of Chapter), in subsection (2) for “849” substitute “ 849A ”.

4 In section 845 (transfer between company and related party treated as at market value), in subsection (4) (exceptions to basic rule)—

a omit the “and” at the end of paragraph (ca), and

b after paragraph (d) insert

5 After section 849 insert—

849A Disincorporation relief: transfer values for post-FA 2002 goodwill

1 This section applies where—

a a company transfers its business to some or all of the shareholders of the company, and

b a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013.

2 If section 735 applies to the transfer of the goodwill of the business, the transfer is treated for the purposes of this Part as being at the lower of—

a the tax written-down value of the goodwill, and

b its market value.

3 If section 736 applies to the transfer of the goodwill of the business, the transfer is treated for the purposes of this Part as being at the lower of—

a the cost of the goodwill, and

b its market value.

4 If section 738 applies to the transfer of the goodwill of the business, the proceeds of realisation of the goodwill are treated for the purposes of this Part as being nil.

5 In subsection (2)(a) the reference to the tax written-down value of the goodwill is to its tax written-down value immediately before the transfer.

6 In subsection (3)(a) “the cost of the goodwill” means the cost recognised for tax purposes (determined in accordance with section 736(6) and (7)).

7 In this section market value has the meaning given in section 845(5).

6 The amendments made by this section have effect in relation to a transfer of a business with a business transfer date of 1 April 2013 or a later date.

Capital gains¶

62 Attribution of gains to members of non-resident companies¶

1 TCGA 1992 is amended as follows.

2 In subsection (4) of section 13 (members to whom rule for attributing gains to members of non-resident companies does not apply), for “one tenth” substitute “ one quarter ”.

3 In subsection (5) of that section (cases where rule for attributing gains to members of non-resident companies does not apply), after the “or” at the end of paragraph (b) insert—

4 After section 13 insert—

13A Section 13(5): interpretation

1 For the purposes of section 13(5)(b) a disposal of an asset is to be regarded as a disposal of an asset used for the purposes of a trade carried on wholly outside the United Kingdom by a company if—

a the asset is accommodation, or an interest or right in accommodation, which is situated outside the United Kingdom, and

b the accommodation has for each relevant period been furnished holiday accommodation of which a person has made a commercial letting.

2 For the purposes of subsection (1)(b) each of the following is “a relevant period”—

a the period of 12 months ending with the date of the disposal and each of the two preceding periods of 12 months, or

b if the company has been the beneficial owner of the accommodation (or interest or right) for a period longer than 36 months, the period of 12 months ending with the date of the disposal and each of the preceding periods of 12 months throughout which the company has been the beneficial owner of the accommodation (or interest or right).

3 The reference in subsection (1)(b) to the commercial letting of furnished holiday accommodation is to be read in accordance with Chapter 6 of Part 4 of CTA 2009, but—

a as if sections 266, 268 and 268A were omitted, and

b as if, in section 267(1), the reference to an accounting period were a reference to a relevant period as defined by subsection (2) above.

4 For the purposes of section 13(5)(ca) activities carried on by a company are “economically significant activities” if they are activities which consist of the provision by the company of goods or services to others on a commercial basis and involve—

a the use of staff in numbers, and with competence and authority,

b the use of premises and equipment, and

c the addition of economic value, by the company, to those to whom the goods or services are provided,

commensurate with the size and nature of those activities.

5 In subsection (4) “staff” means employees, agents or contractors of the company.

5 The amendments made by this section have effect in relation to disposals made on or after 6 April 2012.

6 But, in the case of a disposal made on or after that date but before 6 April 2013, a person to whom a part of a chargeable gain or allowable loss would (but for the amendments made by this section) have accrued on the disposal may make an election in writing for section 13 of TCGA 1992 to apply in relation to the disposal without those amendments.

7 An election under subsection (6) in respect of a disposal must be made—

a in the case of a person within the charge to capital gains tax, within 4 years from the end of the tax year in which the disposal was made, and

b in the case of a person within the charge to corporation tax, within 4 years from the end of the accounting period in which the disposal was made.

63 Heritage maintenance settlements¶

1 In section 169D of TCGA 1992 (gifts to settlor-interested settlements etc: exceptions to sections 169B and 169C), in subsection (1), after “elected” insert “ , or could have elected, ”.

2 The amendment made by this section has effect for the tax year 2012-13 and subsequent tax years.

64 EMI options and entrepreneurs' relief etc¶

Schedule 24 makes provision for capital gains tax purposes in connection with shares acquired under options which are qualifying options under the EMI code.

65 Charge on certain high value disposals by companies etc¶

Schedule 25 contains provision for a new capital gains tax charge on gains accruing to companies etc on certain high value disposals.

^I6066 Currency used in tax calculations: chargeable gains and losses¶

1 Chapter 4 of Part 2 of CTA 2010 (currency) is amended as follows.

2 In section 5 (basic rule: sterling to be used), after subsection (2) insert—

3 After section 9B insert—

9C Chargeable gains and losses of companies

1 This section applies if—

a a company disposes of an asset which is a ship, an aircraft, shares or an interest in shares, and

b at any time beginning with the company's acquisition of the asset (or, if earlier, the time allowable expenditure was first incurred in respect of the asset) and ending with the disposal, the company's relevant currency is not sterling.

2 A company's relevant currency at any time is its functional currency at that time, subject to subsection (3).

3 If, at any time—

a a company is a UK resident investment company, and

b the company has a designated currency (see sections 9A and 9B) which is different from its functional currency,

the company's relevant currency at that time is that designated currency.

4 If the relevant currency of the company at the time of the disposal is not sterling, the chargeable gain or loss accruing to the company on the disposal must be calculated as follows—

Step 1 Calculate the chargeable gain or loss in the relevant currency of the company at the time of the disposal.
Step 2 Translate the amount of the chargeable gain or loss into sterling by reference to the spot rate of exchange on the day of the disposal.

5 In any case, subsections (6) to (10) apply for the purposes of calculating the chargeable gain or loss.

6 Where any allowable expenditure is incurred in a currency which is not the company's relevant currency at the time it is incurred, that expenditure is to be translated into that relevant currency by reference to the spot rate of exchange for the day on which it is incurred.

7 Where, at any time after any allowable expenditure is incurred but before the asset is disposed of, there is a change in the company's relevant currency, that expenditure is to be translated (or, if it has previously been translated under this section, further translated) into the relevant currency of the company immediately following the change, by reference to the spot rate of exchange for the day of the change.

8 Any amount of consideration for the disposal which is given in a currency other than the company's relevant currency is to be translated into that relevant currency by reference to the spot rate of exchange on the day of disposal.

9 For the purposes of subsections (6) and (7)—

a any translation of expenditure under subsection (6) is to be done before any translation of the expenditure under subsection (7), and

b if subsection (7) applies as a result of more than one change in the company's relevant currency, it is to be applied in relation to each change in the order the changes were made (with the earliest first).

10 Where, by virtue of any enactment, the company was at any time treated for the purposes of corporation tax on chargeable gains as acquiring the asset—

a for a consideration of such amount as would secure that neither a gain nor a loss would accrue to the person disposing of the asset, or

b for a consideration equal to the market value of the asset,

for the purposes of this section that allowable expenditure is treated as incurred by the company at that time.

11 For the purposes of this section, a reference to a ship or aircraft includes a reference to the benefit of a contract—

a to which section 67 of CAA 2001 applies, and

b which relates to plant or machinery which is a ship or aircraft.

12 In this section—

“allowable expenditure” means expenditure which, immediately before the disposal, was attributable to the asset under section 38(1)(a) to (c) of TCGA 1992;
“interest in shares” has the same meaning as in Schedule 7AC to TCGA 1992 (see paragraph 29 of that Schedule);
“shares” includes stock.

4 The amendments made by this section come into force in accordance with provision made by the Treasury by order.

Capital allowances¶

^F11867 Allowances for energy-saving plant and machinery: Northern Ireland¶

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

68 Cars with low carbon dioxide emissions¶

1 In section 45D of CAA 2001 (first year qualifying expenditure on cars with low carbon dioxide emissions)—

a in subsection (1)(a), for “2013” substitute “2015”, and

b in subsection (4), for “110” substitute “95”.

^F1192 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 In section 104AA of that Act (special rate expenditure: meaning of “main rate car”), in subsection (4) for “160” substitute “130”.

4 Accordingly, in section 77 of FA 2008 omit—

a subsection (2), and

b subsection (3).

5 The amendments made by subsections (1)(b), (2) and (4)(b) have effect in relation to expenditure incurred on or after 1 April 2013.

6 The amendment made by subsection (3) has effect in relation to expenditure incurred on or after the relevant date.

7 But in relation to expenditure incurred on the hiring of a car—

a for a period of hire which begins before the relevant date, and

b under a contract entered into before that date,

section 49(1A) of ITTOIA 2005 and section 57(1A) of CTA 2009 apply on or after the relevant date as if the amendment made by subsection (3) did not have effect.

8 “The relevant date” means—

a in the case of income tax, 6 April 2013, and

b in the case of corporation tax, 1 April 2013.

69 Gas refuelling stations: extension of time limit for capital allowance¶

In section 45E(1)(a) of CAA 2001 (time limit for incurring of expenditure qualifying for first-year allowance), for “2013” substitute “ 2015 ”.

70 First-year allowance to be available for ships and railway assets¶

1 In section 46(2) of CAA 2001 (general exclusions from first-year allowance), omit—

a general exclusion 3 (ships), and

b general exclusion 4 (railway assets),

and the italicised headings preceding them.

2 The amendments made by this section have effect for expenditure incurred on or after 1 April 2013.

71 Restrictions on buying capital allowances¶

Schedule 26 contains provision amending Chapter 16A of Part 2 of CAA 2001 (restrictions on allowance buying).

72 Hire cars for disabled persons¶

1 In section 268D of CAA 2001 (hire cars for disabled persons), in subsection (2), after paragraph (a) insert—

2 The amendment made by this section has effect in relation to expenditure incurred on or after 1 April 2013.

73 Contribution allowances: plant and machinery¶

1 Section 538 of CAA 2001 (contribution allowances: plant and machinery) is amended as follows.

2 In subsection (1), omit the “and” at the end of paragraph (a) and after that paragraph insert—

3 In subsection (2)—

a in paragraph (a), for “asset provided by means of C's contribution” substitute “ plant or machinery ”,

b in paragraph (b), for “asset” substitute “ plant or machinery ”, and

c in paragraph (c)—

i for “asset” substitute “ plant or machinery ”, and

ii after “times” insert “ plant or machinery ”.

4 The amendments made by this section have effect in relation to expenditure pooled, and to claims made, on or after 29 May 2013 (“the commencement date”).

5 In relation to such expenditure and claims, when determining for the purposes of section 536(3)(a) of CAA 2001 whether an allowance can be made under Chapter 2 of Part 11 of that Act, the amendments made by this section are to be treated as always having had effect.

6 Nothing in this section applies to a claim by a person for a contribution allowance under Part 2 of CAA 2001 in respect of a contribution made before the commencement date.

7 Subsection (8) applies if—

a expenditure which a person has been regarded as having incurred (despite section 532(1) of CAA 2001) by virtue of section 536(1) of that Act has been pooled by virtue of section 53 of that Act—

i on or after 1 January 2013 but before the commencement date, or

ii before 1 January 2013 in circumstances where no claim was made in respect of the expenditure before that date, and

b had the amendments made by this section had effect at the time the expenditure was incurred, that person would not have been regarded as having incurred that expenditure (“the relevant expenditure”).

8 Part 2 of CAA 2001 has effect as if an event had occurred as a result of which the person is required to bring into account as a disposal receipt under that Part, for the chargeable period in which the commencement date falls, a disposal value of an amount equal to E-A.

9 For the purposes of subsection (8)—

E is the amount of the relevant expenditure, and
A is the total amount of writing-down allowances made in respect of the relevant expenditure.

10 For the purpose of calculating A, the total amount of writing-down allowances made in respect of expenditure on an item of plant or machinery is to be determined as if that item were the only item of plant or machinery in relation to which Chapter 5 of Part 2 of CAA 2001 had effect.

11 The event mentioned in subsection (8) is not to be regarded as a disposal event for the purposes of section 60(3) of CAA 2001.

Miscellaneous¶

74 Community investment tax relief¶

Schedule 27 makes provision about community investment tax relief.

75 Lease premium relief¶

Schedule 28 makes provision in relation to relief for lease premiums.

76 Manufactured payments: stock lending arrangements¶

1 Section 596 of ITA 2007 (deemed manufactured payments: stock lending arrangements) is amended in accordance with subsections (2) and (3).

2 For subsection (1) substitute—

3 In subsection (2), for paragraph (a) substitute—

4 Section 812 of CTA 2010 (deemed manufactured payments: stock lending arrangements) is amended in accordance with subsections (5) to (7).

5 For subsection (1) substitute—

6 In subsection (2), for paragraph (a) substitute—

7 After subsection (6) insert—

8 The amendments made by this section have effect in relation to cases in which a dividend or interest is paid, or is treated as paid, on or after 5 December 2012.

77 Manufactured payments: general¶

Schedule 29 contains provision for, and in connection with, the application of the Tax Acts to manufactured payment relationships and payments representative of dividends and interest.

78 Relationship between rules prohibiting and allowing deductions¶

1 In section 31 of ITTOIA 2005 (trade profits: relationship between rules prohibiting and allowing deductions)—

a after subsection (1) insert—

b after subsection (3) insert—

2 In section 274 of ITTOIA 2005 (property businesses: relationship between rules prohibiting and allowing deductions)—

a after subsection (1) insert—

b after subsection (3) insert—

3 In section 51 of CTA 2009 (trade profits: relationship between rules prohibiting and allowing deductions)—

a after subsection (1) insert—

, and

b after subsection (3) insert—

4 In section 214 of CTA 2009 (property businesses: relationship between rules prohibiting and allowing deductions)—

a after subsection (1) insert—

, and

b after subsection (3) insert—

5 The amendments made by this section have effect in relation to deductions in respect of amounts which arise directly or indirectly in consequence of, or otherwise in connection with—

a arrangements which are entered into on or after 21 December 2012, or

b any transaction forming part of arrangements which is entered into on or after that date.

6 But those amendments do not have effect where the arrangements are, or any such transaction is, entered into pursuant to an unconditional obligation in a contract made before that date.

7 “An unconditional obligation” means an obligation which may not be varied or extinguished by the exercise of a right (whether under the contract or otherwise).

79 Close companies¶

Schedule 30 (which makes provision about close companies) has effect.

PART 2 Oil¶

Decommissioning relief agreements¶

80 Decommissioning relief agreements¶

1 There are to be paid out of money provided by Parliament any sums which a Minister of the Crown is liable to pay under a decommissioning relief agreement.

2 A “decommissioning relief agreement” is an agreement which—

a is made between a Minister of the Crown and a qualifying company, and

b provides that, in such circumstances as are specified in the agreement, if the amount of tax relief in respect of any decommissioning expenditure incurred by that or another qualifying company is less than an amount determined in accordance with the agreement (“the reference amount”), the difference is payable to the company that incurred the expenditure.

3 “Qualifying company” means—

a any company that has at any time carried on a ring fence trade,

b any company that is associated with a company carrying on a ring fence trade,

c any company that has at any time been associated with a company that was carrying on a ring fence trade at that time, and

d in the case of decommissioning expenditure incurred in connection with any plant or machinery, or any land, situated in the UK sector of a cross-boundary field, any company that is a party to a joint operating agreement or unitisation agreement in relation to that field.

4 For the purposes of subsection (2)(b) the amount of tax relief in respect of any decommissioning expenditure is to be determined in accordance with the agreement; and in making such a determination tax relief in respect of expenditure incurred by the qualifying company that is not decommissioning expenditure may, in such circumstances as are specified in the agreement, be treated as if it were tax relief in respect of decommissioning expenditure.

4A No payment is to be made to a company under a decommissioning relief agreement by reference to the energy (oil and gas) profits levy.

4B Every decommissioning relief agreement (whenever entered into) is to be read accordingly.

5 A payment made to a company under a decommissioning relief agreement is not to be regarded as income or a gain of the company for any purpose of the Tax Acts.

6 Section 18(1) of CRCA 2005 (restriction on disclosure by Revenue and Customs officials) does not prevent—

a disclosure to a Minister of the Crown for the purpose of enabling the Minister of the Crown to determine the extent of any liability under a decommissioning relief agreement, or

b disclosure to a company that has rights under a decommissioning relief agreement for the purpose of enabling the company to determine the reference amount.

7 In this section—

“company” has the meaning given by section 1121 of CTA 2010,
“cross-boundary field” has the meaning given by section 10(9) of the Petroleum Act 1998,
“decommissioning expenditure” has the meaning given by section 81,
“Minister of the Crown” includes the Treasury,
“ring fence trade” has the same meaning as in Part 8 of CTA 2010 (see section 277 of that Act),
“the UK sector of a cross-boundary field” means that part of a cross-boundary field lying within the UK marine area (as defined by section 42 of the Marine and Coastal Access Act 2009), and
“unitisation agreement” has the meaning given by paragraph 1(2) of Schedule 17 to FA 1980.

8 Subsections (8) to (9) of section 30 of the Petroleum Act 1998 (which specifies when one body corporate is associated with another) apply for the purposes of this section as they apply for the purposes of that section.

81 Meaning of “decommissioning expenditure”¶

1 In section 80 “decommissioning expenditure” means expenditure incurred in connection with—

a demolishing any plant or machinery,

b preserving any plant or machinery pending its reuse or demolition,

c preparing any plant or machinery for reuse,

d arranging for the reuse of any plant or machinery, or

e the restoration of any land.

2 It is immaterial for the purposes of subsection (1)(b) whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.

3 It is immaterial for the purposes of subsection (1)(c) and (d) whether the plant or machinery is in fact reused.

4 In subsection (1)(e) “restoration” includes landscaping.

5 The Treasury may by order amend this section.

6 An order under subsection (5) may include transitional provision and savings.

7 The power to make an order under subsection (5) is exercisable by statutory instrument.

8 A statutory instrument containing an order under subsection (5) is subject to annulment in pursuance of a resolution of the House of Commons.

82 Annual report¶

1 For each financial year the Treasury must prepare a report containing the information in subsection (2).

2 The information is—

a the number of decommissioning relief agreements entered into in that year,

b the total number of decommissioning relief agreements in force at the end of that year,

c the number of payments made under any decommissioning relief agreements during that year, and the amount of each payment,

d the total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments, and

e an estimate of the maximum amount liable to be paid under any decommissioning relief agreements.

3 The report for a financial year must be laid before the House of Commons as soon as is reasonably practicable after the end of that year.

4 In this section “decommissioning relief agreement” has the same meaning as in section 80.

5 This section has effect in relation to financial years ending on or after 31 March 2014.

83 Effect of claim on PRT¶

1 This section applies where a sum is payable to a company (“the claimant”) under a decommissioning relief agreement.

2 Subsection (3) applies where the reference amount is calculated by reference to what the claimant's assessable profit in any chargeable period would be if any expenditure incurred by it were used to reduce its profit in a particular way (rather than in any way that it has in fact been used).

3 For the purposes of petroleum revenue tax—

a the expenditure is treated as having been used to reduce the claimant's profit in that way (rather than in any way that it has in fact been used), and

b the claimant is treated as if it had received the tax relief it would receive if its profit were reduced in that way (so no repayment of tax is to be made by virtue of this subsection).

4 Subsection (5) applies where the reference amount is calculated by reference to what any other company's assessable profit in any chargeable period would be if any expenditure incurred by the claimant—

a had been incurred by the other company, and

b were used to reduce the other company's profit in a particular way.

5 For the purposes of petroleum revenue tax—

a the expenditure is treated as incurred by the other company (and not the claimant),

b the expenditure is treated as having been used by the other company to reduce its profit in that way, and

c the other company is treated as if it had received the tax relief it would receive if its profit were reduced in that way (so no repayment of tax is to be made by virtue of this subsection).

6 In this section—

“assessable profit” and “chargeable period” have the same meaning as in Part 1 of OTA 1975,
“company” has the meaning given by section 1121 of CTA 2010,
“decommissioning relief agreement” has the same meaning as in section 80, and
“the reference amount” means the reference amount (within the meaning of that section) that relates to the sum mentioned in subsection (1).

84 Terminal losses accruing by virtue of another's default¶

1 This section applies where—

a a company defaults on a liability under—

i a relevant agreement, or

ii an abandonment programme,

to make a payment towards decommissioning expenditure in respect of an oil field,

b in consequence of the default, another company (“the other company”) that has rights under a decommissioning relief agreement at the time of the default incurs decommissioning expenditure in respect of that oil field, and

c but for paragraph 15 of Schedule 17 to FA 1980 (terminal losses), a sum (or a sum of a greater amount) would be payable to the other company under the decommissioning relief agreement.

2 Paragraph 15 of Schedule 17 to FA 1980 does not apply in relation to any allowable loss accruing to the other company from that oil field.

3 Any allowable unrelievable field loss (within the meaning of section 6 of OTA 1975) that—

a consists of the unrelieved portion of an allowable loss within subsection (2), and

b would (in the absence of this subsection) arise as a result of subsection (2),

is not to be regarded as arising.

4 Nothing in this section affects the operation of section 83(3) or (5).

5 In this section—

“abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised),
“company” has the meaning given by section 1121 of CTA 2010,
“decommissioning expenditure” has the same meaning as in section 80,
“decommissioning relief agreement” has the same meaning as in that section,
“oil field” has the same meaning as in OTA 1975,
“relevant agreement” has the meaning given by section 104(5)(a) of FA 1991, and
“unrelieved portion”, in relation to an allowable loss, is to be read in accordance with section 6 of OTA 1975.

85 Claims under agreement not to affect oil allowance¶

1 This section applies where—

a a company defaults on a liability under—

i a relevant agreement, or

ii an abandonment programme,

to make a payment towards decommissioning expenditure in respect of an oil field,

b in consequence of the default, another company that has rights under a decommissioning relief agreement at the time of the default incurs decommissioning expenditure in respect of that oil field, and

c by virtue of section 83, any expenditure incurred by that company (whether or not that decommissioning expenditure) is treated as having been used by that company or any other company (“the affected company”) to reduce its assessable profit in a chargeable period in a particular way.

2 If, in the absence of section 83, the assessable profit accruing to the affected company from an oil field in that chargeable period would be reduced under section 8(1) of OTA 1975, the amount of the oil allowance for the oil field utilised by the affected company in that chargeable period for the purposes of section 8 of that Act is to be determined as if section 83 did not apply.

3 In this section—

“abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised),
“company” has the meaning given by section 1121 of CTA 2010,
“decommissioning expenditure” has the same meaning as in section 80,
“decommissioning relief agreement” has the same meaning as in that section,
“oil field” has the same meaning as in OTA 1975, and
“relevant agreement” has the meaning given by section 104(5)(a) of FA 1991.

Decommissioning security settlements¶

86 Removal of IHT charges in respect of decommissioning security settlements¶

1 In Chapter 3 of Part 3 of IHTA 1984 (settled property: settlements without interests in possession etc), section 58 (relevant property) is amended as follows.

2 In subsection (1), omit the “and” at the end of paragraph (ea) and before paragraph (f) insert—

3 At the end insert—

4 This section is treated as having come into force on 20 March 1993.

5 For the purposes of section 58 of IHTA 1984—

a any reference in that section to Part 4 of the Petroleum Act 1998 has effect, in relation to any period before the coming into force of that Part, as a reference to Part 1 of the Petroleum Act 1987, and

b section 38A of the Petroleum Act 1998 is to be treated as having come into force at the same time as this section.

6 There is to be no charge to tax under section 65 of IHTA 1984 if the only reason for such a charge would be that property ceases to be relevant property by virtue of the coming into force of this section.

87 Loan relationships arising from decommissioning security settlements¶

1 In Part 8 of CTA 2010 (oil activities), after section 287 insert—

287A Restriction where debits or credits relate to decommissioning security settlement

1 No debits or credits are to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of a company's loan relationship so far as the loan relationship is in respect of property comprised in a decommissioning security settlement.

2 For the purposes of this section a settlement is a “decommissioning security settlement” if the sole or main purpose of the settlement is to provide security for the performance of obligations under an abandonment programme.

3 In subsection (2)—

“abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised), and
“security” has the same meaning as in section 38A of that Act.

2 In section 464 of CTA 2009 (priority of Part 5 for corporation tax purposes), in subsection (3)(e), for “and 287” substitute “ to 287A ”.

3 The amendments made by this section have effect in relation to accounting periods beginning on or after the day on which this Act is passed.

Decommissioning expenditure etc¶

88 Decommissioning expenditure taken into account for PRT purposes¶

1 Section 330B of CTA 2010 (decommissioning expenditure taken into account for PRT purposes) is amended as follows.

2 In subsection (1), omit the “and” at the end of paragraph (a) and after paragraph (b) insert

3 For subsection (2) substitute—

4 In subsection (3)—

a before the definition of “the appropriate fraction” insert—

;

b in the definition of “the appropriate fraction”, omit “relevant”;

c in the definition of “the PRT difference”, for “subsection (1)” substitute “ subsection (1)(a) ”.

5 In subsection (4), for “subsection (1)” substitute “ subsection (1)(a) ”.

6 In subsection (7)—

a omit the definition of “the relevant accounting period”, and

b at the end insert—

7 The amendments made by this section have effect in relation to expenditure incurred in connection with decommissioning carried out on or after the day on which this Act is passed.

89 Miscellaneous amendments relating to decommissioning¶

1 Part 1 of Schedule 31 contains provision about expenditure on and under abandonment guarantees and abandonment expenditure.

2 Part 2 of Schedule 31 contains provision about calculating the profits of a ring fence trade carried on by a person who incurs expenditure on meeting another person's decommissioning liabilities.

Capital allowances¶

90 Expenditure on decommissioning onshore installations¶

1 Section 163 of CAA 2001 (meaning of “general decommissioning expenditure”) is amended as follows.

2 In subsection (1)—

a the words after “if” become paragraph (a) of that subsection,

b in that paragraph, for “subsections (3) to (4)” substitute “ subsections (3), (3A) and (4) ”, and

c at the end of that paragraph insert

3 After subsection (3A) insert—

3B The expenditure must have been incurred on decommissioning plant or machinery—

a which has been brought into use wholly or partly for the purposes of a ring fence trade, and

b which—

i is, or forms part of, a relevant onshore installation, or

ii when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation.

3C In subsection (3B) “relevant onshore installation” means any building or structure which—

a falls within any of sub-paragraphs (ii) to (iv) of section 3(4)(c) of OTA 1975,

b is not an offshore installation, and

c is or has been used for purposes connected with the winning of oil from an oil field any part of which lies within—

i the boundaries of the territorial sea of the United Kingdom, or

ii an area designated under section 1(7) of the Continental Shelf Act 1964.

4 In subsection (5)(a), for “ “oil field” has” substitute “ “oil” and “oil field” have”.

5 The amendments made by this section have effect in relation to expenditure incurred on decommissioning carried out on or after the day on which this Act is passed.

91 Expenditure on decommissioning certain redundant plant or machinery¶

1 In section 164 of CAA 2001 (general decommissioning expenditure incurred before cessation of ring fence trade), after subsection (1B) insert—

1C If the plant or machinery concerned is incidentally-acquired redundant plant or machinery (see subsection (1D)), it is to be regarded for the purposes of this section as having been brought into use for the purposes of the ring fence trade.

1D Plant or machinery is “incidentally-acquired redundant plant or machinery” if—

a it has not been brought into use for the purposes of the ring fence trade,

b it forms part of a relevant installation (see subsection (1E)) which has been brought into use for the purposes of the ring fence trade,

c at the time R acquired an interest in the relevant installation, the plant or machinery was not being used for any purposes, and

d the acquisition of the interest in the plant or machinery was merely incidental to the acquisition of the interest in the relevant installation.

1E For the purposes of subsection (1D)—

“relevant installation” means—
1. an offshore installation,
2. a submarine pipeline, or
3. a relevant onshore installation;
“offshore installation” and “submarine pipeline” have the same meaning as in Part 4 of the Petroleum Act 1998;
“relevant onshore installation” has the meaning given by section 163(3C).

2 The amendment made by this section has effect in relation to expenditure incurred on decommissioning carried out on or after the day on which this Act is passed.

92 Expenditure on site restoration¶

1 Part 5 of CAA 2001 (mineral extraction allowances) is amended as follows.

2 In section 395 (qualifying expenditure), in subsection (1)(d), omit “post-trading”.

3 In section 403 (qualifying expenditure on acquiring a mineral asset), after subsection (2) insert—

4 In section 416 (expenditure on restoration within 3 years of ceasing to trade)—

a in subsections (1)(a) and (6)(a), before “mineral extraction trade” insert “ relevant ”;

b in subsection (5), at the end insert—

;

c after subsection (7) insert—

;

d the heading of section 416 becomes “ Non-ring fence trades: expenditure on restoration within 3 years of ceasing to trade ”.

5 In Chapter 5, after section 416 insert—

416ZA Ring fence trades: expenditure on site restoration

1 If—

a a person who is carrying on, or has ceased to carry on, a ring fence trade incurs expenditure on the restoration of a relevant site,

b that part of the restoration work to which the expenditure relates has been carried out, and

c the expenditure has not been deducted in calculating for tax purposes the profits of any trade carried on by the person,

the net cost of the restoration is qualifying expenditure for the relevant period in which that part of the work to which the expenditure relates was carried out.

2 “Relevant period” means—

a in the case of restoration work carried out while the person is carrying on the trade, a chargeable period, and

b in the case of restoration work carried out after the person has ceased to carry on the trade, a notional accounting period.

For the meaning of “notional accounting period”, see section 416ZB.

3 The qualifying expenditure for a notional accounting period is treated as incurred on the last day of trading.

4 If the amount of expenditure incurred on any part of the restoration work carried out in a relevant period is disproportionate to that part of the restoration work, only so much of the net cost of the restoration as is proportionate to that part of the restoration work (the “allowable expenditure for the period”) is to be treated as qualifying expenditure for that period.

5 But subsection (4) does not prevent that part of the expenditure that is not allowable expenditure for the period from being treated as qualifying expenditure for a subsequent relevant period.

6 If any expenditure incurred by a person is qualifying expenditure under this section—

a the whole of the expenditure on the restoration (not just the net cost) is not deductible in calculating the person's income for any tax purposes, and

b none of the amounts subtracted to produce the net cost is to be treated as the person's income for any tax purposes.

7 “Restoration” includes—

a landscaping,

b in relation to land in the United Kingdom, the carrying out of any works required as a condition of granting planning permission for development relating to the winning of oil from an oil field,

c in relation to land in the UK marine area, the carrying out of any works required in order to comply with—

i an approved abandonment programme,

ii a condition to which the approval of an abandonment programme is subject, or

iii a requirement imposed by the Secretary of State, or an agreement made with the Secretary of State, in relation to a relevant site, and

d in relation to land in a foreign sector of the continental shelf, the carrying out of any works required in order to comply with anything corresponding to a matter within paragraph (c)(i), (ii) or (iii) under the law of a territory outside the United Kingdom.

But it does not include decommissioning any plant or machinery (within the meaning of section 163).

8 A “relevant site” means—

a the site of a source to the working of which the ring fence trade relates (or related), or

b land used in connection with working such a source.

9 “The net cost of the restoration” means the expenditure incurred on the restoration less any amounts that—

a are received, or are to be received, by the person, and

b are attributable to the restoration of the relevant site.

10 All such adjustments are to be made, by way of discharge or repayment of tax or otherwise, as are necessary to give effect to this section.

11 In this section—

“abandonment programme”, “approval” and “approved” (in relation to an abandonment programme) have the same meaning as in Part 4 of the Petroleum Act 1998,
“foreign sector of the continental shelf” means an area within which rights are exercisable with respect to the sea bed and subsoil and their natural resources by a territory outside the United Kingdom,
“oil” and “oil field” have the same meaning as in Part 1 of OTA 1975,
“ring fence trade” has the same meaning as in Part 8 of CTA 2010 (see section 277 of that Act), and
“UK marine area” has the meaning given by section 42 of the Marine and Coastal Access Act 2009.

416ZB “Notional accounting period”

1 For the purposes of section 416ZA “notional accounting period”, in relation to a person (“the former trader”) who has ceased to carry on a ring fence trade, means each of the following periods—

a the period that—

i begins with the day following the last day on which the former trader carried on the ring fence trade, and

ii ends with the day on which the first termination event subsequently occurs, and

b each period that—

i begins with the day following the last day of a period determined under paragraph (a) or this paragraph, and

ii ends with the day on which the first termination event subsequently occurs.

2 But there are to be no notional accounting periods after the end of the post-cessation period (see subsection (4)).

3 “Termination event”, in relation to a notional accounting period, means each of the following—

a the end of the period of 12 months beginning with the first day of the notional accounting period,

b the occurrence of an accounting date of the former trader or, if there is a period for which the former trader does not make up accounts, the end of that period (but see subsections (6) and (7)), and

c the end of the post-cessation period.

4 “The post-cessation period” means the period that—

a begins with the day following the last day on which the former trader carried on the ring fence trade, and

b ends with the day on which the appropriate authority is satisfied that the restoration of the relevant site has been completed.

5 In subsection (4) “the appropriate authority” means—

a in the case of restoration falling within section 416ZA(7)(c), the Secretary of State, and

b in any other case, such person or body as the Commissioners for Her Majesty's Revenue and Customs may specify.

6 If the former trader—

a carries on more than one trade,

b makes up accounts of any of them to different dates, and

c does not make up general accounts for the whole of the former trader's activities,

subsection (3)(b) applies with reference to the accounting date of such one of the trades as the former trader may determine.

7 If the Commissioners for Her Majesty's Revenue and Customs are of the opinion, on reasonable grounds, that a date determined by the former trader for the purposes of subsection (6) is inappropriate, the Commissioners may by notice direct that the accounting date of such other of the trades referred to in that subsection as appears to the Commissioners to be appropriate is to be used instead.

8 Expressions used in this section and in section 416ZA have the same meaning in this section as they do in that section.

6 In section 416B (first-year qualifying expenditure), in subsection (2), at the end insert “ (within the meaning of section 403) ”.

7 Part 4 of CTA 2010 (loss relief) is amended as follows.

8 In section 40 (ring fence trades: extension of periods for which relief may be given), in subsection (1)(b), for “403” substitute “ by virtue of section 416ZA ”.

9 In section 43 (claim period in case of ring fence or mineral extraction trades), in subsection (1)(b)—

a after “416” insert “ or 416ZA ”, and

b for the words from “restoration” to “trade” substitute “ site restoration ”.

10 The amendments made by this section have effect in relation to expenditure incurred on restoration carried out on or after the day on which this Act is passed.

93 Restrictions on allowances for certain oil-related expenditure¶

Schedule 32 contains provision in connection with restrictions on allowances for certain oil-related expenditure.

^C12^C32PART 3 Annual tax on enveloped dwellings¶

The charge to tax¶

94 Charge to tax¶

1 A tax (called “annual tax on enveloped dwellings”) is to be charged in accordance with this Part.

2 Tax is charged in respect of a chargeable interest if on one or more days in a chargeable period—

a the interest is a single-dwelling interest and has a taxable value of more than £500,000, and

b a company, partnership or collective investment scheme meets the ownership condition with respect to the interest.

3 The tax is charged for the chargeable period concerned.

4 A company meets the ownership condition with respect to a single-dwelling interest on any day on which the company is entitled to the interest (otherwise than as a member of a partnership or for the purposes of a collective investment scheme).

5 A partnership meets the ownership condition with respect to a single-dwelling interest on any day on which a member of the partnership that is a company is entitled to the interest (as a member of the partnership).

6 A collective investment scheme meets the ownership condition with respect to a single-dwelling interest on any day on which the interest is held for the purposes of the scheme.

7 If a company is jointly entitled to a chargeable interest (as a member of a partnership or otherwise), then regardless of whether the company is entitled as a joint tenant or tenant in common (or, in Scotland, as a joint owner or owner in common) the ownership condition is regarded as met in relation to the whole chargeable interest.

8 The chargeable periods are—

a the period beginning with 1 April 2013 and ending with 31 March 2014, and

b each subsequent period of 12 months beginning with 1 April.

9 See also section 95.

95 Entitlement to interests¶

1 In this Part “entitled” means beneficially entitled—

a whether solely or jointly with another person, and

b whether as a member of a partnership or otherwise.

This is subject to subsection (2).

2 References in this Part to entitlement to a single-dwelling interest (or any other chargeable interest) do not include—

a entitlement in the capacity of a trustee or personal representative, or

b entitlement as a beneficiary under a settlement.

3 Subsection (1)(b) does not apply where the contrary is specified.

4 In this section “settlement” has the same meaning as in Part 4 of FA 2003 (see paragraph 1 of Schedule 16 to that Act).

96 Person liable¶

1 The chargeable person is liable to pay tax charged under this Part.

2 “The chargeable person” means—

a in relation to tax charged by virtue of section 94(4), the company;

b in relation to tax charged by virtue of section 94(5), the responsible partners.

3 In relation to tax charged by virtue of section 94(6) “the chargeable person” means—

a if the collective investment scheme is a unit trust scheme, the trustee of the scheme;

b if the collective investment scheme is an open-ended investment company, the body corporate referred to in section 236(2) of the Financial Services and Markets Act 2000;

c in relation to an EEA UCITS which is not an open-ended investment company or unit trust scheme, the management company for that UCITS;

d in any other case, the person who has day-to-day control over the management of the property subject to the scheme.

4 The liability of the responsible partners to pay tax charged on them under this Part is joint and several.

5 References in this section to “the responsible partners” are to all the persons who are members of the partnership concerned on the first day in the chargeable period on which the partnership meets the ownership condition with respect to the single-dwelling interest.

6 Tax charged under this Part is said to be “charged on” the chargeable person (and that person is said to be “chargeable to” the tax).

97 Liability of persons jointly entitled¶

1 Subsection (2) applies if—

a a company is within the charge for a chargeable period with respect to a single-dwelling interest by virtue of section 96(2)(a), and

b one or more other persons are jointly entitled to the interest on the first day in that period on which the company is within the charge with respect to it.

2 The company and the other person or persons are jointly and severally liable for the tax charged for that period with respect to the interest (whether or not those other persons are also within the charge with respect to the interest on the day in question).

3 Subsection (4) applies if—

a a company that is a member of a partnership is entitled (as a member of the partnership) to a single-dwelling interest on a day in a chargeable period, and

b as a result, the responsible partners are within the charge with respect to the interest for the period.

4 If, on the first day in the chargeable period on which the responsible partners are within the charge a person (“P”) who is not one of the responsible partners is jointly entitled to the chargeable interest, P and the responsible partners are jointly and severally liable for the tax charged for the period with respect to the interest (whether or not P is also within the charge with respect to the interest on the day in question).

98 Collective investment schemes: liability for and collection of tax¶

1 Subsection (2) applies where tax is charged for a chargeable period with respect to a single-dwelling interest by virtue of section 94(6).

2 The persons who are major participants in the scheme on the first day of the chargeable period on which the chargeable person is within the charge with respect to the interest are jointly and severally liable with the chargeable person for the tax charged.

3 Subsection (2) does not permit the recovery from a major participant of an amount exceeding the market value of the participant's holding in the scheme.

4 The reference in subsection (3) to a participant's holding in a collective investment scheme is to the interests or rights by virtue of which the participant takes part in the scheme.

5 Tax chargeable by virtue of section 94(6) may be recovered from the depositary (if any) of a collective investment scheme, but only up to the amount or value of any money or other property subject to the scheme that has been entrusted to the depositary for safekeeping.

6 The depositary—

a may retain out of any money entrusted to it as mentioned in subsection (5) enough money to pay that tax, and

b is entitled to be fully reimbursed by the participants in the scheme (by that method or another) for amounts recovered under subsection (5).

7 In this section—

a “depositary”, in relation to a collective investment scheme (other than a unit trust scheme), has the meaning given by section 237(2) of the Financial Services and Markets Act 2000;

b “major participant”, in relation to a collective investment scheme, is to be read in accordance with section 136(4);

c “participant”, in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000.

8 For the purposes of this Part “market value” is to be determined as for the purposes of TCGA 1992 (see, particularly, section 272 of that Act).

99 Amount of tax chargeable¶

1 The amount of tax charged for a chargeable period with respect to a single-dwelling interest is stated in subsection (2) or (3).

2 If the chargeable person is within the charge with respect to the single-dwelling interest on the first day of the chargeable period, the amount of tax charged is equal to the annual chargeable amount.

3 Otherwise, the amount of tax charged is equal to the relevant fraction of the annual chargeable amount.

4 The annual chargeable amount for a single-dwelling interest and a chargeable period is determined in accordance with the following table, by reference to the taxable value of the interest on the relevant day.

Annual chargeable amount	Taxable value of the interest on the relevant day
£3,500	More than £500,000 but not more than £1 million.
£7,000	More than £1 million but not more than £2 million.
£23,350	More than £2 million but not more than £5 million.
£54,450	More than £5 million but not more than £10 million.
£109,050	More than £10 million but not more than £20 million.
£218,200	More than £20 million.

5 The “relevant day” is—

a for the purposes of subsection (2), the first day of the chargeable period;

b for the purposes of subsection (3), the first day in the chargeable period on which the chargeable person is within the charge with respect to the interest.

6 The relevant fraction is—

\frac{N}{Y}

where—

“N” is the number of days from (and including) the relevant day to the end of the chargeable period;

“Y” is the number of days in the chargeable period.

7 See also—

a section 100 (interim relief), and

b section 106 (adjustment of amount chargeable).

100 Interim relief¶

1 Where tax is charged for a chargeable period with respect to a single-dwelling interest, the chargeable person may claim relief before the end of the chargeable period if—

a one or more days in the period is relievable with respect to the interest (by virtue of any of sections 133 to 150),

b one or more days in the chargeable period (after the first day in the period on which the chargeable person is within the charge with respect to the interest) are days on which the chargeable person is not within the charge with respect to the interest, or

c the taxable value of the single-dwelling interest on the first day in the chargeable period on which the chargeable person is within the charge with respect to the interest is higher than its taxable value on a later day in the chargeable period on which the chargeable person remains within the charge with respect to the interest.

2 Relief under this section is called “interim relief”, and must be claimed—

a in an annual tax on enveloped dwellings return, or

b by amending such a return.

3 Where interim relief is claimed under this section, section 163(1) (payment of tax by filing date for annual tax on enveloped dwellings return) has effect as if the amount of tax charged with respect to the single-dwelling interest were the sum of amounts A and B.

4 Amount A is the total of all the daily amounts for days in the pre-claim period on which the chargeable person is within the charge with respect to the single-dwelling interest, other than days that are relievable with respect to the single-dwelling interest.

5 Amount B is zero if—

a the day of the claim is relievable with respect to the single-dwelling interest by virtue of any of sections 133 to 150, or

b the chargeable person is not within the charge with respect to the single-dwelling interest on the day of the claim.

6 Otherwise, amount B is the appropriate fraction of the annual chargeable amount for the single-dwelling interest.For this purpose the annual chargeable amount is determined (under section 99(4)) on the basis that the day of the claim is the relevant day.

7 In subsection (6) “appropriate fraction” means—

\frac{X}{Y}

where—

“X” is the number of days in the period beginning with the day of the claim and ending at the end of the chargeable period, and

“Y” is the number of days in the chargeable period.

8 In this section—

“day of the claim” means the day on which the return mentioned in subsection (2)(a), or notice of the amendment made under subsection (2)(b), is delivered to HMRC;
“pre-claim period” means the period—
1. beginning with the first day in the chargeable period mentioned in subsection (1) on which the chargeable person is within the charge with respect to the single-dwelling interest, and
2. ending with the day before the day of the claim.

9 See sections 105 and 106 for provision about the adjustment of the amount of tax charged.

101 Indexation of annual chargeable amounts¶

^C141 If the consumer prices index for September in 2013 or any later year (“the later year”) is higher than it was for the previous September, section 99(4) applies in relation to chargeable periods beginning on or after 1 April in the year after the later year with the following amendments.

2 For each of the annual chargeable amounts stated in the table in section 99(4) (as it applies in relation to chargeable periods beginning in the previous 12 months) there is substituted the indexed amount.

3 “The indexed amount” is found by—

a increasing the previous amount by the same percentage increase as the percentage increase in the consumer prices index, and

b rounding down the result to the nearest multiple of £50.

4 In this section “consumer prices index” means the all items consumer prices index published by the Statistics Board.

^C155 The Treasury must, before 1 April 2014 and before each subsequent 1 April, make an order stating the amounts that by virtue of this section are to be the annual chargeable amounts for chargeable periods beginning on or after that date.

102 Taxable value¶

1 The taxable value of a single-dwelling interest on any day (“the relevant day”) is equal to its market value at the end of the latest day that—

a falls on or before that day, and

b is a valuation date in the case of that interest.

2 Each of the following is a valuation date in the case of any single-dwelling interest—

a 1 April 2012;

b each 1 April falling 5 years, or a multiple of 5 years, after 1 April 2012.

2A But a day that is a valuation date only because of subsection (2)(b) (a “5-yearly valuation date”) is to be treated as if it were not a valuation date for the purpose of determining the taxable value of a single-dwelling interest on any day in the chargeable period beginning with that 5-yearly valuation date.

3 The following are also valuation dates in the case of any single-dwelling interest to which a company is entitled on the relevant day (otherwise than as a member of a partnership)—

a the effective date of any substantial acquisition by the company of a chargeable interest in or over the dwelling concerned;

b the effective date of any substantial disposal of part (but not the whole) of the single-dwelling interest.

4 The following are also valuation dates in the case of any single-dwelling interest to which a company is entitled on the relevant day as a member of a partnership—

a the effective date of any substantial acquisition as a result of which a chargeable interest in or over the dwelling concerned became an asset of the partnership,

b the effective date of any substantial disposal of part (but not the whole) of the single-dwelling interest.

5 The following are also valuation dates in the case of any single-dwelling interest that is on the relevant day held for the purposes of a collective investment scheme—

a the effective date of any substantial acquisition, made for the purposes of the scheme, of a chargeable interest in or over the dwelling concerned;

b the effective date of any substantial disposal of part (but not the whole) of the single-dwelling interest.

6 In this section references to a disposal of part of a single-dwelling interest include the grant of a chargeable interest out of the single-dwelling interest.

7 The grant of an option does not count as the grant of a chargeable interest for the purposes of subsection (6).

103 Section 102: “substantial” acquisitions and disposals¶

1 For the purposes of section 102—

a the acquisition of a chargeable interest in a dwelling is a “substantial acquisition” only if the chargeable consideration for the acquisition is £40,000 or more;

b the disposal of part (but not the whole) of a single-dwelling interest is a “substantial disposal” only if the chargeable consideration for the acquisition of the chargeable interest by the person acquiring it is £40,000 or more.

2 If the acquisition mentioned in subsection (1)(a) is a transaction between persons who are connected with each other or not acting at arm's length, subsection (1)(a) applies as if the reference to the chargeable consideration for the acquisition were to the market value of the chargeable interest acquired.

3 If the disposal mentioned in subsection (1)(b) is a transaction between persons who are connected with each other or not acting at arm's length, subsection (1)(b) applies as if the reference to the chargeable consideration for the acquisition in question were to the market value of the part of the single-dwelling interest disposed of.

4 The chargeable consideration for the acquisition mentioned in subsection (1)(a) is taken to include the chargeable consideration for any linked acquisition of a chargeable interest in or over the same dwelling.

5 The chargeable consideration for the transaction mentioned in subsection (1)(b) is taken to include the chargeable consideration for any linked disposal of part (but not the whole) of the single-dwelling interest concerned.

6 For the purposes of subsection (2) the market value of the chargeable interest acquired is taken to be the sum of the market values of that chargeable interest and any chargeable interest in or over the same dwelling that is acquired in a linked transaction.

7 For the purposes of subsection (3) the market value of the part of the single-dwelling interest disposed of is taken to be the sum of the market values of that chargeable interest and any chargeable interest in or over the same dwelling that is disposed of in a linked transaction.

8 For the purposes of this section two or more transactions are “linked” if they form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser or, in either case, persons connected with them.

9 In this section “chargeable consideration”, “purchaser” and “vendor” have the same meaning as in Part 4 of FA 2003.

10 In this section references to a disposal of part of a single-dwelling interest include the grant of a chargeable interest out of the single-dwelling interest.

104 No double charge¶

Tax in respect of a given single-dwelling interest is charged only once for any chargeable day even if more than one person is “the chargeable person” with respect to the tax charged.

Adjustment of amount charged¶

105 “Adjusted chargeable amount”¶

1 In relation to a person on whom tax is charged for a chargeable period with respect to a single-dwelling interest, the “adjusted chargeable amount” is the total of the daily amounts for all the days in the period on which the chargeable person is within the charge with respect to the interest.

2 The daily amount for any such day (“the actual day”) is—

\frac{1}{Y} \times A

where—

“Y” is the number of days in the chargeable period;

“A” is the annual chargeable amount for the single-dwelling interest, determined (under section 99(4)) on the basis that the actual day is the relevant day.

106 Adjustment of amount chargeable¶

1 Where tax is charged for a chargeable period with respect to a single-dwelling interest and the adjusted chargeable amount is greater than the initial charged amount, the amount of tax charged is taken to be increased to the adjusted chargeable amount.

2 In this section “the initial charged amount” means the amount of tax charged under section 99 for the period in respect of the interest.

3 Subsection (4) applies where—

a tax is charged for a chargeable period with respect to a single-dwelling interest,

b the adjusted chargeable amount is less than the initial charged amount, and

c a claim for relief is made under this subsection.

4 The amount of tax charged for the period with respect to the interest is taken to be reduced (at the end of the chargeable period) to the adjusted chargeable amount.

5 Relief under subsection (3) must be claimed—

a in an annual tax on enveloped dwellings return, or

b by amending an annual tax on enveloped dwellings return.

^F2186 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 Relief under subsection (3) may be given by repayment of tax or otherwise.

8 See also section 160 (return of adjusted amount chargeable); and see section 163(2) for provision about payment of additional tax by reference to the adjusted chargeable amount.

Chargeable interests and “single-dwelling interest”¶

107 Chargeable interests¶

1 In this Part “chargeable interest” means—

a an estate, interest, right or power in or over land in the United Kingdom, or

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

2 Where two or more persons are jointly entitled to a chargeable interest the chargeable interest is not regarded, for the purposes of this Part, as consisting of separate interests corresponding to the shares (if any) that those persons have by virtue of their joint entitlement.

3 An exempt interest is not a chargeable interest for the purposes of this Part.

4 The following are exempt interests—

a any security interest;

b a licence to use or occupy land;

c in England and Wales or Northern Ireland, a tenancy at will.

5 In subsection (4) “security interest” means an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any other obligation.

6 In the application of this Part in Scotland the reference in subsection (5) to a rentcharge is to be read as a reference to a feu duty or a payment mentioned in section 56(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000 (asp 5).

7 The Treasury may by regulations provide that any other description of interest or right in or over a dwelling is an exempt interest.

108 Meaning of “single-dwelling interest”¶

1 References in this Part to a “single-dwelling interest” are to be read in accordance with this section.

2 A chargeable interest that is exclusively in or over land consisting (on any day) of a single dwelling is a single-dwelling interest (on that day).

3 Where a person is entitled to a chargeable interest that is exclusively in or over land consisting (on any day) of two or more single dwellings—

a provisions referring to a “single-dwelling interest” operate as if the person had (on that day) a separate chargeable interest in or over each dwelling, and

b the chargeable interest in or over each dwelling is therefore a single-dwelling interest.

4 Where a person is entitled to a chargeable interest in or over land that on any day consists of one or more single dwellings and non-residential land—

a provisions referring to a “single-dwelling interest” operate as if the person had (on that day) a separate chargeable interest in or over each dwelling and a further separate chargeable interest in or over the non-residential land, and

b the chargeable interest in or over each dwelling is therefore a single-dwelling interest.

5 A single-dwelling interest is referred to as a single-dwelling interest “in” the dwelling concerned.

6 A single-dwelling interest in one dwelling is distinct from any single-dwelling interest in another dwelling, even if the dwellings stand successively on the same land.

7 In this section—

a “non-residential land” means land that is not a dwelling or part of a dwelling;

b references to a dwelling include a part of a dwelling.

109 Different interests held in the same dwelling¶

1 Subsection (2) applies if on one or more days in a chargeable period—

a a company is entitled to two or more single-dwelling interests in the same dwelling, or

b two or more single-dwelling interests in the same dwelling are held for the purposes of the same collective investment scheme.

2 This Part has effect with respect to that chargeable period as if those separate interests constituted just one single-dwelling interest, the taxable value of which on any day is the sum of the taxable values of the separate interests.

3 In calculating the taxable values of the separate interests for the purposes of subsection (2), the market value of each interest is determined, under the provisions of TCGA 1992 applied by section 98(8), on the assumption that the other interest or interests are placed on the open market with that interest (on the valuation date appropriate to that interest).

110 Interests held by connected persons¶

1 If on any day (“the relevant day”) a company (“C”) is entitled to a single-dwelling interest in a dwelling and another person (“P”) who is connected with C is entitled to a different single-dwelling interest in the same dwelling, this Part has effect—

a in relation to C as if C were on that day entitled to P's single-dwelling interest as well as C's single-dwelling interest, and

b (if P is a company) in relation to P as if P were on that day entitled to C's single-dwelling interest as well as P's single-dwelling interest.

2 This subsection provides for an exception to subsection (1).Where P is an individual, C is not treated ^F31... as entitled to P's single-dwelling interest on the relevant day unless on that day C is entitled to a single-dwelling interest in the dwelling that is a freehold or leasehold interest with a taxable value of more than £250,000.

2A Subsection (2B) applies in any case where—

a C would (without subsection (2B)) be treated, as a result of subsection (1) (read with section 109), as entitled to a single-dwelling interest with a taxable value (on the relevant day) of more than £2 million, but

b C would not be so treated if the value specified in subsection (2) were £500,000 (instead of £250,000).

2B Subsection (2) has effect as if the value specified in it were £500,000 (instead of £250,000).

3 If on any day a single-dwelling interest (“the scheme interest”) is held for the purposes of a collective investment scheme and a person (“P”) who is connected with the scheme is entitled to a different single-dwelling interest in the same dwelling, this Part has effect—

a in relation to the scheme, as if both those separate interests were on that day held for the purposes of the scheme, and

b (if P is a company) in relation to P as if P were on that day entitled to the scheme interest as well as P's single-dwelling interest.

4 If on any day a single-dwelling interest in a dwelling is held for the purposes of a collective investment scheme (“the first scheme”) and another interest in the same dwelling is held for the purposes of another collective investment scheme (“the second scheme”) that is connected with the first scheme, this Part has effect—

a in relation to the first scheme, as if both the interests were held on that day for the purposes of that scheme, and

b in relation to the second scheme, as if both interests were held on that day for the purposes of that scheme.

5 See also—

a section 97, for provision about the liability to tax of persons treated under this section (read with section 104) as jointly entitled to a single-dwelling interest;

b paragraph 55 of Schedule 33, for provision about returns in cases involving joint entitlement.

6 The provisions mentioned in subsection (5) are to be read as including corresponding provision for cases where the same single-dwelling interest is treated under this section as held—

a for the purposes of different collective investment schemes, or

b by a company and for the purposes of a collective investment scheme.

7 In the application of this section to Scotland—

a the reference to a freehold interest is to the interest of the owner;

b the reference to a leasehold interest is to a tenant's right over or interest in property subject to a lease.

111 Different interests held in the same dwelling: effect of reliefs etc¶

1 References in section 110 to a person do not include—

a a public body, as defined in section 153,

b a body listed in section 154(2) (bodies established for national purposes).

2 Subsections (1) to (4) of section 110 do not apply in relation to a single-dwelling interest if—

a the day in question is relievable with respect to that interest by virtue of section 150 (providers of social housing),

b by virtue of section 151 (charitable companies) the ownership condition is regarded as not met with respect to the interest on that day, or

c the taxable value of the interest on that day is taken to be zero by virtue of section 155 (dwelling conditionally exempt from inheritance tax).

3 Subsection (4) applies where the separate interests (the “relevant interests”) that under section 110 (or that section and section 109) are treated as constituting, on a day, just one single-dwelling interest (“the combined interest”) include—

a a freehold or leasehold interest, and

b a leasehold interest (“the inferior interest”) granted out of that interest.

4 If the inferior interest is the most inferior relevant interest, the combined interest, and the dwelling itself (where relevant), are regarded for the purposes of the relevant relieving provisions as being exploited, on the day mentioned in subsection (3), in the way the inferior interest is exploited on that day.

5 If the inferior interest is an interest in part only (“the sub-let part”) of the land that is the subject-matter of the combined interest, subsection (4) has effect in relation to the combined interest only so far as that interest relates to the sub-let part.

6 In this section “the relevant relieving provisions” means sections 132 to 150.

7 The inferior interest counts as “the most inferior relevant interest” if no relevant interest (see subsection (3)) is a leasehold interest granted out of it.

8 In this section the reference to a leasehold interest includes the interest of a lessee under an agreement for a lease.

9 In the application of this section to Scotland—

a the reference to a freehold interest is to the interest of the owner;

b the reference to a leasehold interest is to a tenant's right over or interest in property subject to a lease;

c the reference to an agreement for lease includes missives of let.

Meaning of “dwelling”¶

112 Meaning of “dwelling”¶

1 A building or part of a building counts as a dwelling at any time when—

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.

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

3 Land that subsists, or is at any time intended to subsist, for the benefit of a dwelling is taken to be part of the dwelling at that time.

4 A building, or part of a building, used for a purpose specified in section 116(2) or (3) of FA 2003 is not used as a dwelling for the purposes of subsection (1).

5 Where a building, or part of a building, is used for a purpose mentioned in subsection (4), no account is to be taken for the purposes of subsection (1) of its suitability for any other use.

6 If a building or part of a building becomes temporarily unsuitable for use as a dwelling for any reason (including accidental damage, repairs or any other physical change to the building or its environment), that temporary unsuitability is ignored in determining whether or not the building or part of a building is, during the period in question, a dwelling for the purposes of this Part.This subsection does not affect any of the provisions in sections 126 to 131.

113 Substantial performance of “off plan” purchase¶

1 Subsection (2) applies where—

a a contract is entered into for the acquisition of a chargeable interest in or over land that consists of or includes a building, or part of a building, that is to be constructed or adapted for use as a single dwelling,

b substantial performance is treated as constituting the acquisition of the chargeable interest (under section 122), and

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

2 The chargeable interest deemed to be acquired as mentioned in subsection (1)(b) is taken to be in or over land that consists of or (as appropriate) includes a dwelling.

3 If at any time after the substantial performance of the contract the obligation under the contract to carry out the construction or adaptation ceases to have effect without the construction or adaptation having been begun, subsection (2) ceases to apply at that time.

4 A building or part of a building used for a purpose specified in section 116(2) or (3) of FA 2003 is not used as a dwelling for the purposes of subsection (1).

5 In this section—

“contract” includes any agreement (including, in the case of Scotland, missives of let not constituting a lease);
“substantially performed” has the same meaning as in section 44 of FA 2003.

114 Power to modify meaning of “use as a dwelling”¶

1 The Treasury may by order amend this Part so as to specify cases where use of a building is to be use of a building as a dwelling for the purposes of section 112(1) or 113(1).

2 The reference in section 116(8)(a) of FA 2003 (power to amend section 116(2) and (3)) to “the purposes of subsection (1)” includes a reference to the purposes of sections 112(1) and 113(1).

115 Parts of a greater whole¶

1 The fact that a part of a building is suitable for use as a dwelling does not prevent that part from forming part of a larger single dwelling.

2 The fact that a building or structure that is—

a in the garden or grounds of a dwelling, and

b occupied or enjoyed with the dwelling,

is itself suitable for use as a single dwelling does not prevent it from being treated (in accordance with section 112(2)) as part of the dwelling.

116 Dwelling in grounds of another dwelling¶

1 Subsection (4) applies where the conditions in subsection (2) are met in relation to two dwellings (the “main dwelling” and the “associated dwelling”) on a day (“the day in question”) in a chargeable period.

2 The conditions are that—

a the main dwelling has a garden or grounds,

b the associated dwelling stands within the garden or grounds of the main dwelling, but is not occupied or enjoyed with that dwelling,

c the associated dwelling does not have separate access, and is not part of the same building as the main dwelling, and

d the common ownership condition is met.

3 The common ownership condition is that—

a a company is entitled to a chargeable interest in the main dwelling, and the company or a person connected with the company is entitled to a chargeable interest in the associated dwelling, or

b a chargeable interest in the main dwelling is held for the purposes of a collective investment scheme, and a chargeable interest in the associated dwelling is held for the purposes of the same collective investment scheme.

(It does not matter whether or not the interest in the main dwelling and the interest in the associated dwelling are held for the same title.)

4 This Part has effect in relation to the interests mentioned in paragraph (a) or (as the case may be) (b) of subsection (3) as if the main dwelling and the associated dwelling were, on the day in question, suitable for use as a single dwelling.

5 Subsection (4) does not apply if—

a the day in question is, in relation to the interest in the main dwelling or the interest in the associated dwelling, relievable by virtue of a provision mentioned in subsection (6), or

b the ownership condition is, by virtue of section 151 (charitable companies), regarded as not being met on that day with respect to one or other of those interests.

6 Those provisions are—

section 133 (property rental businesses);
section 134 (rental property: preparation for sale etc);
section 137 (dwellings opened to the public);
section 138 (property developers);
section 139 (property developers: exchange of dwellings);
section 141 (property traders);
section 143 (financial institutions acquiring dwellings in the course of lending);
section 144A (regulated home reversion plans);
section 145 (occupation by employees or partners of a qualifying trade or property rental business );
section 147A (caretaker flat owned by management company);
section 148 (farmhouses);
section 150 (providers of social housing).

7 The reference in subsection (3)(a) to a person connected with the company does not include a public body (as defined in section 153) or a body listed in section 154(2) (bodies established for national purposes).

8 The reference in subsection (3)(b) to a chargeable interest being held for the purposes of the same collective investment scheme includes a reference to a person connected with the scheme being entitled to the interest.

9 The associated dwelling has “separate access” only if—

a there is access to the associated dwelling directly from a highway (in Scotland, a road) that the dwelling adjoins, or

b the person entitled to possession of the associated dwelling has access to that dwelling from a highway (in Scotland, a road), exclusively by passing over land that the person is entitled to pass over by reason of one or more rights of way or other interests in land to which the person is separately entitled.

10 In this section—

in relation to a dwelling or dwellings, references to the “garden or grounds” are to land occupied or enjoyed with the dwelling or dwellings as a garden or grounds;
references to the person entitled to possession of a dwelling are to the person entitled to possession of the dwelling by reason of an estate or interest held by that person;
“separately entitled” means entitled otherwise than by reason of a chargeable interest in or over the main dwelling.

117 Dwellings in the same building¶

1 Two parts of a building are “linked dwellings” if—

a each of them counts as a dwelling,

b there is private access between the two dwellings,

c the two parts of the building are not (together) used or suitable for use as a single dwelling, and

d the common ownership condition and the use condition are met.

2 The common ownership condition is that—

a a company is entitled to a chargeable interest in one of the dwellings, and the company or a person connected with the company is entitled to a chargeable interest in the other dwelling, or

b a chargeable interest in one of the dwellings is held for the purposes of a collective investment scheme, and a chargeable interest in the other dwelling is held for the purposes of the same collective investment scheme.

(It does not matter whether or not the interests are held for the same title.)

3 If on a day in a chargeable period (“the day in question”) two parts of a building constitute linked dwellings, this Part has effect in relation to the interests mentioned in paragraph (a) or (as the case may be) (b) of subsection (2) as if the two parts were, on the day in question, suitable for use as a single dwelling.

4 Subsection (3) does not apply if—

a the day in question is, in relation to a chargeable interest mentioned in subsection (2)(a) or (as the case may be) (2)(b), relievable by virtue of a provision mentioned in subsection (5), or

b (in a case where paragraph (a) of subsection (2) applies) the ownership condition is, by virtue of section 151 (charitable companies), regarded as not being met on that day with respect to one or other of the chargeable interests mentioned in that paragraph.

5 Those provisions are—

section 133 (property rental businesses);
section 134 (rental property: preparation for sale etc);
section 137 (dwellings opened to the public);
section 138 (property developers);
section 139 (property developers: exchange of dwellings);
section 141 (property traders);
section 143 (financial institutions acquiring dwellings in the course of lending);
section 144A (regulated home reversion plans);
section 145 (occupation by employees or partners of a qualifying trade or property rental business );
section 147A (caretaker flat owned by management company);
section 148 (farmhouses);
section 150 (providers of social housing).

6 The reference in subsection (2)(a) to a person connected with the company does not include a public body (as defined in section 153) or a body listed in section 154(2) (bodies established for national purposes).

7 If two dwellings in a building (dwelling A and dwelling B) are treated under this section as suitable for use as a single dwelling, and dwelling B and a third dwelling in the building (“dwelling C”) are treated under this section as suitable for use as a single dwelling, all three are treated as suitable for use as a single dwelling (and so on).

118 Section 117: supplementary¶

1 The reference in section 117(2)(b) to a chargeable interest being held for the purposes of the same collective investment scheme includes a reference to a person connected with the scheme being entitled to the interest.

2 For the purposes of section 117, there is private access between two dwellings if the person entitled to possession of each dwelling is entitled, by reason of a right of way or other interest in land, to have access to that person's dwelling from the other dwelling, without passing over any part of the building (or any other land) in which a third party has an interest entitling that third party to enter it.

3 In subsection (2) “third party” means a person other than—

a the persons entitled to possession of the dwellings mentioned in subsection (2), and

b persons connected with any of them.

4 The use condition mentioned in section 117(1)(d) is that each of the two dwellings—

a is occupied (or usually occupied) by a relevant individual,

b is intended to be so occupied (or usually so occupied), or

c is not occupied.

5 In subsection (4) “relevant individual” means—

a an individual connected with the company mentioned in section 117(2)(a),

b an individual connected with the collective investment scheme mentioned in section 117(2)(b),

c an individual who occupies (or is to occupy) the dwelling concerned otherwise than on commercial terms, or

d an individual who is employed wholly or partly in connection with the occupation by a person falling within any of paragraphs (a) to (c) of a dwelling in the building, or provides services in connection with such a person's occupation of a dwelling in the building.

6 In this section references to the person entitled to possession of a dwelling are to the person entitled to possession of the dwelling by reason of an estate or interest held by that person.

119 Terraces etc¶

Any structure (such as a terrace of houses or a pair of semi-detached houses) that is composed of or includes dwellings is regarded as a building for the purposes of sections 117 and 118.

Acquisitions and disposals¶

120 Acquisitions and disposals of chargeable interests¶

1 References in this Part to the acquisition of a chargeable interest include any acquisition however effected (including an acquisition effected by the act of parties to a transaction, by order of a court or other authority, by or under any statutory provision or by operation of law).

2 The surrender or release of a chargeable interest is—

a an acquisition of that interest by any person whose interest or right is benefited or enlarged by the transaction, and

b a disposal by the person ceasing to be entitled to that interest.

3 The variation of a chargeable interest is—

a an acquisition of a chargeable interest by the person benefiting from the variation, and

b a disposal of a chargeable interest by the person whose interest is subject to or limited by the variation.

121 Date of acquisition or disposal¶

1 A person who acquires a chargeable interest in or over land that consists of or includes a dwelling is treated for the purposes of this Part as acquiring the interest on the effective date of the acquisition (and therefore as entitled to the interest with effect from that date: see section 171).

2 A person who disposes of a chargeable interest in or over land that consists of or includes a dwelling is treated for the purposes of this Part as ceasing to be entitled to the interest on the effective date of the disposal (and therefore as not being entitled to the interest on that day: see section 171).

3 If a person's acquisition and disposal of a chargeable interest are completed on the same day, then for the purposes of this Part—

a the person's acquisition of the interest is ignored if it precedes the disposal;

b the person's disposal of the interest is ignored if it precedes the acquisition.

4 The effective date of an acquisition of a chargeable interest is—

a the date on which the acquisition is completed, or

b any alternative date the Commissioners for Her Majesty's Revenue and Customs may prescribe by regulations.

5 The effective date of a disposal of a chargeable interest is—

a the date on which the disposal is completed, or

b any alternative date the Commissioners for Her Majesty's Revenue and Customs may specify by regulations.

122 Contract and conveyance: the purchaser¶

1 This section applies where a person (“P”) enters into a contract under which—

a P is to acquire a relevant chargeable interest, and

b the acquisition is to be completed by a conveyance.

2 P is not regarded as acquiring any chargeable interest by reason of entering into the contract.

3 If the contract is substantially performed without having been completed, this Part has effect as if the substantial performance of the contract were the completion of the acquisition provided for by the contract.

4 Accordingly, where subsection (3) applies and the contract is subsequently completed by a conveyance, that completion is not treated for the purposes of section 102 (taxable value) as effecting the acquisition of a chargeable interest.

5 Where subsection (3) applies and—

a the contract is afterwards rescinded or annulled, or

b performance of the contract is for any other reason terminated before the contract has been carried fully into effect,

this Part has effect as if P had at the relevant time disposed of the chargeable interest referred to in subsection (1)(a).

6 In subsection (5) “the relevant time” means—

a the time when the rescission or annulment takes effect, or

b (as the case requires) the time when performance of the contract ceases.

7 Where subsection (3) applies and the contract is afterwards varied (or partially rescinded) so that the chargeable interest to be acquired under the contract is not the same as the chargeable interest to which the contract originally related, this Part (including subsection (3)) has effect as if the variation of the contract effected—

a the disposal by P of the chargeable interest referred to in subsection (1)(a), and

b the substantial performance of the contract, as varied.

8 If the parties to the contract proceed as if they had varied the contract in the way mentioned in subsection (7) (without actually doing so), subsection (7) applies as if they had actually made the corresponding variation in the terms of the contract.

9 In this section—

a references to completion are to the completion of the acquisition proposed, whether or not between the original parties;

b “contract” includes any agreement;

c “conveyance” includes any instrument;

d “relevant chargeable interest” means a chargeable interest in or over land that consists of or includes a dwelling;

e “substantially performed” has the same meaning as in section 44 of FA 2003.

123 Contract and conveyance: the vendor¶

1 This section applies where a person (“V”) enters into a contract under which—

a V is to dispose of a relevant chargeable interest, and

b the disposal is to be completed by a conveyance.

2 V is not regarded as disposing of a chargeable interest by reason of entering into the contract.

3 If the contract is substantially performed without having been completed, this Part has effect as if the substantial performance of the contract were the completion of the disposal provided for by the contract.

4 Accordingly, where subsection (3) applies and the contract is subsequently completed by a conveyance, that completion is not treated for the purposes of section 102 as effecting the disposal of a chargeable interest.

5 Where subsection (3) applies and—

a the contract is afterwards rescinded or annulled, or

b performance of the contract is for any other reason terminated before the contract has been carried fully into effect,

this Part has effect as if V had at the relevant time re-acquired the chargeable interest referred to in subsection (1)(a).

6 In subsection (5) “the relevant time” means—

a the time when the rescission or annulment takes effect, or

b (as the case requires) the time when performance of the contract ceases.

7 Where subsection (3) applies and the contract is afterwards varied (or partially rescinded) so that the chargeable interest to be disposed of under the contract is not the same as the chargeable interest to which the contract originally related, this Part (including subsection (3)) has effect as if the variation of the contract effected—

a the re-acquisition by V of the chargeable interest referred to in subsection (1)(a), and

b the substantial performance of the contract, as varied.

9 In this section—

a references to completion are to the completion of the disposal proposed, between the same parties, in substantial conformity with the contract;

b “contract” includes any agreement;

c “conveyance” includes any instrument;

d “relevant chargeable interest” means a chargeable interest in or over land that consists of or includes a dwelling;

e “substantially performed” has the same meaning as in section 44 of FA 2003.

New dwellings, conversions, demolition etc¶

124 New dwellings¶

1 Where a new dwelling is being or has been constructed (whether or not as part of a larger building) the earlier of the following days is a valuation date in the case of a single-dwelling interest in that dwelling—

a the completion day;

b the day on which the dwelling is first occupied.

2 The reference in subsection (1) to the construction of a new dwelling—

a includes the production of a new dwelling by the alteration (whether structural or otherwise) of an existing building, but

b does not include a case to which section 125 (dwellings produced from other dwellings) or section 128 (demolition and replacement: new dwellings) applies.

3 The reference in subsection (1) to the “completion day” is to the day on which the new dwelling is treated as having come into existence for the purposes of—

a Part 1 of the Local Government Finance Act 1992 (council tax: England and Wales) (see section 17 of that Act), or

b Part 2 of that Act (council tax: Scotland) (see section 83 of that Act), or

c the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I. 28)) (see Article 25B of that Order).

4 In this section “building” includes a part of a building.

125 Dwellings produced from other dwellings¶

1 This section applies where an existing building that is a dwelling or dwellings (“the old dwelling” or “the old dwellings”) becomes a different dwelling or dwellings ( “ new ” dwellings) as a result of structural alteration.

2 Any question as to whether or not a person has a single-dwelling interest at any time either in the old dwelling or dwellings or in a new dwelling is determined on the assumption that the old dwelling or dwellings cease to exist, and any new dwelling come into existence, only when the conversion is completed.

3 The day after the conversion is completed is a valuation date in the case of any single-dwelling interest in a new dwelling.

4 References to when the conversion is completed are to the end of the day on which the new dwelling is treated as having come into existence (or the first day on which all the new dwellings are treated as having come into existence) for the purposes of—

a Part 1 of the Local Government Finance Act 1992 (council tax: England and Wales) (see section 17 of that Act), or

b Part 2 of that Act (council tax: Scotland) (see section 83 of that Act), or

c the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I. 28)) (see Article 25B of that Order).

5 In this section “building” includes a part of a building.

126 Demolition of a dwelling¶

1 This section and sections 127 to 129 apply where a building that is a dwelling (“the old dwelling”) is demolished after 1 April 2013.

2 Except so far as express provision to the contrary is made in sections 127 to 129, any question as to whether a person has a single-dwelling interest in the dwelling, and any question as to the taxable value of such an interest, is determined as if the dwelling had not been demolished.

3 For the purposes of subsection (1) the demolition of a building is treated as having occurred after 1 April 2013 if a day after 1 April 2013 is the first day on which—

a the demolition has begun, and

b as a result, the building is no longer suitable for use as a dwelling.

4 In this section “building” includes a part of a building.

127 Demolition without replacement¶

1 Subsection (2) applies if a person entitled to a single-dwelling interest in the old dwelling notifies an officer of Revenue and Customs that to the best of the person's knowledge there is no proposal to construct any dwelling or dwellings on the site of the old dwelling.

2 Any question as to whether a person has a single-dwelling interest in the old dwelling is determined on the assumption that the old dwelling ceases (or ceased) to exist with effect from the end of the day mentioned in subsection (3).

3 That day is the first day on which—

a the demolition has begun, and

b as a result, the building in question is no longer suitable for use as a dwelling.

4 A notification under subsection (1) must be given—

a in an annual tax on enveloped dwellings return, or

b by amending such a return.

5 In this section—

a “building” includes part of a building;

b “the site of the old dwelling” means the land on which the dwelling stood and that counted as part of the dwelling;

c the reference to the construction of a dwelling or dwellings on that site is to the construction of a dwelling or dwellings wholly or partly on the site.

128 Demolition and replacement: new dwellings¶

1 Subsection (2) applies if one or more dwellings (referred to below as “new dwellings”) are constructed on the site of the old dwelling after the demolition.

2 Any question as to whether or not a person has a single-dwelling interest at any time either in the old dwelling or in a new dwelling is determined on the assumption that the old dwelling ceases to exist, and the new dwellings come into existence, only when the rebuilding is completed.

3 The day after the rebuilding is completed is a valuation date in the case of any single-dwelling interest in a new dwelling.

4 In subsection (1)—

a “the site of the old dwelling” means the land on which the dwelling stood and that counted as part of the dwelling;

b the reference to the construction of a dwelling on that site is to the construction of a dwelling wholly or partly on the site.

5 References to when the rebuilding is completed are to the end of whichever of the following days is earlier—

a the completion day;

b the day on which the last of the new dwellings to be occupied is first occupied.

6 The reference in subsection (5) to the “completion day” is to the day on which the new dwelling is treated as having come into existence (or the first day on which all the new dwellings are treated as having come into existence) for the purposes of—

a Part 1 of the Local Government Finance Act 1992 (council tax: England and Wales) (see section 17 of that Act), or

b Part 2 of that Act (council tax: Scotland) (see section 83 of that Act), or

c the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I. 28)) (see Article 25B of that Order).

129 Demolition and replacement: other cases¶

1 This section applies if—

a a building is constructed on the site of the old dwelling after the demolition, and

b section 128 does not apply.

2 Any question as to whether a person has a single-dwelling interest in the old dwelling is determined on the assumption that the old dwelling ceases to exist on the day after—

a the day on which the change of use is approved, or

b if later, the day on which the old dwelling ceased to be occupied.

3 In subsection (1)—

a “the site of the old dwelling” means the land on which the dwelling stood and that counted as part of the dwelling;

b the reference to the construction of a dwelling on that site is to the construction of a dwelling wholly or partly on the site.

130 Conversion of dwelling for non-residential use¶

1 This section applies where a building or part of a building—

a has been suitable for use as a dwelling, and

b is altered for the purpose of making it suitable for use otherwise than as a dwelling.

2 The question whether or not the alterations make the building or part unsuitable for use as a dwelling is one of fact (but see subsection (3)).

3 The building or part will not be regarded as having become unsuitable for use as a dwelling as a result of the alterations at any time unless by that time any planning permission , development consent or infrastructure consent required for the alterations has been granted (and the alterations have been made in accordance with any such permission or consent).

4 In this section “planning permission” has the meaning given by the relevant planning enactment.

5 “The relevant planning enactment” means—

a in relation to land in England and Wales, section 336(1) of the Town and Country Planning Act 1990;

b in relation to land in Scotland, section 277(1) of the Town and Country Planning (Scotland) Act 1997;

c in relation to land in Northern Ireland, Article 2(2) of the Planning (Northern Ireland) Order 1991 (S.I. 1991/1220 (N.I. 11)).

6 In this section—

a “development consent” means development consent under the Planning Act 2008.

b “infrastructure consent” means infrastructure consent under the Infrastructure (Wales) Act 2024.

131 Damage to a dwelling¶

1 This section applies where a dwelling is damaged so as to be temporarily unsuitable for use as a dwelling.

2 The unsuitability for use as a dwelling is taken into account in applying the definition of “dwelling” for the purposes of this Part (see section 112) only if the first and second conditions are met.

3 The first condition is that the damage is—

a accidental, or

b otherwise caused by events beyond the control of the person entitled to the single-dwelling interest.

4 The second condition is that, as a result of the damage, the building concerned is unsuitable for use as a dwelling for at least 90 consecutive days.

5 Where the first and second conditions are met—

a the entire period of unsuitability for use as a dwelling (including the first 90 days) is taken into account in applying the definition of “dwelling”, and

b work done in that period to restore the building to suitability for use as a dwelling does not count, for the purposes of section 112 or 113, as construction or adaptation of the building for use as a dwelling.

6 The first condition is regarded as not being met if the damage occurs in the course of work that—

a is done for the purpose of altering the dwelling (or a building of which it forms part), and

b itself involves, or could be expected to involve, making the building unsuitable for use as a dwelling for 30 days or more.

7 In this section—

a references to alteration include partial demolition;

b references to a building include a part of a building.

8 In this section references to damage include damage done before 1 April 2013; and days before 1 April 2013 may be taken into account for the purposes of subsection (4).

Reliefs¶

132 Effect of reliefs under sections 133 to 150¶

1 Subsection (2) applies where tax is charged, in respect of a single-dwelling interest, for a chargeable period that includes one or more days that are relievable as a result of any of the provisions listed in subsection (3) (or for more than one such period).

2 For any such period, the adjusted chargeable amount is to be calculated on the basis that the chargeable person is not within the charge with respect to the interest on any relievable day.

3 The provisions are—

section 133 (property rental businesses);
section 134 (rental property: preparation for sale etc);
section 137 (dwellings opened to the public);
section 138 (property developers);
section 139 (property developers: exchange of dwellings);
section 141 (property traders);
section 143 (financial institutions acquiring dwellings in the course of lending);
section 144A (regulated home reversion plans);
section 145 (occupation by employees or partners of a qualifying trade or property rental business );
section 147A (caretaker flat owned by management company);
section 148 (farmhouses);
section 150 (providers of social housing).

4 See also section 106 (adjustment of amount chargeable and claim for relief).

133 Property rental businesses¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if on that day the interest—

a is being exploited as a source of rents or other receipts (other than excluded rents) in the course of a qualifying property rental business carried on by a person entitled to the interest, or

b steps are being taken to secure that the interest will, without undue delay, be so exploited in the course of a qualifying property rental business that is being carried on, or is to be carried on, by a person entitled to the interest.

2 A day is not relievable by virtue of subsection (1) or section 134 in the case of a single-dwelling interest if on that day a non-qualifying individual is permitted to occupy the dwelling.

3 In this Part “qualifying property rental business” means a property rental business that is run on a commercial basis and with a view to profit.

4 A business is a “property rental business” for the purposes of subsection (3) if it is a property business as defined in Chapter 2 of Part 4 of CTA 2009, but—

a the question whether or not a business is a property rental business for the purposes of subsection (3) is determined without reference to whether or not any profits of the business are chargeable to corporation tax (and section 204(2) of CTA 2009 is therefore disregarded), and

b for the purposes of this subsection the “rents or other receipts” referred to in section 207(1) of CTA 2009 are taken not to include excluded rents

5 In subsection (1)(b) “without undue delay” means without delay except so far as delay is justified by commercial considerations or cannot be avoided.

6 In this Part “excluded rents” means rents within any of classes 2 to 6 in the table in section 605(2) of CTA 2010.

134 Rental property: preparation for sale, demolition etc¶

1 A day (“day X”) on which a person (“P”) is entitled to a single-dwelling interest is relievable in relation to that interest if—

a on day X the dwelling is unoccupied and any of the first to fourth conditions is met (see below),

b day X is preceded by one or more days (“qualifying days”) that are relievable under section 133 in relation to the interest and on which P, or a relevant partner, was entitled to the interest, and

c the days (if any) between day X and the last of the qualifying days to precede day X are all relievable under this section.

First condition The first condition is that steps are being taken to secure that the interest will be sold without undue delay.
Second condition The second condition is that—
1. steps are being taken to secure that the dwelling will be demolished without undue delay, and
2. if it is intended that a new dwelling will be constructed on the site of the existing dwelling, the intention is that it will be used in a relievable way.
Third condition The third condition is that—
1. steps are being taken to secure that the dwelling will be converted into a different dwelling without undue delay, and
2. it is intended that the new dwelling will be used in a relievable way.
Fourth condition The fourth condition is that steps are being taken to secure that the dwelling will be converted into a building other than a dwelling without undue delay.

2 A dwelling is “used in a relievable way” for the purposes of subsection (1) if the single-dwelling interest in question is exploited in such a way, or held in such a way and for such purposes, (or, as the case requires, the dwelling itself is exploited or used in such a way) that a day of such exploitation, ownership or use would be relievable under any of sections 133, 137, 145 and 148.

3 In this section—

“relevant partner”, where P is (on day X) entitled to the interest as a member of a partnership, means a person who was at the time in question carrying on the qualifying rental property business concerned as a member of that partnership;
“without undue delay” means without delay, except so far as delay is justified by commercial considerations or cannot be avoided.

135 Non-qualifying occupation: look-forward and look-back¶

1 Subsection (2) applies if on a day in a chargeable period (“the day of non-qualifying occupation”)—

a a single-dwelling interest to which a person (“the landlord”) is entitled is being exploited as mentioned in section 133(1)(a), or steps are being taken to secure that the interest will be so exploited, as mentioned in section 133(1)(b), and

b a non-qualifying individual is permitted to occupy the dwelling.

2 No subsequent day in that chargeable period, or in any of the subsequent 3 chargeable periods, that meets the continuity of ownership condition and would (in the absence of this subsection) be relievable by virtue of section 133(1)(b) is treated as relievable by virtue of that provision unless a day of qualifying use falls between that day and the day of non-qualifying occupation.

3 A day meets the continuity of ownership condition if on that day—

a the landlord is entitled to the single-dwelling interest, or

b if the landlord carried on or (as the case requires) intended to carry on the property rental business in partnership, another member of the partnership is entitled to the interest.

4 Subsection (5) applies if a person who is a non-qualifying individual in relation to a single-dwelling interest occupies the dwelling on a day in a chargeable period (“the day of non-qualifying occupation”).

5 An earlier day in that or the preceding chargeable period (“the earlier day”) is not relievable by virtue of section 133(1)(b) or 134 if a relevant person is entitled to the single-dwelling interest on that day.

6 In subsection (5) “relevant person” means—

a a person who is entitled to the single-dwelling interest on the day of non-qualifying occupation, or

b if a person falling within paragraph (a) is or has been a member of a partnership whose members have at any time exploited the single-dwelling interest as a source of rents and receipts in a property rental business, any other member of that partnership.

7 Subsection (5) does not apply in relation to the earlier day if a day that is relievable by virtue of section 133(1)(a) falls between that earlier day and the day of non-qualifying occupation.

8 For the purposes of this section—

a “day of qualifying use”, in relation to a single-dwelling interest, means a day that is relievable in the case of the interest by virtue of section 133(1)(a);

b occupation of any part of a dwelling is regarded as occupation of the dwelling.

136 Meaning of “non-qualifying individual”¶

1 In sections 133 and 135 “non-qualifying individual”, in relation to a single-dwelling interest, means any of the following—

a an individual who is entitled to the interest (otherwise than as a member of a partnership),

b an individual (“a connected person”) who is connected with a person entitled to the interest,

c if a person is entitled to the interest as a member of a partnership, an individual who is, or is connected with, a qualifying member of that partnership,

d an individual (“a relevant settlor”) who is the settlor in relation to a settlement of which a trustee is (in the capacity of trustee) connected with a person who is entitled to the interest,

e the spouse or civil partner of a connected person or of a relevant settlor,

f a relative of a connected person or of a relevant settlor, or the spouse or civil partner of a relative of a connected person or of a relevant settlor,

g a relative of the spouse or civil partner of a connected person or of a relevant settlor,

h the spouse or civil partner of a person falling within paragraph (g), or

i an individual who is a major participant in a relevant collective investment scheme or is connected with a major participant in a relevant collective investment scheme.

2 In subsection (1)(c) “qualifying member”, in relation to a partnership, means a member of the partnership who is entitled to a 50% or greater share—

a in the income profits of the partnership, or

b in the partnership's assets.

3 In subsection (1)(i) “relevant collective investment scheme”, in relation to a single-dwelling interest, means a collective investment scheme that meets the ownership condition with respect to the interest.

4 A person who participates in a collective investment scheme is a “major participant” in the scheme if the person—

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 the scheme 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.

5 The reference in subsection (4)(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.

6 For the purposes of subsection (1), section 1122 of CTA 2010 (as applied by section 172) has effect as if subsections (7) and (8) of that section (application of rules about connected persons to partnerships) were omitted.

7 In this section—

“relative” means brother, sister, ancestor or lineal descendant;
“settlement” and “settlor” have the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).

8 In subsection (1)(d) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected persons”: supplementary).

137 Dwellings opened to the public¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if the first or second condition is met on that day.

2 The first condition is that the dwelling is being exploited as a source of income in the course of a qualifying trade in the normal course of which the public are offered the opportunity to make use of, stay in or otherwise enjoy the dwelling as customers of the trade on least 28 days in any year.

3 The second condition is that steps are being taken to secure—

a that the dwelling will (in that or a future chargeable period) be exploited as a source of income in the course of a qualifying trade such as is mentioned in subsection (2), and

b that it will be so exploited without delay, except so far as delay is justified by commercial considerations or cannot otherwise be avoided.

4 In this section “qualifying trade” means a trade carried on on a commercial basis and with a view to profit.

5 For the purposes of this section persons are not taken to have an opportunity to make use of, stay in or otherwise enjoy a dwelling unless the areas that they are permitted to make use of, stay in or otherwise enjoy include a significant part of the interior of the dwelling.

6 The size (relative to the size of the whole dwelling), nature, and function of the area or areas concerned are to be taken into account in determining whether they form a significant part of the interior of the dwelling.

138 Property developers¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if on that day—

a a person carrying on a property development trade (“the property developer”) is entitled to the interest, and

b the interest is held exclusively for the purpose of developing and reselling the land in the course of the trade.

2 If the property developer holds an interest for the purpose mentioned in subsection (1)(b), any additional purpose the property developer may have of exploiting the interest as a source of rents or other receipts in the course of a qualifying property rental business (after developing the land and before reselling it) is treated as not being a separate purpose in applying the test in subsection (1)(b).

3 A day is not relievable by virtue of subsection (1) if on the day a non-qualifying individual is permitted to occupy the dwelling.

4 In this Part “property development trade” means a trade that—

a consists of or includes buying and developing for resale residential or non-residential property, and

b is run on a commercial basis and with a view to profit.

5 In this section references to development include redevelopment.

139 Property developers: exchange of dwellings¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if—

a a person (“the property developer”) is on that day entitled to a single-dwelling interest (“the returned interest”) that was acquired (by the relevant person) in the course of a property development trade, and

b that acquisition (“the reverse acquisition”) was part of a qualifying exchange.

2 A day is not relievable by virtue of this section if on that day a non-qualifying individual is permitted to occupy the dwelling.

3 In this section “the relevant person” means—

a if the property developer is entitled to the returned interest as a member of a partnership, the persons who acquired the interest as members of the partnership, or

b otherwise, the property developer (and any person who acquired the returned interest jointly with the property developer).

4 The reverse acquisition is “part of a qualifying exchange” only if—

a it was made by way of transfer,

b the person from whom the acquisition was made itself acquired (by way of grant or transfer) a chargeable interest in or over a new dwelling from the relevant person, and

c each of those acquisitions was entered into in consideration of the other.

5 A building or part of a building is a “new dwelling” if—

a it has been constructed for use as a single dwelling and has not previously been occupied, or

b it has been adapted for use as a single dwelling and has not been occupied since its adaptation.

140 Property developers: supplementary¶

1 Subsection (2) applies if on a day in a chargeable period—

a a person carrying on a property development trade (“the property developer”) is entitled to a single-dwelling interest that has been acquired in the course of that trade (whether or not the acquisition was part of a qualifying exchange for the purposes of section 139), and

b a non-qualifying individual is permitted to occupy the dwelling.

2 No subsequent day is relievable in the case of the single-dwelling interest by virtue of section 138(1) or 139(1) if—

a the day falls within that chargeable period, or any of the subsequent 3 chargeable periods, and

b there is continuity of ownership on that day.

3 There is “continuity of ownership” on any day on which—

a the property developer is entitled to the single-dwelling interest, or

b if the property developer carried on the property development trade in partnership, another member of the partnership is entitled to the interest.

4 Subsection (5) applies if—

a on a day in a chargeable period (“the day of non-qualifying occupation”) a person who is a non-qualifying individual in relation to a single-dwelling interest is occupying the dwelling in question, and

b on an earlier day in that, or the preceding, chargeable period (“the earlier day”) the conditions in section 138(1)(a) and (b) are met in relation to the same single-dwelling interest.

5 The earlier day is not relievable by virtue of section 138(1) in the case of the single-dwelling interest if—

a a person who is entitled to the interest on the earlier day is also entitled to it on the day of non-qualifying occupation, or

b if the trade mentioned in section 138(1) is carried on in partnership, a person who has at any time carried that business on in partnership is entitled to the interest on the day of non-qualifying occupation.

6 Subsection (7) applies if—

b on an earlier day in that, or the preceding, chargeable period (“the earlier day”) the conditions in section 139(1)(a) and (b) are met in relation to the same single-dwelling interest.

7 The earlier day is not relievable by virtue of section 139(1) in the case of the single-dwelling interest if—

a a person who is entitled to the interest on the earlier day is also entitled to it on the day of non-qualifying occupation, or

b where the trade mentioned in section 139(1) is carried on in partnership, a person who has at any time carried that trade on in partnership is entitled to the interest on the day of non-qualifying occupation.

8 If a day that is relievable by virtue of section 133(1)(a) falls between the earlier day mentioned in subsection (5) or (as the case may be) (7) and the day of non-qualifying occupation, that subsection does not apply in relation to that earlier day.

9 For the purposes of sections 138 and 139 and this section—

a “non-qualifying individual” has the meaning given by section 136(1);

b occupation of any part of a dwelling is regarded as occupation of the dwelling.

141 Property traders¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if on that day—

a a person carrying on a property trading business is entitled to the interest, and

b the interest is held as stock of the business and for the sole purpose of resale in the course of the business.

2 A single-dwelling interest in a dwelling is taken not to be held for the sole purpose of resale in the course of a property trading business at any time when a non-qualifying individual is permitted to occupy the dwelling.

3 In this Part “property trading business” means a business that—

a consists of or includes activities in the nature of a trade of buying and selling dwellings, and

b is carried on on a commercial basis and with a view to profit.

142 Property traders: supplementary¶

1 Subsection (2) applies if on a day in a chargeable period (“the day of non-qualifying occupation”)—

a a person carrying on a property trading business (“the property trader”) is entitled to a single-dwelling interest that is held as mentioned in section 141(1)(b), and

b a non-qualifying individual is permitted to occupy the dwelling.

2 No subsequent day is relievable in the case of the single-dwelling interest by virtue of section 141(1) if—

a the day falls within that chargeable period, or any of the subsequent 3 chargeable periods, and

b the property trader or a relevant partner is entitled to the interest on that day.

3 If on the day of non-qualifying occupation mentioned in subsection (1) the property trader carries on the property trading business in partnership, “relevant partner” means any other person who is, at any time, a member of that partnership.

4 Subsection (5) applies if—

b on an earlier day in that, or the preceding, chargeable period (“the earlier day”) the conditions in section 141(1)(a) and (b) are met in relation to the same single-dwelling interest.

5 The earlier day is not relievable by virtue of section 141(1) in the case of the single-dwelling interest if—

a a person who is entitled to the interest on the earlier day is also entitled to it on the day of non-qualifying occupation, or

b if the business mentioned in section 141(1) is carried on in partnership, a person who has at any time carried that business on in partnership is entitled to the interest on the day of non-qualifying occupation.

6 Subsection (5) does not apply in relation to the earlier day if a day that is relievable by virtue of section 133(1)(a) falls between the earlier day and the day of non-qualifying occupation.

7 For the purposes of this section and section 141—

a “non-qualifying individual” has the meaning given by section 136(1);

b occupation of any part of a dwelling is regarded as occupation of the dwelling.

143 Financial institutions acquiring dwellings in the course of lending¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if matters stand as follows on that day—

a a financial institution carrying on a business that involves the lending of money is entitled to the interest,

b the financial institution has acquired the interest in the course of that business and in connection with those lending activities, and

c the interest is held with the intention that it will be sold in the course of that business without delay (except so far as delay is justified by commercial considerations or cannot be avoided).

2 A single-dwelling interest in a dwelling is taken not to be held with the intention mentioned in subsection (1)(c) at any time when a non-qualifying individual is permitted to occupy the dwelling.

3 In this Part (except where otherwise stated) “financial institution” has the meaning given by section 564B of ITA 2007; but for this purpose section 564B(1) is to be read as if paragraph (d) of that subsection were omitted.

144 Section 143: supplementary¶

1 Subsection (2) applies if on a day in a chargeable period—

a a financial institution that carries on a business involving the lending of money is entitled to a single-dwelling interest that has been acquired by it as mentioned in section 143(1)(b), and

b a non-qualifying individual is permitted to occupy the dwelling.

2 No subsequent day is relievable in the case of the single-dwelling interest by virtue of section 143(1) if—

a the day falls within that chargeable period, or any of the subsequent 3 chargeable periods, and

b there is continuity of ownership on that day.

3 There is continuity of ownership on a day on which—

a the financial institution is entitled to the single-dwelling interest, or

b if the financial institution carried on the business mentioned in subsection (1)(a) in partnership, another member of the partnership is entitled to the interest.

4 Subsection (5) applies if—

b on an earlier day in that, or the preceding, chargeable period (“the earlier day”) the conditions in section 143(1)(a) to (c) are met in relation to the same single-dwelling interest.

5 The earlier day is not relievable by virtue of section 143(1) in the case of the single-dwelling interest if—

a a person who is entitled to the interest on the earlier day is also entitled to it on the day of non-qualifying occupation, or

b if the business mentioned in section 143(1) is carried on in partnership, a person who has at any time carried that business on in partnership is entitled to the interest on the day of non-qualifying ownership.

6 Subsection (5) does not apply in relation to the earlier day if a day that is relievable by virtue of section 133(1)(a) falls between the earlier day and the day of non-qualifying occupation.

7 For the purposes of this section and section 143—

a “non-qualifying individual” has the meaning given by section 136(1);

b occupation of any part of a dwelling is regarded as occupation of the dwelling.

144A Regulated home reversion plans¶

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.

145 Occupation by employees or partners of a qualifying trade or property rental business¶

1 A day in a chargeable period is a relievable if matters stand as follows on that day—

a a person (“P”) is entitled to a single-dwelling interest,

b P, or a relevant group member, carries on a qualifying trade or qualifying property rental business ,

c the interest is held for the purpose of making the dwelling available to one or more qualifying employees or qualifying partners for use as living accommodation, and

d the dwelling is, or is to be, made available as mentioned in paragraph (c) for purposes that are solely or mainly purposes of the qualifying trade or qualifying property rental business .

2 “Qualifying trade” means a trade that is carried on on a commercial basis and with a view to profit.

3 In this section references to making a dwelling available to a qualifying employee or qualifying partner include making it available to persons who are to share the accommodation with such an individual as their family.

4 Where P is a company, “a relevant group member” means a company which is a member of the same group as P for the purposes mentioned in paragraph 1(2) of Schedule 7 to FA 2003 (stamp duty land tax: group relief).

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

146 Meaning of “qualifying employee” and “qualifying partner” in section 145¶

1 In a case where the person carrying on the trade or property rental business mentioned in section 145(1)(b) carries it on in partnership with one or more other persons, “qualifying partner” means any individual who is a member of the partnership, except one who is entitled to a 10% or greater share—

a in the income profits of the partnership, or

b in any company that is entitled to the single-dwelling interest mentioned in section 145(1)(a), or

c in the partnership's assets.

2 “Qualifying employee” means any individual employed for the purposes of the qualifying trade or qualifying property rental business , except one who—

a is entitled to a 10% or greater share—

i in the income profits of the trade or (as the case may be) property rental business , or

ii in any company that is entitled to the single-dwelling interest mentioned in section 145(1)(a), or

iii in that single-dwelling interest, or

b provides excluded domestic services.

3 The reference in subsection (2)(b) to an individual who provides excluded domestic services is to an individual the duties of whose employment include the provision of services in connection with the (actual or intended) occupation, by a non-qualifying individual, of the dwelling mentioned in section 145(1)(c) (“the relevant dwelling”), or a linked dwelling.

4 In subsection (3) “non-qualifying individual” means an individual connected with a person who is entitled to the single-dwelling interest.

5 The following are “linked” dwellings for the purposes of subsection (3)—

a if the conditions in section 116(2) are met in relation to the relevant dwelling and another dwelling, that other dwelling;

b a dwelling that is linked to the relevant dwelling, as described in section 117(1).

6 In this section references to employment include the holding of an office.

7 For the purposes of subsections (1)(c) and (2)(a)(iii) persons who are entitled to a chargeable interest as beneficial joint tenants (or, in Scotland, as joint owners) are taken to be entitled to the chargeable interest as beneficial tenants in common (or, in Scotland, as owners in common) in equal shares.

^C1147 Meaning of “10% or greater share in a company”¶

1 This section applies for the purposes of section 146.

2 An individual (“P”) is taken to be entitled to a 10% or greater share in a company (“C”) if P possesses (directly or indirectly) or is entitled to acquire—

a 10% or more of the share capital of C,

b 10% or more of the issued share capital of C,

c 10% or more of the voting power in C,

d so much of the issued share capital of C as would, on the assumption that the whole of the income of C were distributed among the participators, entitle P to receive 10% or more of the amount so distributed, or

e such rights as would entitle P, in the event of the winding up of C or in any other circumstances, to receive 10% or more of the assets of C which would then be available for distribution among the participators.

3 Any rights that P or any other person has as a loan creditor are to be disregarded for the purposes of the assumption in subsection (2)(d).

4 For the purposes of subsection (2) a person is treated as entitled to acquire anything which the person—

a is entitled to acquire at a future date, or

b will at a future date be entitled to acquire.

5 If a person—

a possesses any rights or powers on behalf of another person (“A”), or

b may be required to exercise any rights or powers on A's direction or behalf,

those rights or powers are to be attributed to A.

6 The following are also to be attributed to a person—

a the rights and powers of any company of which the person has, or the person and associates of the person have, control;

b the rights and powers of any two or more companies within paragraph (a);

c the rights and powers of any associate of the person (or of any two or more associates of the person).

7 The rights and powers which are to be attributed under subsection (6)—

a include those attributed to a company or associate under subsection (5), but

b do not include those attributed to an associate under subsection (6).

8 A person who does not meet the conditions in subsection (2) is nevertheless treated as having a 10% or greater share in a company if the person exercises, is able to exercise or is entitled to acquire, direct or indirect control over the company's affairs.

9 In this section—

“associate” has the same meaning as in Part 10 of CTA 2010 (see section 448 of that Act); but for this purpose section 448 is to be read as if the words “or partner” were omitted in subsection (1)(a);
“control” has the same meaning as in that Part (see section 450 of that Act);
“loan creditor” has the same meaning as in that Part (see section 453 of that Act);
“participator” has the same meaning as in that Part (see section 454 of that Act).

147A Caretaker flat owned by management company¶

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.

148 Farmhouses¶

1 This section applies where on a day in a chargeable period—

a a dwelling (“the farmhouse”) forms part of land occupied for the purposes of a qualifying trade of farming, and

b a person carrying on the trade is entitled to, or connected with a person who is entitled to, a single-dwelling interest in the farmhouse.

2 That day is relievable in relation to the single-dwelling interest if on that day the farmhouse is occupied—

a by a farm worker who occupies it for the purposes of the trade, or

b by a former long-serving farm worker, or the surviving spouse or civil partner of a former farm worker.

3 A trade of farming is a “qualifying trade of farming” only if it is carried on—

a on a commercial basis, and

b with a view to profit.

4 In this section—

“farming” has the same meaning as in the Corporation Tax Acts (see section 1125 of CTA 2010), except that in this section “farming” includes market gardening;
“market gardening” has the same meaning as in the Corporation Tax Acts (see section 1125(5) of CTA 2010).

149 “Farm worker” and “former long-serving farm worker”¶

1 An individual is a “farm worker” in relation to the qualifying trade of farming mentioned in section 148(1) at any time when the individual has a substantial involvement in—

a the day-to-day work of the trade, or

b the direction and control of the conduct of the trade.

2 Where section 148 applies, an individual occupying the farmhouse on the day mentioned in section 148(1) is a “former long-serving farm worker” if the individual had, before that day, been a farm worker in relation to the qualifying trade of farming for—

a a qualifying period of 3 or more years, or

b qualifying periods together amounting to 3 or more years within a 5 year period.

3 In subsection (2) “qualifying period” means a period throughout which—

a the individual occupied the farmhouse for the purposes of the trade,

b the land of which the farmhouse forms part was occupied for the purposes of the trade,

c the trade was carried on by—

i a person who is entitled to the single-dwelling interest in the farmhouse on the day mentioned in section 148(1), or

ii a person connected with such a person, and

d a person who is entitled to the single-dwelling interest in the farmhouse on the day mentioned in section 148(1) was entitled to that interest.

4 A person occupying part of a dwelling is regarded as occupying the dwelling for the purposes of this section and section 148.

150 Providers of social housing etc ¶

1 A day in a chargeable period is relievable in relation to a single-dwelling interest if on that day—

a a profit-making registered provider of social housing (P) is entitled to the interest, and

b P's acquisition of the interest (or of any part of the interest) was funded with the assistance of public subsidy.

2 A day in a chargeable period is relievable in relation to a single-dwelling interest if on that day—

a a qualifying housing provider ^F199... is entitled to the interest, and

b the condition in subsection (3) is met.

3 The condition mentioned in subsection (2) is that—

a the qualifying housing provider is controlled by its tenants,

b the person from whom the qualifying housing provider acquired the interest (or any part of the interest) is a qualifying body, or

c the qualifying housing provider's acquisition of the interest (or of any part of the interest) was funded with the assistance of a public subsidy.

3A A day in a chargeable period is relievable in relation to a single-dwelling interest if on that day a qualifying housing co-operative (as defined by section 150A) is entitled to the interest.

4 In this section—

a subsection (2) of section 71 of FA 2003 applies in relation to a reference to a qualifying housing provider controlled by its tenants as it applies to a reference in that section to a non-profit registered provider of social housing controlled by its tenants;

b “qualifying body” means—

i anything described as a qualifying body in subsection (3) of that section,

ii the Scottish Ministers,

iii a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994, or

iv Scottish Homes;

c “public subsidy” means—

i anything that is a public subsidy for the purposes of section 71 of FA 2003, and for the purposes of this section the reference in subsection (5)(a) of that section to “the purchaser” is to be treated as a reference to P or the qualifying housing provider (as the case may be);

ii any grant or other financial assistance under section 18 of the Housing Act 1996 (c. 52) (social housing grants);

iii any grant or other financial assistance under section 2 of the Housing (Scotland) Act 1988 (c. 43) (general functions of the Scottish Ministers);

d “qualifying housing provider” means—

i a relevant housing provider (within the meaning of section 71 of FA 2003),

ii a body registered as a social landlord in a register maintained under section 1(1) of the Housing Act 1996 (Welsh registered social landlords), or

iii a body registered under section 20(1) of the Housing (Scotland) Act 2010 (asp 17) (Scottish registered social landlords).

150A Meaning of “qualifying housing co-operative”¶

1 A company is a “qualifying housing co-operative” for the purposes of section 150(3A) on any day if on that day—

a it is a housing association within the meaning of—

i the Housing Associations Act 1985, or

ii Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I. 15)),

b it is a registered society within the meaning of—

i the Co-operative and Community Benefit Societies Act 2014, or

ii the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969, and

c the rules of the association comply with subsection (2).

2 The rules of the association—

a must restrict membership to persons who are tenants, or prospective tenants, of the association,

b must preclude the granting or assignment of tenancies to persons other than members,

c must prevent members from transferring any of their shares,

d must prevent members from receiving any more than the nominal value of their shares on a return of share capital, and

e must confer on members equal voting rights.

Exemptions¶

151 Charitable companies¶

1 A charitable company that is entitled to a single-dwelling interest is regarded as not meeting the ownership condition with respect to the interest on any day on which the interest is held by the company for qualifying charitable purposes, other than an excluded day.

2 The interest is “held for qualifying charitable purposes” if it is held—

a for use in furtherance of the charitable purposes of the charitable company or of another charity, or

b as an investment from which the profits are (or are to be) applied to the charitable purposes of the charitable company.

3 A day is an “excluded day” if the following conditions are met—

a a person (“the donor”) has on or before that day made, or agreed to make, a gift to the charitable company or to a charity that is connected with it,

b there exist on that day arrangements under which or as a result of which a linked individual is permitted, or is to be or may in the future be permitted, to occupy the dwelling, and

c it is reasonable to assume from either or both of—

i the likely effects of the gift and the arrangements, or

ii the circumstances in which the gift was made and the circumstances in which the arrangements were entered into,

that the gift would not have been made and the arrangements would not have been entered into independently of one another;

but see the exception in subsection (5).

4 In subsection (3)(b) “linked individual” means an individual who—

a is the donor, or

b was, when the arrangements were entered into, an associate of the donor.

5 A day is not an “excluded day” if the first, second or third condition is met on that day.

The first condition is that the activities undertaken for carrying out the primary purposes of the charitable company include, or normally include, opening the dwelling to the public.
The second condition is that the dwelling is being exploited through commercial activities that involve, or normally involve, opening the dwelling to the public.
The third condition is that steps are being taken—
1. to secure that the first or second condition will be met without undue delay, or
2. to secure that the single-dwelling interest will be sold without undue delay.

6 In subsection (5)—

a “opening the dwelling to the public” means offering the public the opportunity to make use of, stay in or otherwise enjoy, on at least 28 days in any year, areas that constitute a significant part of the interior of the dwelling or of the dwelling's garden or grounds;

b “without undue delay” means without delay, except so far as delay is justified by commercial considerations or for the sake of a primary purpose of the charitable company.

7 For the purposes of subsection (6)(a), the size (relative to the size of the whole dwelling or of the whole garden or grounds), nature, and function of the areas concerned are to be taken into account in determining whether they form a significant part of the interior of the dwelling or (as the case may be) of the garden or grounds.

8 For the purposes of subsection (3)(a)—

a “connected” means connected in a matter relating to the structure, administration or control of the charitable company, and

b section 172 does not apply.

152 Section 151: supplementary¶

1 In section 151 “associate”, in relation to the donor, means any of the following—

a an individual (“a connected person”) who is connected with the donor,

b an individual who is the settlor in relation to a settlement of which a trustee is (in the capacity of trustee) connected with the donor,

c the spouse or civil partner of a connected person or of a relevant settlor,

d a relative of a connected person or of a relevant settlor, or the spouse or civil partner of a relative of a connected person or of a relevant settlor,

e a relative of the spouse or civil partner of a connected person or of a relevant settlor, or

f the spouse or civil partner of a person falling within paragraph (e).

2 In subsection (1)—

“relative” means brother, sister, ancestor or lineal descendant;
“settlement” and “settlor” have the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).

3 In subsection (1)(b) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected persons”: supplementary).

4 For the purposes of section 151 occupation of any part of a dwelling is regarded as occupation of the dwelling.

5 For the purposes of section 151(3)—

a the making of a gift is disregarded if it is made before the day on which this Act is passed, and

b an agreement to make a gift is disregarded if the agreement is made before that day.

6 Arrangements entered into before the day on which this Act is passed are disregarded for the purposes of section 151(3) unless a material alteration has been made to them on or after that date.“Material alteration” means an alteration affecting anything in the arrangements that relates to the individual's having (at any time), or potentially having, permission to occupy the dwelling.

7 References in section 151 and this section to a gift include the disposal of an asset for consideration of an amount or value which is less than the market value of the asset.

8 In section 151 and this section “arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.

153 Public bodies¶

1 A public body is not regarded as a company for the purposes of this Part.

2 In this section—

a “public body” means any body corporate that is a public body for the purposes of section 66 of FA 2003, and

b references to a public body accordingly include a company such as is mentioned in subsection (5) of that section (companies wholly owned by the listed bodies).

3 The power of the Treasury to prescribe persons by an order under section 66(4) of FA 2003 may be exercised so as to make different provision for purposes relating to annual tax on enveloped dwellings and stamp duty land tax.

4 In paragraph (b) of subsection (2) “company” means a company as defined by section 1 of the Companies Act 2006 (and subsection (1) is to be ignored in interpreting that paragraph).

154 Bodies established for national purposes¶

1 A body listed in subsection (2) is not regarded as a company for the purposes of this Part.

2 The bodies are—

the Historic Buildings and Monuments Commission for England;
the Trustees of the British Museum;
the Trustees of the National Heritage Memorial Fund;
the Trustees of the Natural History Museum.

155 Dwelling conditionally exempt from inheritance tax¶

1 Subsection (2) applies to a single-dwelling interest if—

a the whole or part of the dwelling has been designated under section 31 of IHTA 1984 (buildings of outstanding historic or architectural interest etc),

b an undertaking has been made with respect to the dwelling under section 30 of that Act (conditionally exempt transfers), and

c a transfer of value is exempt from inheritance tax by virtue of that designation and that undertaking.

2 The taxable value of the single-dwelling interest on any day is taken to be zero if no chargeable event has occurred with respect to the dwelling in the time between the transfer of value and the beginning of that day.

3 Subsection (4) applies to a single-dwelling interest if—

a the whole or part of the dwelling has been designated under section 31 of IHTA 1984,

b an undertaking has been made with respect to the dwelling under section 78 of that Act (settled property: conditionally exempt occasions), and

c a transfer of property or other event is a conditionally exempt occasion by virtue of that designation and that undertaking.

4 The taxable value of the single-dwelling interest on any day is taken to be zero if no chargeable event has occurred with respect to the dwelling in the time between the conditionally exempt occasion and the beginning of that day.

5 In this section—

“chargeable event” means an event which is a chargeable event under section 32 of IHTA 1984;
“conditionally exempt occasion” is to be read in accordance with section 78(2) of that Act;
“transfer of value” has the same meaning as in that Act.

Power to modify reliefs¶

156 Modification of reliefs¶

1 The Treasury may by regulations—

a amend this Part for the purpose of providing further relief, or further exemptions, from tax (whether by modifying an existing relief or exemption or otherwise);

b amend or repeal any of sections 132 to 155 for purposes not falling within paragraph (a);

c make any amendment of any other provision of this Part that may be necessary in consequence of provision under paragraph (b).

2 In subsection (1)—

a the reference to providing further relief from tax includes the provision of relief for additional persons or categories of person or in additional cases or circumstances;

b the reference to providing further exemptions from tax includes the provision of exemptions for additional persons or categories of person or in additional cases or circumstances.

Alternative property finance¶

157 Land in England ^F210... or Northern Ireland sold to financial institution and leased to person¶

1 This section applies where—

a section 71A of FA 2003 (land sold to financial institution and leased to person) ^F70... applies in relation to arrangements entered into between a financial institution and another person (“the lessee”), and

b the land in which the institution purchases a major interest under the first transaction is in England ^F206... or Northern Ireland and consists of or includes one or more dwellings (or parts of a dwelling).

2 This Part has effect in relation to times when the arrangements are in operation as if—

a the interest held by the financial institution as mentioned in subsection (3)(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.

3 The reference in subsection (2) to times when the arrangements are in operation is to times when—

a the lessee holds the leasehold interest granted to it under the second transaction, and

b the interest purchased under the first transaction (or that interest except so far as transferred by a further transaction) is held by a financial institution.

4 A company or individual treated under subsection (2)(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 or individual holds the leasehold interest as a member of the partnership (and this Part has effect accordingly in relation to the other members of the partnership).

5 In relation to times when the arrangements operate for the benefit of a collective investment scheme, this Part has effect as if—

a the interest held by the financial institution as mentioned in subsection (6)(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.

6 The reference in subsection (5) to times when the arrangements operate for the benefit of a collective investment scheme is to times when—

a the lessee holds the leasehold interest for the purposes of a collective investment scheme, and

b the interest purchased under the first transaction (or that interest except so far as transferred by a further transaction) is held by a financial institution.

7 In this section—

“financial institution” has the meaning given by section 73BA of FA 2003;
“the first transaction” has the same meaning as in section 71A ^F72... of FA 2003;
“further transaction” has the same meaning as in section 71A of FA 2003;
“the leasehold interest” means the interest granted to the lessee under the second transaction;
“the second transaction” has the same meaning as in section 71A ^F73... of FA 2003.

8 The reference in subsection (1) to a major interest in land is to be read in accordance with section 117 of FA 2003.

9 Where the lessee is an individual, references in subsections (2), (3), (5) and (6) 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.

^F7410 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

157A Land in Scotland sold to financial institution and leased to person¶

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 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 or individual 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 or individual 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 (4), (5), (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.

157B Land in Wales sold to financial institution and leased to person¶

1 This section applies where—

a paragraph 2 of Schedule 10 to the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1) (land in Wales sold to financial institution and leased to person) applies in relation to arrangements entered into between a financial institution and another person (“the lessee”), and

b the land in which the institution purchases a major interest under the first transaction is in Wales and consists of or includes one or more dwellings (or parts of a dwelling).