Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 11 paragraph 8

Condition 3: generating income through a leaseback arrangement

Schedule 11 paragraph 8 sets out the third condition for alternative finance investment bond relief, which requires that the parties enter into a leaseback arrangement (or meet other prescribed conditions) to generate income or gains for the bond.

• Condition 3 requires that the bond arrangement generates income or gains, typically through a leaseback agreement between B and A.
• A leaseback agreement means B grants A a lease (where the original interest was freehold) or a sub-lease (where it was leasehold), carved out of the interest B acquired.
• Alternatively, Condition 3 can be met if other conditions prescribed by regulations are satisfied, allowing for flexibility beyond a standard leaseback.
• The leaseback mechanism is the typical way Sharia-compliant bond structures produce a return for investors, as the rent paid by A to B represents the income stream for the bond.