Land and Buildings Transaction Tax - Additional Dwelling Supplement legislation changes: consultation

6 Annex A – Draft Clauses For Consultation

Draft Scottish Statutory Instruments

2022 No.

Land And Buildings Transaction Tax

The Land and Buildings Transaction Tax (Miscellaneous Amendments) (Scotland) Order 2022

Made - - - - ***

Coming into force - - ***

The Scottish Ministers make the following Order in exercise of the powers conferred by sections 27(3) and 67(1) and paragraph 19(3)(a) and (b) of schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013() and all other powers enabling them to do so.

In accordance with section 68(2)(ja)() of that Act, a draft of this instrument has been laid before, and approved by resolution of, the Scottish Parliament.

Citation and commencement

1. This Order may be cited as the Land and Buildings Transaction Tax (Miscellaneous Amendments) (Scotland) Order 2022 and comes into force on [ ].

Relief for certain acquisitions by local authorities

2. In section 27(1) of the Act (reliefs) after "schedule 6 (relief for certain acquisitions by registered social landlords)," insert—

schedule 6A (relief for certain acquisitions by local authorities),.

3. After schedule 6 to the Act, insert schedule 6A contained in the Schedule to this Order.

Amendment of schedule 2A

4. Schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013 (additional amount: transactions relating to second homes etc.) is amended in accordance with articles [ ] to [ ].

5. In paragraph 2(2)—

(a) in head (a), for "18" substitute "36",

(b) in head (b), for "18" substitute "36".

6. In paragraph 6—

(a) after sub-paragraph (1), insert—

"(1A) For the purposes of paragraph 8(1), a dwelling which is disposed of by—

(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 disposed of by the buyer.",

(b) in sub-paragraph (2), for "and (1)(c)(ii)" substitute ", (1)(c)(ii), (1A)(a) and (1A)(c)(ii)".

7. In paragraph 8, in sub-paragraph (1)—

(1) In head (a)—

(a) for "18" substitute "36",

(b) after "with" insert "or ending with",

(c) after "buyer" insert "or, where there are two or more buyers who are or will be jointly entitled to the interest acquired, one of the buyers".

(2) In head (b)—

(a) after "buyer's" insert "or, where there are two or more buyers who are or will be jointly entitled to the interest acquired, one of the buyers'",

(b) for "18" substitute "36".

(3) In head (c) after "buyer's" insert "or, where there are two or more buyers who are or will be jointly entitled to the interest acquired, all of the buyers'".

8. After paragraph 9A insert—

Relief for beneficiaries

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

(a) at the end of the day that is the effective date of the transaction, the buyer owns two dwellings,

(b) the date of acquisition of ownership of the first of the two dwellings is after the date on which the buyer entered into the contract for the land transaction relating to the second of the two dwellings, but before the date of completion of that contract, and

(c) the buyer is a beneficiary to the estate of a deceased person and acquired ownership of the first of two dwellings by virtue of a conveyance or transfer in their favour by the executors of that person.

(2) For the purposes of paragraph (1) the date on which the buyer acquired ownership of a dwelling by virtue of a conveyance or transfer in their favour by the executors of a deceased person is the date on which the conveyance or transfer was granted by the executors.

Relief for separated spouses and civil partners retaining interest in former main residence

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

(a) at the end of the day that is the effective date of the transaction, the buyer is the owner of two dwellings,

(b) the first of the two dwellings was at any time before the effective date of the transaction the only or main residence of the buyer and the buyer's spouse, civil partner, former spouse or former civil partner,

(c) the first of the two dwellings is the only or main residence of the buyer's spouse, civil partner, former spouse or former civil partner,

(d) the buyer and the buyer's spouse, civil partner, former spouse or former civil partner do not intend to live together again, and

(e) the buyer retains an ownership interest in the first of the two dwellings in pursuance of an order of a court or agreement of a type referred to in paragraph 5 of schedule 1.

9. In paragraph 17(2) after "dwelling" insert ", but if the market value of any person's share in the ownership interest of a dwelling is less than £40,000, that person is not to be treated as the owner of the dwelling".

Name

St Andrew's House

Edinburgh Authorised to sign by the Scottish Ministers

Date

Schedule 1 Article 3

Schedule 6a

(introduced by section 27)

Relief for certain acquisitions by local authorities

The relief

1. A land transaction under which the buyer is a local authority is exempt from charge if the qualifying condition is met.

The qualifying condition

2. The qualifying condition is that the transaction is funded with the assistance of a grant or other financial assistance under section 2 of the Housing (Scotland) Act 1988 (c.43) (general functions of the Scottish Ministers).

Explanatory Note

(This note is not part of the Order)

This Order makes various amendments to the Land and Buildings Transaction Tax (Scotland) Act 2013 ("the Act").

First, it inserts a new schedule 6A into the Act which provides for a targeted relief. The targeted relief is to provide relief from land and buildings transaction tax where the buyer is a local authority and the acquisition of land is funded by the Scottish Ministers under section 2 of the Housing (Scotland) Act 1988.

Second, it modifies paragraph 2(2) of schedule 2A to the Act so that the period ending with the effective date of a transaction during which the replacement of an only or main residence gives rise to relief from payment of the additional amount is extended to 36 months.

Third, it modifies paragraph 6 of schedule 2A to the Act so that properties owned by the buyer's spouse, civil partner, cohabitant, or a child of the buyer or any of those persons, which are currently deemed to be owned by the buyer, are also deemed to be disposed of by the buyer, when disposed of.

Fourth, it modifies paragraph 8 of schedule 2A to the Act so that relief from the additional amount is extended to transactions by joint buyers where either of the joint buyers disposes of their own former main residence in the relevant period before the effective date of the transaction, or where only one of the joint buyers has an ownership interest in a former main residence which can be disposed of in the relevant period. Further, it extends the relevant period to 36 months before or after the effective date of the transaction.

Fifth, it adds a relief from the additional amount where a buyer is replacing their main residence but inherits an ownership interest in a second dwelling in the period after missives have been concluded for the purchase of the new main residence.

Sixth, it adds a relief from the additional amount where a buyer is replacing their main residence but is subject to a court order requiring them to retain an ownership interest in a second dwelling which is a former main residence, following divorce, dissolution of a civil partnership or judicial separation.