Finance Act 2003

Rent to mortgage or rent to loan: chargeable consideration U.K.

6 (1) The chargeable consideration for a rent to mortgage or rent to loan transaction is determined in accordance with this paragraph. U.K.

(2) A “rent to mortgage transaction” means—

(a) the transfer of a dwelling to a person, or

(b) the grant of a lease of a dwelling to a person,

pursuant to the exercise by that person of the right to acquire on rent to mortgage terms under Part 5 of the Housing Act 1985 (c. 68).

(3) The chargeable consideration for such a transaction is equal to the price that, by virtue of section 126 of the Housing Act 1985, would be payable for—

(a) a transfer of the dwelling to the person (where the rent to mortgage transaction is a transfer), or

(b) the grant of a lease of the dwelling to the person (where the rent to mortgage transaction is the grant of a lease),

if the person were exercising the right to buy under Part 5 of that Act.

(4) A “rent to loan transaction” means the execution of a heritable disposition in favour of a person pursuant to the exercise by that person of the right to purchase a house by way of the rent to loan scheme in Part 3 of the Housing (Scotland) Act 1987 (c. 26).

(5) The chargeable consideration for such a transaction is equal to the price that, by virtue of section 62 of the Housing (Scotland) Act 1987, would be payable for the house if the person were exercising the right to purchase under section 61 of that Act.

Shared ownership trust: introduction U.K.

[F1 7 (1) In this Schedule “shared ownership trust” means a trust of land, within the meaning of section 1 of the Trusts of Land and Appointment of Trustees Act 1996, which satisfies the following conditions.

(2) Condition 1 is that the trust property is—

(a) a dwelling, and

(b) in England or Wales.

(3) Condition 2 is that one of the beneficiaries (“the social landlord”) is a qualifying body F2 ....

(4) Condition 3 is that the terms of the trust—

(a) provide for one or more of the individual beneficiaries (“the purchaser”) to have exclusive use of the trust property as the only or main residence of the purchaser,

(b) require the purchaser to make an initial payment to the social landlord (“the initial capital”),

(c) require the purchaser to make additional payments to the social landlord by way of compensation under section 13(6)(a) of the Trusts of Land and Appointment of Trustees Act 1996 (“rent-equivalent payments”),

(d) enable the purchaser to make other additional payments to the social landlord (“equity-acquisition payments”),

(e) determine the initial beneficial interests of the social landlord and of the purchaser by reference to the initial capital,

(f) specify a sum, equating or relating to the market value of the dwelling, by reference to which the initial capital was calculated, and

(g) provide for the purchaser's beneficial interest in the trust property to increase, and the social landlord's to diminish (or to be extinguished), as equity-acquisition payments are made.

(5) Section 118 (meaning of “market value”) does not apply to this paragraph.

(6) In Condition 1 “dwelling” includes—

(a) a building which is being constructed or adapted for use as a dwelling,

(b) land which is to be used for the purpose of the construction of a dwelling, and

(c) land which is, or is to become, the garden or grounds of a dwelling.

[F3 (7) In Condition 2 “qualifying body” means—

(a) a qualifying body within the meaning of paragraph 5(2)(a) to (f), or

(b) a registered provider of social housing within paragraph 5(2)(g) (subject to sub-paragraph (8)).

(8) A registered provider of social housing within paragraph 5(2)(g) (“R”) is only a qualifying body in relation to a shared ownership trust if the following has been or is being funded with the assistance of a grant or other financial assistance under section 19 of the Housing and Regeneration Act 2008—

(a) the purchase or construction of the trust property by R (or a person connected with R), or

(b) the adaptation of the trust property by R (or a person connected with R) for use as a dwelling.

(9) Section 839 of the Taxes Act 1988 (connected persons) has effect for the purposes of sub-paragraph (8).]

Textual Amendments

F1 Sch. 9 paras. 7-11 and cross-headings inserted (with effect in accordance with s. 77(2) of the amending Act) by Finance Act 2007 (c. 11), s. 77(1)

F2 Words in Sch. 9 para. 7(3) omitted (with effect in accordance with s. 81(8) of the amending Act) by virtue of Finance Act 2009 (c. 10), s. 81(7)(a)

F3 Sch. 9 para. 7(7)-(9) inserted (with effect in accordance with s. 81(8) of the amending Act) by Finance Act 2009 (c. 10), s. 81(7)(b)

Shared ownership trust: “purchaser” U.K.

8 For the purposes of the application of stamp duty land tax in relation to a shared ownership trust, the person (or persons) identified as the purchaser in accordance with paragraph 7, and not the social landlord or any other beneficiary, is (or are) to be treated as the purchaser of the trust property.

Textual Amendments

F1 Sch. 9 paras. 7-11 and cross-headings inserted (with effect in accordance with s. 77(2) of the amending Act) by Finance Act 2007 (c. 11), s. 77(1)

Shared ownership trust: election for market value treatment U.K.

9 (1) This paragraph applies where—

(a) a shared ownership trust is declared, and

(b) the purchaser elects for tax to be charged in accordance with this paragraph.

(2) An election must be included in—

(a) the land transaction return for the declaration of the shared ownership trust, or

(b) an amendment of that return.

(3) An election may not be revoked.

(4) Where this paragraph applies—

(a) the chargeable consideration for the declaration of the shared ownership trust shall be taken to be the amount stated in accordance with paragraph 7(4)(f), and

(b) no account shall be taken for the purposes of stamp duty land tax of rent-equivalent payments.

(5) The transfer to the purchaser of an interest in the trust property upon the termination of the trust is exempt from charge if—

(a) an election was made under this paragraph, and

(b) any tax chargeable in respect of the declaration of the shared ownership trust has been paid.

Textual Amendments

F1 Sch. 9 paras. 7-11 and cross-headings inserted (with effect in accordance with s. 77(2) of the amending Act) by Finance Act 2007 (c. 11), s. 77(1)

Shared ownership trust: treatment of staircasing transaction U.K.

10 (1) An equity-acquisition F4 ... payment under a shared ownership trust, and the consequent increase in the purchaser's beneficial interest, shall be exempt from charge if—

(a) an election was made under paragraph 9, and

(b) any tax chargeable in respect of the declaration of trust has been paid.

(2) An equity-acquisition F5 ... payment under a shared ownership trust, and the consequent increase in the purchaser's beneficial interest, shall also be exempt from charge if following the increase the purchaser's beneficial interest does not exceed 80% of the total beneficial interest in the trust property.

Textual Amendments

F1 Sch. 9 paras. 7-11 and cross-headings inserted (with effect in accordance with s. 77(2) of the amending Act) by Finance Act 2007 (c. 11), s. 77(1)

F4 Word in Sch. 9 para. 10(1) omitted (with effect in accordance with s. 95(13) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 95(9)

F5 Word in Sch. 9 para. 10(2) omitted (with effect in accordance with s. 95(13) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 95(9)

Shared ownership trust: treatment of additional payments where no election made U.K.

11 Where no election has been made under paragraph 9 in respect of a shared ownership trust—

(a) the initial capital shall be treated for the purposes of stamp duty land tax as chargeable consideration other than rent, and

(b) any rent-equivalent F6 ... payment by the purchaser shall be treated for the purposes of stamp duty land tax as a payment of rent.]

Textual Amendments

F1 Sch. 9 paras. 7-11 and cross-headings inserted (with effect in accordance with s. 77(2) of the amending Act) by Finance Act 2007 (c. 11), s. 77(1)

F6 Word in Sch. 9 para. 11(b) omitted (with effect in accordance with s. 95(13) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 95(9)

Shared ownership trust: declaration not linked with staircasing transactions etc U.K.

[F7 12 For the purpose of determining the rate of tax chargeable on the declaration of a shared ownership trust, the declaration shall be treated as if it were not linked to—

(a) any equity-acquisition payment under the trust or any consequent increase in the purchaser's beneficial interest in the trust property, or

(b) a transfer to the purchaser of an interest in the trust property upon the termination of the trust.]

Textual Amendments

F7 Sch. 9 para. 12 and cross-heading inserted (with effect in accordance with s. 95(13) of the amending Act) by Finance Act 2008 (c. 9), s. 95(10)