Land and Buildings Transaction Tax (Scotland) Act 2013

[F1 SCHEDULE 2A S ADDITIONAL AMOUNT: TRANSACTIONS RELATING TO SECOND HOMES ETC.

(introduced by section 26A)

Textual Amendments

F1 Sch. 2A inserted (1.4.2016) by Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 (asp 11), ss. 1(3), 5(2) (with s. 3)

PART 1 S OVERVIEW

Overview S

1 (1) This schedule makes provision about an additional amount of tax chargeable in respect of certain chargeable transactions. S

(2) It is arranged as follows—

• Part 2 identifies the transactions to which this schedule applies,

• Part 3 sets out the additional amount of tax,

• Part 4 contains provision about the application of this schedule in relation to certain types of buyer,

• Part 5 provides for repayment of and relief from the additional amount of tax in certain cases,

• Part 6 contains special rules about the meaning of ownership of dwellings for the purposes of this schedule,

• Part 7 contains general provision including powers to modify this schedule.

PART 2 S TRANSACTIONS TO WHICH THIS SCHEDULE APPLIES

Transactions relating to second homes etc. S

2 (1) This schedule applies to a chargeable transaction if the following conditions are satisfied— S

(a) the subject-matter of the transaction consists of or includes the acquisition of ownership of a dwelling,

(b) the relevant consideration for the transaction is £40,000 or more,

(c) at the end of the day that is the effective date of the transaction, the buyer owns more than one dwelling, and

(d) either—

(i) the buyer is not replacing the buyer's only or main residence, or

(ii) the buyer is replacing the buyer's only or main residence but the subject-matter of the transaction also includes the acquisition of ownership of one or more other dwellings in addition to the one that the buyer intends to occupy as the buyer's only or main residence.

(2) A buyer is replacing the buyer's only or main residence if—

(a) during the period of 18 months ending with the effective date of the transaction, the buyer has disposed of the ownership of a dwelling,

(b) that dwelling was the buyer's only or main residence at any time during the period of 18 months, and

(c) on the effective date of the transaction, the buyer intends to occupy the dwelling that is or forms part of the subject-matter of the transaction as the buyer's only or main residence.

Transactions where buyer is a non-individual etc. S

3 (1) This schedule applies to a chargeable transaction if the following conditions are satisfied— S

(a) the subject-matter of the transaction consists of or includes the acquisition of ownership of a dwelling,

(b) the relevant consideration for the transaction is £40,000 or more, and

(c) the buyer—

(i) is not an individual, or

(ii) is an individual and sub-paragraph (2) or (5) applies.

(2) This sub-paragraph applies if the acquisition is made in the course of a business of the individual the sole or main activity of which is investing or dealing in chargeable interests.

(3) Sub-paragraph (2) of paragraph 31 of schedule 17 applies for the purposes of sub-paragraph (2) of this paragraph as it applies for the purposes of paragraph 31(1) of that schedule.

(4) In sub-paragraph (2), the reference to a business of the individual includes a reference to a business of a partnership of which the individual is a partner.

(5) This sub-paragraph applies if the individual is making the acquisition as trustee under a settlement and, in relation to any dwelling that is or forms part of the subject-matter of the transaction, there is no interested beneficiary.

(6) For the purposes of sub-paragraph (5), a beneficiary under the settlement is an interested beneficiary in relation to a dwelling if the beneficiary has or will have a relevant interest in the dwelling.

PART 3 S THE ADDITIONAL AMOUNT

Additional amount S

4 (1) Where this schedule applies to a chargeable transaction, the amount of tax chargeable in respect of the transaction (as determined under section 25(1) or 26(1)) is increased by the additional amount. S

(2) The additional amount is an amount equal to [F2 4%] of the relevant consideration.

(3) The relevant consideration is—

(a) in a case where the transaction is a residential property transaction, the chargeable consideration for the transaction, or

(b) in a case where the transaction is a non-residential property transaction, so much of the chargeable consideration for the transaction as is attributable, on a just and reasonable apportionment, to the acquisition of ownership of the dwelling (including any interest or right pertaining to ownership of the dwelling) that is or forms part of the subject-matter of the transaction.

(4) In the case of a chargeable transaction to which this schedule applies by virtue of paragraph 2(1)(d)(ii), the relevant consideration is to exclude so much of the chargeable consideration as is attributable, on a just and reasonable apportionment, to the acquisition of ownership of the dwelling (including any interest or right pertaining to ownership of the dwelling) that the buyer intends to occupy as the buyer's only or main residence.

Textual Amendments

F2 Percentage in Sch. 2A para. 4(2) substituted (25.1.2019) by The Land and Buildings Transaction Tax (Tax Rates and Tax Bands etc) (Scotland) Amendment Order 2018 (S.S.I. 2018/372), arts. 1(1), 3 (with arts. 1(2), 4)

PART 4 S CERTAIN TYPES OF BUYER

Joint buyers S

5 (1) This paragraph applies to a chargeable transaction which satisfies the conditions in paragraph 2(1)(a) and (b) or 3(1)(a) and (b) if there are two or more buyers who are or will be jointly entitled to ownership of the dwelling. S

(2) The conditions set out in paragraph 2(1)(c) and (d) or, as the case may be, 3(1)(c) are satisfied if they are satisfied in relation to any one of, or more than one of, the buyers.

Spouses, civil partners, cohabitants and children S

6 (1) For the purposes of paragraph 2(1)(c), a dwelling which is owned by— S

(a) the buyer's spouse or civil partner,

(b) the buyer's cohabitant,

(c) a person aged under 16 who is a child of—

(i) the buyer,

(ii) the buyer's spouse or civil partner, or

(iii) the buyer's cohabitant,

is to be treated as being owned by the buyer.

(2) Sub-paragraphs (1)(a) and (1)(c)(ii) do not apply if the buyer and the buyer's spouse or civil partner have separated.

(3) For the purposes of sub-paragraph (2), the parties have separated if—

(a) they no longer live together, and

(b) they do not intend to live together again.

(4) For the purposes of sub-paragraphs (1)(b) and (1)(c)(iii), a person is the buyer's cohabitant if the two of them live together as though married to one another.

Trustees in certain trusts S

7 (1) This paragraph applies to a chargeable transaction which satisfies the conditions in paragraph 2(1)(a) and (b) if— S

(a) the buyer is acting as trustee of a settlement, and

(b) a beneficiary under the settlement has or will have a relevant interest in a dwelling that is or forms part of the subject-matter of the transaction.

(2) In paragraphs 2(1)(c) and (d), 2(2)(b) and (c), 5, 6 and 8(1)(b) and (c), references to the buyer are to be read as if they were references to the beneficiary.

(3) In paragraphs 2(2)(a) and 8(1)(a), references to the buyer are to be read as including references to the beneficiary.

PART 5 S REPAYMENT OF AND RELIEF FROM THE ADDITIONAL AMOUNT

Repayment of additional amount in certain cases S

8 (1) Sub-paragraph (2) applies in relation to a chargeable transaction to which this schedule applies by virtue of paragraph 2 if— S

(a) within the period of 18 months beginning with the day after the effective date of the transaction, the buyer disposes of the ownership of a dwelling (other than one that was or formed part of the subject-matter of the chargeable transaction),

(b) that dwelling was the buyer's only or main residence at any time during the period of 18 months ending with the effective date of the transaction, and

(c) the dwelling that was or formed part of the subject-matter of the transaction has been occupied as the buyer's only or main residence.

(2) Where this sub-paragraph applies—

(a) the chargeable transaction is to be treated as having been exempt from the additional amount, and

(b) if the buyer has made a land transaction return in respect of the transaction, the buyer may take one of the steps mentioned in sub-paragraph (3).

(3) The steps are—

(a) within the period allowed for amendment of the land transaction return, amend the return accordingly, or

(b) after the end of that period (if the land transaction return is not so amended), make a claim to the Tax Authority under section 107 of the Revenue Scotland and Tax Powers Act 2014 for repayment of the amount overpaid.

(4) For the period allowed for amendment of returns, see section 83 of the Revenue Scotland and Tax Powers Act 2014.

(5) In the case of a chargeable transaction to which this schedule applies by virtue of paragraph 2(1)(d)(ii), sub-paragraph (2)(a) has effect only in relation to the additional amount applicable to so much of the relevant consideration for the transaction as is attributable, on a just and reasonable apportionment, to the acquisition of ownership of the dwelling (including any interest or right pertaining to ownership of the dwelling) referred to in sub-paragraph (1)(c).

[F3 Repayment of additional amount: spouses, civil partners and cohabitants replacing main residence S

Textual Amendments

F3 Sch. 2A para. 8A and cross-heading inserted by The Land and Buildings Transaction Tax (Additional Amount-Second Homes Main Residence Relief) (Scotland) Order 2017 (S.S.I. 2017/233), arts. 1, 3 (with art. 5) (which amendment has retrospective effect from 1.4.2016 by virtue of Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Act 2018 (asp 11), ss. 1, 3)

8A. (1) Sub-paragraph (2) applies in relation to a chargeable transaction to which this schedule applies by virtue of paragraph 2 if— S

(a) there are only two buyers, and

(b) the buyers—

(i) are (in relation to each other) spouses, civil partners or cohabitants, and

(ii) are or will be jointly entitled to ownership of the dwelling that is or forms part of the subject-matter of the transaction.

(2) Paragraph 8 has effect in relation to the transaction as if—

(a) the reference in sub-paragraph (1)(a) of that paragraph to the buyer were a reference to either or both of the buyers, and

(b) the references in sub-paragraph (1)(b) and (c) of that paragraph to the buyer were references to both of the buyers together.

(3) For the purposes of sub-paragraph (1)(b)(i), two buyers are cohabitants if they live together as though married to one another.]

[F4 Repayment of additional amount: period for disposing of ownership of dwelling S

Textual Amendments

F4 Sch. 2A para. 8B and cross-heading inserted (27.5.2020) by Coronavirus (Scotland) (No.2) Act 2020 (asp 10), s. 16(1), sch. 4 para. 6(3)(a) (with s. 9)

8B (1) Sub-paragraph (2) applies in relation to a chargeable transaction to which this schedule applies by virtue of paragraph 2 if the effective date of the transaction falls within the period beginning with 24 September 2018 and ending with 24 March 2020. S

(2) Paragraph 8(1)(a) has effect in relation to the transaction as if for “period of 18 months” there were substituted “period of 36 months”.]

Relief for purchases of 6 or more dwellings S

9 S A chargeable transaction is exempt from the additional amount if it is a transaction to which section 59(8) applies.

[F5 Relief for spouses, civil partners and cohabitants replacing main residence S

Textual Amendments

F5 Sch. 2A para. 9A and cross-heading inserted by The Land and Buildings Transaction Tax (Additional Amount-Second Homes Main Residence Relief) (Scotland) Order 2017 (S.S.I. 2017/233), arts. 1, 4 (with art. 5) (which amendment has retrospective effect from 1.4.2016 by virtue of Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Act 2018 (asp 11), ss. 1, 3)

9A. (1) A chargeable transaction to which this schedule applies by virtue of paragraph 2 is exempt from the additional amount if— S

(a) there are only two buyers,

(b) the buyers—

(i) are (in relation to each other) spouses, civil partners or cohabitants, and

(ii) are or will be jointly entitled to ownership of the dwelling that is or forms part of the subject-matter of the transaction, and

(c) paragraph 2(2) would apply if—

(i) the reference in paragraph (a) of that paragraph to the buyer were a reference to either of the buyers, and

(ii) the references in paragraphs (b) and (c) of that paragraph to the buyer were references to both of the buyers together.

(2) For the purposes of sub-paragraph (1)(b)(i), two buyers are cohabitants if they live together as though married to one another.]

Relief: supplemental S

10 (1) A relief under paragraph 9 must be claimed in the first return made in relation to the transaction or in an amendment of that return. S

(2) For the period allowed for amendment of returns, see section 83 of the Revenue Scotland and Tax Powers Act 2014.

PART 6 S OWNERSHIP OF DWELLINGS

What counts as a dwelling owned by a person? S

11 (1) This paragraph applies to determine what counts as a dwelling owned by a person for the purposes of this schedule. S

(2) Dwellings situated outside Scotland (as well as such property in Scotland) are to be counted.

(3) A dwelling owned by a person is not to be counted for the purposes of paragraph 2(1)(c) if the acquisition of ownership of the dwelling by the person—

(a) is or was a chargeable transaction to which this schedule applies by virtue of paragraph 3, or

(b) would have been such a chargeable transaction but for the fact that the dwelling is situated outside Scotland.

(4) Ownership of a dwelling (other than one that is or forms part of the subject-matter of the chargeable transaction) is not to be counted if the market value of the ownership interest is less than £40,000.

(5) In determining the market value of the ownership interest in a dwelling for the purposes of sub-paragraph (4), the market value of any interest or right pertaining to ownership of the dwelling is to be included.

(6) Where the ownership interest in a dwelling is one of deemed ownership by virtue of paragraph 13 or 16 then, for the purposes of sub-paragraph (4), the market value of the interest is taken to be the market value of the dwelling.

(7) In determining the market value of a dwelling for the purposes of sub-paragraph (6)—

(a) the market value of any interest or right pertaining to ownership of the dwelling is to be included, and

(b) no account is to be taken of the effect of the existence of the interest referred to in sub-paragraph (6).

Deemed ownership: cases where title is not yet registered etc. S

12 (1) This paragraph applies to determine, for the purposes of this schedule, when a person owns any dwelling where ownership of the dwelling is or has been the subject-matter or part of the subject-matter of a land transaction. S

(2) Where the person is the buyer in relation to the transaction, the person is to be treated for the purposes of this schedule as owning the dwelling as from the end of the day that is the effective date of the transaction.

(3) Where the person is the seller in relation to the transaction, the person is to be treated for the purposes of this schedule as ceasing to own the dwelling as from the end of the day that is the effective date of the transaction.

(4) In the application of this paragraph to a dwelling situated in England, Wales or Northern Ireland, “land transaction” and “effective date” have the same meanings as they have in Part 4 of the Finance Act 2003 (stamp duty land tax).

(5) In the application of this paragraph to a dwelling situated outside the United Kingdom—

(a) “land transaction” means any transaction for the transfer of ownership of the dwelling, and

(b) “effective date” means the date of settlement or completion of the transaction (or of any event that is equivalent to settlement or completion of the transaction).

Deemed ownership: beneficiaries under certain trusts S

13 (1) This paragraph applies where a person is the beneficiary under— S

(a) a bare trust, or

(b) a settlement under the terms of which the beneficiary has a relevant interest in any dwelling that is or forms part of the trust property.

(2) For the purposes of this schedule, the beneficiary is to be treated as the owner of the dwelling.

(3) References in this schedule to “ownership” and “acquisition of ownership” are to be read accordingly.

Dwellings owned by trustees or personal representatives S

14 (1) This paragraph applies where a person owns a dwelling as— S

(a) a trustee, or

(b) a personal representative of another.

(2) For the purposes of this schedule, the person is to be treated as not being the owner of the dwelling.

(3) Sub-paragraph (2) does not affect the operation of any other provision of this schedule by which the person is to be treated as the owner of the dwelling.

Deemed ownership: long leases S

15 (1) This paragraph applies where a person (“the tenant”) is the tenant under a lease of a dwelling for a term of more than 20 years S

(2) For the purposes of this schedule—

(a) the tenant is to be treated as the owner of the dwelling, and

(b) the landlord under the lease is to be treated as not being the owner.

(3) References in this schedule to “ownership” and “acquisition of ownership” are to be read accordingly.

Deemed ownership: proper liferents S

16 (1) This paragraph applies where a person (“the liferenter”) holds a liferent over a dwelling under a proper liferent. S

(2) For the purposes of this schedule—

(a) the liferenter is to be treated as the owner of the dwelling, and

(b) the granter of the liferent and the fiar are to be treated as not being the owner.

(3) References in this schedule to “ownership” and “acquisition of ownership” are to be read accordingly.

Deemed ownership: joint owners and owners of shares S

17 (1) This paragraph applies where two or more persons are jointly entitled to the ownership of a dwelling. S

(2) For the purposes of this schedule, each of the persons is to be treated as the owner of the dwelling.

(3) In the application of this paragraph to a dwelling situated in England, Wales or Northern Ireland, “jointly entitled” has the meaning given in section 121 of the Finance Act 2003 (minor definitions).

(4) In the application of this paragraph to a dwelling situated outside the United Kingdom, “jointly entitled” means having an interest equivalent to being jointly entitled within the meaning of this Act or the Finance Act 2003.

Dwellings outside Scotland: what counts as “ownership” S

18 (1) In the case of a dwelling situated outside Scotland, a person owns the dwelling for the purposes of this schedule if the person has an interest in it that is equivalent to ownership in Scotland. S

(2) References in this schedule to “ownership” and “acquisition of ownership” are to be read accordingly.

PART 7 S GENERAL PROVISION

Power of Scottish Ministers to modify schedule S

19 (1) The Scottish Ministers may by order amend paragraph 4(2) so as to substitute, for the percentage figure for the time being specified there, a different percentage figure. S

(2) The Scottish Ministers may by order amend paragraph 2(1)(b), 3(1)(b) or 11(4) so as to substitute, for the figure for the time being specified there, a different figure.

(3) The Scottish Ministers may by order modify this schedule so as to make provision for or about reliefs from the additional amount and, in particular, may—

(a) add a relief,

(b) modify any relief,

(c) remove any relief.

[F6 (3A) The Scottish Ministers may by order amend paragraph 8B(1) so as to substitute, for the period that is for the time being specified there, a longer period.

(3B) The Scottish Ministers may by order amend paragraph 8B(2) so as to substitute, for the period that is for the time being specified there as the period to be substituted into paragraph 8(1)(a), a longer period.

(3C) The Scottish Ministers may make an order under sub-paragraph (3A) or (3B) only if they are satisfied that it is appropriate to make the order for a reason relating to coronavirus.

(3D) For the avoidance of doubt, an order under sub-paragraph (3A) or (3B) may have retrospective effect.]

(4) The Scottish Ministers may by regulations modify the following provisions of this schedule—

(a) Parts 2 (except paragraphs 2(1)(b) and 3(1)(b)) and 4 so far as relating to the application of this schedule in relation to—

(i) partnerships,

(ii) trusts,

(b) Part 6 (except paragraph 11(4)),

(c) paragraph 20.

(5) An order under sub-paragraph (3) may modify any other enactment that the Scottish Ministers consider appropriate.

Textual Amendments

F6 Sch. 2A para. 19(3A)-(3D) inserted (27.5.2020) by Coronavirus (Scotland) (No.2) Act 2020 (asp 10), s. 16(1), sch. 4 para. 6(3)(b) (with s. 9)

Interpretation S

20 (1) In this schedule— S

• “bare trust” has the meaning given in paragraph 19 of schedule 18,

• [F7 “coronavirus” has the meaning given by section 1 of the Coronavirus (Scotland) Act 2020,]

• “relevant consideration” is to be construed in accordance with paragraph 4(3) and (4),

• “settlement”, except in paragraph 12(5)(b), has the meaning given in paragraph 21 of schedule 18.

(2) Part 6 of schedule 5 (what counts as a “dwelling”) applies for the purposes of this schedule as it applies for the purposes of schedule 5.

(3) For the purposes of this schedule, a beneficiary under a settlement has a relevant interest in a dwelling that is or forms part of the trust property or the subject-matter of a transaction if the beneficiary is entitled to—

(a) occupy the dwelling for life, or

(b) income (whether net or gross) in respect of the dwelling.]

Textual Amendments

F7 Words in sch. 2A para. 20(1) inserted (27.5.2020) by Coronavirus (Scotland) (No.2) Act 2020 (asp 10), s. 16(1), sch. 4 para. 6(3)(c) (with s. 9)