Guidance on Land Transaction Tax (LTT) miscellaneous reliefs.

Organisation:
First published:
5 April 2018
Last updated:

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LTTA/7102 Lighthouses relief

(paragraphs 1 and 2 of Schedule 22)

A land transaction relating to a lighthouse entered into by or under the direction of the Secretary of State, for the purpose of carrying into effect Part 8 of the Merchant Shipping Act 1995, is relieved from tax.

A land transaction entered into by or under the direction of Trinity House, for the purpose of carrying out the services referred to in section 221(1) of the Merchant Shipping Act 1995, is relieved from tax.

‘Trinity House’ has the meaning given in section 223 of the Merchant Shipping Act 1995.

LTTA/7103 Visiting forces and international military headquarters

(paragraphs 3, 4 and 5 of Schedule 22)

This relief applies to certain acquisitions of land for use by:

  • visiting forces of ‘designated’ countries, which are present in Wales at the invitation of HM Government, or
  • designated international military headquarters.

A land transaction is relieved where it is entered into with a view to:

  • building or enlarging barracks or camps for the visiting force of a designated country
  • facilitating the training of such a force, or
  • promoting the health or efficiency of such a force.

For this purpose a designated international military headquarters is treated as if:

  • it were a visiting force of a designated country
  • the members of that force were persons serving at or attached to the headquarters who are members of the armed forces of a designated country.

In order for relief to apply, the country or headquarters concerned must be ‘designated’ for this purpose by Order in Council to give effect to an international agreement.

References to a ‘visiting force’ include any body, contingent etc. of the countries force that is present, or will become present, at the invitation of the UK Government.

LTTA/7104 Relief for property accepted in satisfaction of tax

(paragraph 6 of Schedule 22)

A land transaction entered into under section 9 of the National Heritage Act 1980 (disposal of property accepted in satisfaction of an amount tax) is relieved from charge where the buyer is:

  • any museum, art gallery, library or other similar institution having as its purpose or one of its purposes the preservation for the public benefit of a collection of historic, artistic or scientific interest
  • any body having as its purpose or one of its purposes the provision, improvement or preservation of amenities enjoyed or to be enjoyed by the public or the acquisition of land to be used by the public
  • any body having nature conservation as its purpose or one of its purposes
  • the National Art Collections Fund or the Friends of the National Libraries
  • the Secretary of State, or
  • the Department of the Environment for Northern Ireland.

LTTA/7105 Trunk roads relief

(paragraph 7 of Schedule 22)

A land transaction to which the Welsh Ministers or the Secretary of State is a party, is relieved if:

  • it relates to a highway or proposed highway which is, or is to become, a trunk road, and
  • in respect of which LTT would otherwise be payable as an expense incurred by the Welsh Ministers or the Secretary of State under the Highways Act 1980.

This, together with charities relief, is one of the very few places where relief may be claimed by joint buyers, one of whom would not usually be entitled to relief.  In such situations, trunk roads relief is available in full, rather than as a partial relief.

LTTA/7106 Relief for acquisitions by bodies established for national purposes

(paragraph 8 of Schedule 22)

This relief applies to acquisitions of land entered into by the bodies listed below as buyer:

  • the Trustees for the British Museum
  • the Trustees of the National Heritage Memorial Fund
  • the Trustees of the Natural History Museum.

LTTA/7107 Relief for acquisitions in consequence of reorganisation of parliamentary constituencies

(paragraph 9 of Schedule 22)

Relief may be claimed by a new local constituency association where a land transaction is entered into as a consequence of an Order in Council made under the Parliamentary Constituencies Act 1986 (orders specifying new parliamentary constituencies) and the chargeable interest is transferred to it by a former local constituency association. In the absence of such an order no relief is available.

The relief allows for parliamentary constituencies to change and, as a consequence of that change, the previous local constituency association to transfer a chargeable interest to a new local constituency association without a charge to LTT arising.

A charge might otherwise arise when, for example, an old constituency is split into 2 and 2 new associations are formed, or where 2 previous constituencies merge and one is formed.

Any chargeable interest transferred to either of the new associations is eligible for relief. The relief also allows for those occasions where the chargeable interest is temporarily transferred to a related body before eventual transfer to the new association.

LTTA/7108 Interpretation

  • ‘Existing local constituency association’ means a local constituency association whose area, at the relevant date, was the same (or substantially the same) as the area of the former parliamentary constituency or two or more such constituencies
  • ‘former parliamentary constituency’ means an area that, for the purposes of parliamentary elections, was a constituency immediately before the relevant date but is no longer a constituency after that date
  • ‘local constituency association’ means an unincorporated association whose primary purpose is to further the aims of a political party in an area that is or was the same or substantially the same as one or more parliamentary constituencies
  • ‘new association’ means a local constituency association whose area, at the relevant date, is the same (or substantially the same) as that of a new parliamentary constituency or 2 or more such constituencies
  • ‘new parliamentary constituency’ means an area that, for the purposes of parliamentary elections, is a constituency after the date of the relevant date but was not a constituency before that date
  • ‘related body’ means a body that is an organ of the political party concerned
  • ‘relevant date’ means the date on which the Order comes into operation.

Examples

An Order in Council provides for 2 constituencies to be merged into a single new constituency. Each existing local constituency association holds an interest in land.

Constituency association 1 (‘CA1’) owns a building outright, constituency association 2 (‘CA2’) owns a building subject to a mortgage of £200,000.

The following tax positions arise on the following facts:

  • The new association (CA3) is to use CA1’s property and CA2’s property is to be sold. If CA1’s property is transferred for no consideration, the transaction will be exempt. A third party acquiring CA2’s building will not be able to claim relief for acquisitions in consequence of reorganisation of parliamentary constituencies
  • The new association (CA3) is to use CA2’s property and CA1’s property is to be sold. If CA2’s property is transferred for no consideration other than the assumption of the debt, the chargeable consideration will be the amount of that debt. A third party acquiring CA1’s building will not be able to claim relief for acquisitions in consequence of reorganisation of parliamentary constituencies
  • The new association (CA3) is to use CA2’s property and CA1’s property is to be sold. The new association is not ready to receive the property on the date that the old association is dissolved. The property is therefore transferred to the central party property holding company. The intention is to transfer the property to the new association as soon as possible. The second transfer takes place three months later once the new association has been fully established and all relevant officers are in post. Both the transfer from CA2 to the central party’s property holding company and the transfer from that company to the new association are eligible for relief. A third party acquiring CA1’s building will not be able to claim relief for acquisitions in consequence of reorganisation of parliamentary constituencies.

LTTA/7109 Building societies relief

(paragraph 10 of Schedule 22)

A land transaction is relieved from charge if it is effected by or in consequence of:

  • an amalgamation of 2 or more building societies under section 93 of the Building Society Act 1986, or
  • a transfer of engagements between building societies under section 94 of the Building Society Act 1986.

LTTA/7110 Friendly societies relief

(paragraph 11 of Schedule 22)

A land transaction is relieved from charge if it is effected by or in consequence of:

  • an amalgamation of 2 or more registered friendly societies under section 82 of the Friendly Societies Act 1974
  • a transfer of engagements of a registered friendly society to another registered friendly society societies under section 82 of the Friendly Societies Act 1974
  • an amalgamation of 2 or more friendly societies under section 85 of the Friendly Societies Act 1992
  • a transfer of the engagements of a friendly society under section 86 of the Friendly Societies Act 1992, or
  • a transfer of the engagements of a friendly society pursuant to a direction given by the appropriate authority under section 90 of the Friendly Societies Act 1992.

For these purposes the appropriate authority is the Prudential Regulation Authority.

LTTA/7111 Co-operative and community benefit society and credit union relief

(paragraph 12 of Schedule 22)

A land transaction is relieved from charge if it is effected by or in consequence of:

  • a transfer by a registered society of its engagements to another registered society under section 110 of the Co-operative and Community Benefit Societies Act 2014
  • a conversion of a registered society into a company under section 112 of the Co-operative and Community Benefit Societies Act 2014
  • an amalgamation of a registered society with a company under section 112 of the Co-operative and Community Benefit Societies Act 2014
  • a transfer by a registered society of the whole of its engagements to a company under section 112 of the Co-operative and Community Benefit Societies Act 2014.

A ‘registered society’ has the meaning in section 1(1) of the Co-operative and Community Benefit Societies Act 2014. However, for transactions effected under section 112 of the Co-operative and Community Benefit Societies Act 2014 the definition in section 1(1) of the Co-operative and Community Benefit Societies Act 2014 but does not include a credit union registered under section 1 of the Credit Unions Act 1979.

However, in relation to a transaction effected under section 110 of the Co-operative and Community Benefit Societies Act 2014, a transfer of engagements from one registered credit union to another, may claim relief so long as it complies with the rules in section 21 of the Credit Unions Act 1979.

LTTA/7112 Relief from LTT provided by UK legislation in relation to diplomatic and international organisations

Diplomatic relief

Relief from LTT is available for acquisitions of certain diplomatic and consular premises under the following provisions:

  • Purchase or lease of premises of a diplomatic mission or the official residence of the head of mission (Articles 23 and 34 of the Vienna Convention on Diplomatic Relations, incorporated as Schedule 1 to the Diplomatic Privileges Act 1964)
  • Purchase or lease of consular premises or the official residence of the consular head (Article 32 of the Vienna Convention on Consular Relations, incorporated as Schedule 1 to the Consular Relations Act 1968).

Before doing so, the mission or consulate concerned must have obtained confirmation of the diplomatic status of the premises, in accordance with the Diplomatic & Consular Premises Act 1987, from the Diplomatic Missions & International Organisations Unit (DMIOU), Protocol Directorate of the Foreign and Commonwealth Office.

These reliefs do not apply to the purchase or lease of the private residence of a diplomat or consular official.

Sovereign Bodies and International Organisations

Overseas Heads of State, Governments or other Sovereign bodies are not generally exempt or relieved from liability to pay LTT.

However, relief will be given on the purchase or lease of headquarters premises of an international organisation where the Statutory Instrument conferring immunities and privileges on the organisation, accords to its Director or High Officer exemption from UK taxation on the same terms as are accorded to a diplomatic agent.