Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section 29

Treatment of non-major interests in dwellings held through bare trusts and settlements for higher rates purposes

Schedule 5, paragraph 29 clarifies that where a transaction involves an interest other than a major interest in a dwelling — but that interest is held through a bare trust or settlement — the transaction is nevertheless treated as involving a major interest for the purposes of the higher rates of Land Transaction Tax.

• Where a dwelling is held on bare trust or within a settlement, the beneficiary is treated as holding a major interest in that dwelling for higher rates purposes, even though the actual interest being transacted is not itself a major interest.
• For bare trusts, this rule applies where a beneficiary disposes of their interest and, immediately before the transaction, the major interest was treated as vested in them, and immediately after, it is treated as vested in the buyer.
• For settlements, the rule applies where a beneficiary who is entitled either to occupy the dwelling for life or to receive income from it disposes of their interest, and the buyer is then treated as holding the major interest.
• When determining whether these bare trust or settlement rules apply, you should disregard the effects of paragraphs 30 and 35(5) of Schedule 5, which deal with certain adjustments for connected persons and dwellings outside Wales.

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