Clause 195 - Leases

Part of Finance Bill – in a Public Bill Committee am 2:45 pm ar 18 Mehefin 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of David Gauke David Gauke The Exchequer Secretary 2:45, 18 Mehefin 2013

Clause 195 and schedule 39 simplify the stamp duty land tax rules that apply to certain lease transactions. Approximately 22,000 taxpayers are expected to benefit from the changes, which will reduce compliance costs by up to £150 per business.

In most cases when a person acquires land or property, stamp duty land tax is paid only once. Certain transactions involving leases can require the purchaser to make further notifications to HMRC, for example when the lease is extended or there is an abnormal increase in the rent. Some of the provisions are complex and onerous for the taxpayer, who may not be aware of his or her ongoing liability. HMRC has been working with its stakeholder group for some time to identify areas of legislation that would benefit from simplification. Three areas under provisions on leases were identified as priorities for such simplification, so we have taken action.

The clause introduces schedule 39, which will abolish the rules on abnormal rent increases, simplify the reporting requirements when a lease continues after the expiry of its fixed term, and simplify the reporting requirements when an agreement for a lease is substantially performed  before the actual lease is granted. As I have said, those three areas of the provisions on leases were identified by the stakeholder group as priorities for simplification. HMRC has continued to consult interested parties throughout the process to ensure that the measures give the desired result.

As I said, the clause and schedule are intended to simplify the reporting requirements for certain lease transactions, including when a lease continues after the expiry of its fixed term. However, in some circumstances, the interaction of such changes with another provision under existing legislation would result in the taxpayer being required to subject a return under both provisions for the same period. The potential interaction of the two provisions was not recognised during the consultation period prior to the drafting of the Bill. It is not intended that two returns should be required; indeed, that would go against the objectives of the changes made under schedule 39. Government amendments 103 to 106 will therefore ensure that only one return is required in such circumstances.

For those affected, the changes will streamline the reporting requirements and reduce the administrative costs for business. They support the Government’s objective of simplifying the tax system, so I hope that the Committee will agree to amendments 103 to 106, the clause and the schedule.