F1SCHEDULE A1Non-excluded overseas property
PART 1Overseas property with value attributable to UK residential property
Introductory
1
Property is not excluded property by virtue of section 6(1) or 48(3)(a) if and to the extent that paragraph 2 or 3 applies to it.
Close company and partnership interests
2
1
This paragraph applies to an interest in a close company or in a partnership, if and to the extent that the interest meets the condition in sub-paragraph (2).
2
The condition is that the value of the interest is—
a
directly attributable to a UK residential property interest, or
b
attributable to a UK residential property interest by virtue only of one or more of the following—
i
an interest in a close company;
ii
an interest in a partnership;
iii
property to which paragraph 3 (loans) applies.
3
For the purposes of sub-paragraphs (1) and (2) disregard—
a
an interest in a close company, if the value of the interest is less than 5% of the total value of all the interests in the close company;
b
an interest in a partnership, if the value of the interest is less than 5% of the total value of all the interests in the partnership.
4
In determining under sub-paragraph (3) whether to disregard a person's interest in a close company or partnership, treat the value of the person's interest as increased by the value of any connected person's interest in the close company or partnership.
5
In determining whether or to what extent the value of an interest in a close company or in a partnership is attributable to a UK residential property interest for the purposes of sub-paragraph (1), liabilities of a close company or partnership are to be attributed rateably to all of its property, whether or not they would otherwise be attributed to any particular property.
Loans
3
This paragraph applies to—
a
the rights of a creditor in respect of a loan which is a relevant loan (see paragraph 4), and
b
money or money's worth held or otherwise made available as security, collateral or guarantee for a loan which is a relevant loan, to the extent that it does not exceed the value of the relevant loan.
4
1
For the purposes of this Schedule a loan is a relevant loan if and to the extent that money or money's worth made available under the loan is used to finance, directly or indirectly—
a
the acquisition by an individual, a partnership or the trustees of a settlement of—
i
a UK residential property interest, or
ii
property to which paragraph 2 to any extent applies, or
b
the acquisition by an individual, a partnership or the trustees of a settlement of an interest in a close company or a partnership (“the intermediary”) and the acquisition by the intermediary of property within paragraph (a)(i) or (ii).
2
In this paragraph references to money or money's worth made available under a loan or sale proceeds being used “indirectly” to finance the acquisition of something include the money or money's worth or sale proceeds being used to finance—
a
the acquisition of any property the proceeds of sale of which are used directly or indirectly to finance the acquisition of that thing, or
b
the making, or repayment, of a loan to finance the acquisition of that thing.
3
In this paragraph references to the acquisition of a UK residential property interest by an individual, a partnership, the trustees of a settlement or a close company include the maintenance, or an enhancement, of the value of a UK residential property interest which is (as the case may be) the property of the individual, property comprised in the settlement or property of the partnership or close company.
4
Where the UK residential property interest by virtue of which a loan is a relevant loan is disposed of, the loan ceases to be a relevant loan.
5
Where a proportion of the UK residential property interest by virtue of which a loan is a relevant loan is disposed of, the loan ceases to be a relevant loan by the same proportion.
6
In this Schedule, references to a loan include an acknowledgment of debt by a person or any other arrangement under which a debt arises; and in such a case references to money or money's worth made available under the loan are to the amount of the debt.
Sch. A1 inserted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 10 para. 1 (with Sch. 10 para. 9(2))