Finance Act 2003

Section 68

SCHEDULE 8U.K.Stamp duty land tax: charities relief

Charities reliefU.K.

1(1)A land transaction is exempt from charge if the purchaser is a charity and the following conditions are met.U.K.

Relief under [F1this Schedule] is referred to in this Part as “charities relief”.

(2)The first condition is that the purchaser must intend to hold the subject-matter of the transaction for qualifying charitable purposes, that is—

(a)for use in furtherance of the charitable purposes of the purchaser or of another charity, or

(b)as an investment from which the profits are applied to the charitable purposes of the purchaser.

(3)The second condition is that the transaction must not have not been entered into for the purpose of avoiding tax under this Part (whether by the purchaser or any other person).

(4)In this paragraph a “charity” means a body or trust established for charitable purposes only.

Withdrawal of charities reliefU.K.

2(1)Where in the case of a transaction (“the relevant transaction”) that is exempt by virtue of [F2this Schedule] —U.K.

(a)a disqualifying event occurs—

(i)before the end of the period of three years beginning with the effective date of the transaction, or

(ii)in pursuance of, or in connection with, arrangements made before the end of that period,

and

(b)at the time of the disqualifying event the purchaser holds a chargeable interest—

(i)that was acquired by the purchaser under the relevant transaction, or

(ii)that is derived from an interest so acquired,

charities relief in relation to the relevant transaction, or an appropriate proportion of it, is withdrawn and tax is chargeable in accordance with this paragraph.

(2)The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for charities relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.

(3)For the purposes of this paragraph a “disqualifying event” means—

(a)the purchaser ceasing to be established for charitable purposes only, or

(b)the subject-matter of the transaction, or any interest or right derived from it, being used or held by the purchaser otherwise than for qualifying charitable purposes.

(4)In sub-paragraphs (1) and (2) an “appropriate proportion” means an appropriate proportion having regard to—

(a)what was acquired by the purchaser under the relevant transaction and what is held by the purchaser at the time of the disqualifying event, and

(b)the extent to which what is held by the purchaser at that time becomes used or held for purposes other than qualifying charitable purposes.

(5)In this paragraph “qualifying charitable purposes” has the same meaning as in paragraph 1.

[F3Cases where first condition not fully metU.K.

3(1)This paragraph applies where—U.K.

(a)a land transaction is not exempt from charge under paragraph 1 because the first condition in that paragraph is not met, but

(b)the purchaser (“C”) intends to hold the greater part of the subject-matter of the transaction for qualifying charitable purposes.

(2)In such a case—

(a)the transaction is exempt from charge, but

(b)for the purposes of paragraph 2 (withdrawal of charities relief) “disqualifying event” includes—

(i)any transfer by C of a major interest in the whole or any part of the subject-matter of the transaction, or

(ii)any grant by C at a premium of a low-rental lease of the whole or any part of that subject-matter,

that is not made in furtherance of the charitable purposes of C.

(3)For the purposes of sub-paragraph (2)(b)(ii)—

(a)a lease is granted “at a premium” if there is consideration other than rent, and

(b)a lease is a “low-rental”lease if the annual rent (if any) does not exceed £600 a year.

(4)In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 2—

(a)the date of the event for those purposes is the effective date of the transaction;

(b)paragraph 2 has effect as if—

(i)in sub-paragraph (1)(b), for “at the time of” there were substituted “ immediately before ”,

(ii)in sub-paragraph (4)(a), for “at the time of” there were substituted “ immediately before and immediately after ”, and

(iii)sub-paragraph (4)(b) were omitted.

(5)In this paragraph—

• “qualifying charitable purposes” has the same meaning as in paragraph 1;

• “rent” has the same meaning as in Schedule 5 (amount of tax chargeable: rent) and “annual rent” has the same meaning as in paragraph 9(2) of that Schedule.]

[F4Charitable trustsU.K.

4(1)This Schedule applies in relation to a charitable trust as it applies in relation to a charity.U.K.

(2)In this paragraph “charitable trust” means—

(a)a trust of which all the beneficiaries are charities, or

(b)a unit trust scheme in which all the unit holders are charities,

and “charity” has the same meaning as in paragraph 1.

(3)In this Schedule as it applies by virtue of this paragraph—

(a)references to the purchaser in paragraphs (a) and (b) of paragraph 1(2) are to the beneficiaries or unit holders, or any of them;

(b)the reference to the purchaser in paragraph 2(3)(a) is to any of the beneficiaries or unit holders;

(c)the reference in paragraph 3(2)(b) to the charitable purposes of C is to those of the beneficiaries or unit holders, or any of them.]