Finance Act 2004

302Charities relief

(1)In Schedule 8 to the Finance Act 2003 (stamp duty land tax: charities relief), after paragraph 2 insert—

“Cases where first condition not fully met

3(1)This paragraph applies where—

(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.”.

(2)After paragraph 3 of that Schedule (inserted by subsection (1) above) insert—

“Charitable trusts

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

(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.”

(3)In paragraph 1(1) of that Schedule, for “this paragraph” substitute “this Schedule”.

(4)In paragraph 2(1) of that Schedule, for “paragraph 1 (charities relief)” substitute “this Schedule”.

(5)In section 81 (further return where relief withdrawn), in paragraph (c) of subsection (4) (meaning of “the disqualifying event”), after “paragraph 2(3)” insert “or 3(2)”.

(6)In section 87 (interest on unpaid tax), in paragraph (c) of subsection (4) (meaning of “the disqualifying event”), after “paragraph 2(3)” insert “or 3(2)”.

(7)This section applies in relation to any transaction of which the effective date (within the meaning of Part 4 of the Finance Act 2003 (c. 14)) is on or after the day on which this Act is passed.