- Latest available (Revised)
- Point in Time (17/12/2020)
- Original (As enacted)
Point in time view as at 17/12/2020.
Finance Act 2003, PART 2 is up to date with all changes known to be in force on or before 08 September 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
Changes and effects yet to be applied by the editorial team are only applicable when viewing the latest version or prospective version of legislation. They are therefore not accessible when viewing legislation as at a specific point in time. To view the ‘Changes to Legislation’ information for this provision return to the latest version view using the options provided in the ‘What Version’ box above.
Textual Amendments
F1Sch. 4ZA inserted (with effect in accordance with s. 128(5)(6) of the amending Act) by Finance Act 2016 (c. 24), s. 128(3) (with s. 128(9)(10))
2(1)This paragraph explains how to determine whether a chargeable transaction is a “higher rates transaction” for the purposes of paragraph 1.U.K.
(2)In the case of a transaction where there is only one purchaser, determine whether the transaction falls within any of paragraphs 3 to 7; if it does fall within any of those paragraphs it is a “higher rates transaction” (otherwise it is not).
(3)In the case of a transaction where there are two or more purchasers—
(a)take one of the purchasers and determine, having regard to that purchaser only, whether the transaction falls within any of paragraphs 3 to 7, and
(b)do the same with each of the other purchasers.
If the transaction falls within any of those paragraphs when having regard to any one of the purchasers it is a “higher rates transaction” (otherwise it is not).
[F2(3A)Sub-paragraphs (2) and (3) are subject to paragraph 9A (spouses and civil partners purchasing from one another).]
(4)For the purposes of this Schedule any term of years absolute or leasehold estate is not a “major interest” if its term does not exceed 7 years on the date of its grant.
[F3(5)References in this Schedule to a major interest in a dwelling include an undivided share in a major interest in a dwelling.]
Textual Amendments
F2Sch. 4ZA para. 2(3A) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 7
F3Sch. 4ZA para. 2(5) inserted (with effect in accordance with s. 44(3) of the amending Act) by Finance Act 2019 (c. 1), s. 44(2)
3(1)A chargeable transaction falls within this paragraph if—U.K.
(a)the purchaser is an individual,
(b)the main subject-matter of the transaction consists of a major interest in a single dwelling (“the purchased dwelling”), and
(c)Conditions A to D are met.
[F4(1A)But sub-paragraph (1) is subject to paragraph 7A.]
(2)Condition A is that the chargeable consideration for the transaction is £40,000 or more.
(3)Condition B is that on the effective date of the transaction the purchased dwelling—
(a)is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or
(b)is subject to such a lease but the lease has an unexpired term of no more than 21 years.
(4)Condition C is that at the end of the day that is the effective date of the transaction—
(a)the purchaser has a major interest in a dwelling other than the purchased dwelling,
(b)that interest has a market value of £40,000 or more, and
(c)that interest is not reversionary on a lease which has an unexpired term of more than 21 years.
(5)Condition D is that the purchased dwelling is not a replacement for the purchaser's only or main residence.
(6)For the purposes of sub-paragraph (5) the purchased dwelling is a replacement for the purchaser's only or main residence if—
(a)on the effective date of the transaction (“the transaction concerned”) the purchaser intends the purchased dwelling to be the purchaser's only or main residence,
(b)in another land transaction (“the previous transaction”) whose effective date was during the period of three years ending with the effective date of the transaction concerned, the purchaser or the purchaser's spouse or civil partner at the time disposed of a major interest in another dwelling (“the sold dwelling”),
[F5(ba)immediately after the effective date of the previous transaction, neither the purchaser nor the purchaser's spouse or civil partner had a major interest in the sold dwelling,]
(c)at any time during [F6the period of three years referred to in paragraph (b)] the sold dwelling was the purchaser's only or main residence, and
(d)at no time during the period beginning with the effective date of the previous transaction and ending with the effective date of the transaction concerned has the purchaser or the purchaser's spouse or civil partner acquired a major interest in any other dwelling with the intention of it being the purchaser's only or main residence.
[F7(6A)Sub-paragraph (6)(ba) does not apply in relation to a spouse or civil partner of the purchaser if the two of them were not living together (see paragraph 9(3)) on the effective date of the transaction concerned.]
(7)For the purposes of sub-paragraph (5) the purchased dwelling [F8is also] a replacement for the purchaser's only or main residence if—
(a)on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser's only or main residence,
(b)in another land transaction whose effective date is during [F9a permitted period], the purchaser or the purchaser's spouse or civil partner disposes of a major interest in another dwelling (“the sold dwelling”),
[F10(ba)immediately after the effective date of that other land transaction, neither the purchaser nor the purchaser's spouse or civil partner has a major interest in the sold dwelling,] and
(c)at any time during the period of three years ending with the effective date of the transaction concerned the sold dwelling was the purchaser's only or main residence.
[F11(7A)For the purposes of sub-paragraph (7)(b), the permitted periods are—
(a)the period of three years beginning with the day after the effective date of the transaction concerned, or
(b)if HMRC are satisfied that the purchaser or the purchaser's spouse or civil partner would have disposed of the major interest in the sold dwelling within that three year period but was prevented from doing so by exceptional circumstances that could not reasonably have been foreseen, such longer period as HMRC may allow in response to an application made in accordance with sub-paragraph (7B).
(7B)An application for the purposes of sub-paragraph (7A)(b) must—
(a)be made within the period of 12 months beginning with the effective date of the transaction disposing of the major interest in the sold dwelling, and
(b)be made in such form and manner, and contain such information, as may be specified by HMRC.
(7C)Schedule 11A (claims not included in returns) does not apply in relation to an application made in accordance with sub-paragraph (7B).]
[F12(8)Sub-paragraph (7)(ba) does not apply in relation to a spouse or civil partner of the purchaser if the two of them are not living together (see paragraph 9(3)) on the effective date of that other land transaction.]
Textual Amendments
F4Sch. 4ZA para. 3(1A) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 8(2)
F5Sch. 4ZA para. 3(6)(ba) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 2(2)(a)
F6Words in Sch. 4ZA para. 3(6)(c) substituted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 2(2)(b)
F7Sch. 4ZA para. 3(6A) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 2(3)
F8Words in Sch. 4ZA para. 3(7) substituted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 8(3)
F9Words in Sch. 4ZA para. 3(7)(b) substituted (with effect in accordance with s. 76(4) of the amending Act) by Finance Act 2020 (c. 14), s. 76(2)(a)
F10Sch. 4ZA para. 3(7)(ba) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 2(4)
F11Sch. 4ZA para. 3(7A)-(7C) inserted (with effect in accordance with s. 76(4) of the amending Act) by Finance Act 2020 (c. 14), s. 76(2)(b)
F12Sch. 4ZA para. 3(8) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 2(5)
4U.K.A chargeable transaction falls within this paragraph if—
(a)the purchaser is not an individual,
(b)the main subject-matter of the transaction consists of a major interest in a single dwelling, and
(c)Conditions A and B in paragraph 3 are met.
5(1)A chargeable transaction falls within this paragraph if—U.K.
(a)the purchaser is an individual,
(b)the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), and
(c)at least two of the purchased dwellings meet conditions A, B and C.
(2)A purchased dwelling meets condition A if the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the purchased dwelling is £40,000 or more.
(3)A purchased dwelling meets condition B if on the effective date of the transaction the purchased dwelling—
(a)is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or
(b)is subject to such a lease but the lease has an unexpired term of no more than 21 years.
(4)A purchased dwelling meets condition C if it is not subsidiary to any of the other purchased dwellings.
(5)One of the purchased dwellings (“dwelling A”) is subsidiary to another of the purchased dwellings (“dwelling B”) if—
(a)dwelling A is situated within the grounds of, or within the same building as, dwelling B, and
(b)the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to dwelling B is equal to, or greater than, two thirds of the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the following combined—
(i)dwelling A,
(ii)dwelling B, and
(iii)each of the other purchased dwellings (if any) which are situated within the grounds of, or within the same building as, dwelling B.
6(1)A chargeable transaction falls within this paragraph if—U.K.
(a)the purchaser is an individual,
(b)the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”),
(c)only one of the purchased dwellings meets conditions A, B and C,
(d)the purchased dwelling which meets those conditions is not a replacement for the purchaser's only or main residence, and
(e)at the end of the day that is the effective date of the transaction—
(i)the purchaser has a major interest in a dwelling other than one of the purchased dwellings,
(ii)that interest has a market value of £40,000 or more, and
(iii)that interest is not reversionary on a lease which has an unexpired term of more than 21 years.
[F13(1A)But sub-paragraph (1) is subject to paragraph 7A.]
(2)Sub-paragraphs (2) to (5) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph.
(3)Sub-paragraphs (6) [F14to (8)] of paragraph 3 apply for the purposes of sub-paragraph (1)(d) of this paragraph as they apply for the purposes of sub-paragraph (5) of that paragraph.
Textual Amendments
F13Sch. 4ZA para. 6(1A) inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 9(a)
F14Words in Sch. 4ZA para. 6(3) substituted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 9(b)
7(1)A chargeable transaction falls within this paragraph if—U.K.
(a)the purchaser is not an individual,
(b)the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), and
(c)at least one of the purchased dwellings meets conditions A and B.
(2)Sub-paragraphs (2) and (3) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph.]
Textual Amendments
F15Sch. 4ZA para. 7A and cross-heading inserted (with effect in accordance with Sch. 11 para. 16(1)-(3) of the amending Act) by Finance Act 2018 (c. 3), Sch. 11 para. 3
7A(1)A chargeable transaction which would (but for this paragraph) fall within paragraph 3 or paragraph 6 does not fall within that paragraph if—U.K.
(a)the purchaser had a major interest (“the prior interest”) in the relevant purchased dwelling immediately before the effective date of the transaction, and
(b)the relevant purchased dwelling had been the purchaser's only or main residence throughout the period of three years ending with the effective date of the transaction.
(2)Sub-paragraph (1) does not apply if—
(a)the prior interest is a term of years absolute or a leasehold estate, and
(b)immediately before the effective date of the transaction, the remaining term of the prior interest is less than 21 years.
(3)Sub-paragraph (1) does not apply if immediately before the effective date of the transaction—
(a)the purchaser is beneficially entitled as a joint tenant to the prior interest, and
(b)there are more than three other joint tenants.
(4)Sub-paragraph (1) does not apply if immediately before the effective date of the transaction the purchaser is beneficially entitled as a tenant in common or coparcener to less than a quarter of the prior interest.
(5)In this paragraph “relevant purchased dwelling” means—
(a)the purchased dwelling mentioned in paragraph 3(1)(b), or (as the case may be)
(b)the purchased dwelling which meets the conditions mentioned in paragraph 6(1)(c).]
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.
Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.
Point in Time: This becomes available after navigating to view revised legislation as it stood at a certain point in time via Advanced Features > Show Timeline of Changes or via a point in time advanced search.
Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.
Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.
Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:
This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.
Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:
Click 'View More' or select 'More Resources' tab for additional information including: