Development Land Tax Act 1976

JurisdictionUK Non-devolved
Citation1976 c. 24


Development Land Tax Act 1976

1976 CHAPTER 24

An Act to impose a new tax on the realisation of the development value of land; to provide for the termination of the charges on capital gains from land imposed by Chapters I and II of Part III of the Finance Act 1974; and for connected purposes.

[22nd July 1976]

Most Gracious Sovereign,

We , Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the new tax hereinafter mentioned and to make such other provision as is hereinafter contained; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

The charge to tax

The charge to tax

S-1 Development land tax.

1 Development land tax.

(1) A tax, to be called development land tax, shall be charged in accordance with the provisions of this Act in respect of the realisation of the development value of land in the United Kingdom.

(2) Subject to the provisions of this Act, a person shall be chargeable to development land tax on the realised development value, determined in accordance with this Act, which accrues to him on the disposal by him on or after the appointed day of an interest in land in the United Kingdom, and shall be so chargeable whether or not he is resident (for purposes of income tax or otherwise) in the United Kingdom.

(3) Subject to section 13 below, the rate of development land tax shall be 80 per cent.

S-2 Deemed disposals at start of material development.

2 Deemed disposals at start of material development.

(1) Immediately before a project of material development is begun on any land, every major interest then subsisting in that land shall be deemed for the purposes of this Act to be disposed of for a consideration equal to its market value at that time and to be immediately reacquired at that value.

(2) Part I of Schedule 1 to this Act shall have effect for determining what is a project of material development, what land is comprised in such a project and at what time such a project is to be treated for the purposes of this Act as begun, and Part II of that Schedule shall have effect with respect to deemed disposals and reacquisitions.

(3) Subject to section 28(6) below, for the purposes of this Act an interest in land comprised in a project of material development is a major interest unless—

(a ) as to all the land in which it subsists, it is in reversion (at law or in equity) on one or more long leases or (in Northern Ireland) it is the interest of a person entitled for the time being to the rent payable under a grant in fee farm, and the rent or the aggregate of the rents and of any premium or premiums to which, under or by virtue thereof, the owner of the interest is entitled does not, and cannot be made to, reflect the value or any part of the value of the development concerned; or

(b ) its market value on the date on which the project is begun is less than 5,000 and—

(i)if the land is in England, Wales or Northern Ireland, the interest does not confer, either absolutely or conditionally, and whether on that date or at any later time, a right to possession, as defined in section 205(1) of the Law of Property Act 1925;and
(ii)if the land is in Scotland, the interest is not the estate or interest of the proprietor of thedominium utile, or, in the case of property other than feudal property, of the owner, or an interest under a lease

(4) For the purposes of paragraph (a ) of subsection (3) above, a lease is a long lease unless, on the date on which the project referred to in that subsection is begun, the unexpired term of the lease does not exceed thirty-five years; and in the application of that subsection to Scotland, that paragraph shall have effect with the omission of the words ‘(at law or in equity)’.

(5) For the purposes of this section, the following leases shall be treated as granted for terms not exceeding thirty-five years, namely,—

(a ) a lease of land in Northern Ireland which is a lease for life or lives or for any terms of years determinable with life or lives and is not a lease in perpetuity, within the meaning of section 1 of the Renewable Leasehold Conversion Act 1849 , or a lease to which section 37 of that Act applies; and

(b ) a lease of land in England and Wales which is, or takes effect as if, granted for a term exceeding thirty-five years and which is determinable by notice (whether by the lessor or otherwise) at a time after the death of the lessor or any other person or of the survivor of two or more persons; and

(c ) a lease of land in Scotland which is determinable on the death of any person.

(6) The provisions of Part III of Schedule 1 to this Act (being provisions corresponding to subsections (1)(b ), (c ) and (d )and (2) to (3A) of section 84 of the Income and Corporation Taxes Act 1970 ) shall have effect in ascertaining for the purposes of this section when the term of a lease will expire.

S-3 Part disposals.

3 Part disposals.

(1) Subject to section 8 below, references in this Act to a disposal of an interest in land include references to a part disposal thereof, and for the purposes of this Act there is a part disposal of an interest in land—

(a ) where the owner of that interest grants a lease or other interest in land out of, or by virtue of his ownership of, his interest; or

(b ) where the owner of that interest grants to another his interest in some but not all of the land in which that interest subsisted before the grant.

(2) Without prejudice to subsection (1) above, there is for the purposes of this Act a part disposal of an interest in land by the owner thereof where any sum is derived from his ownership of that interest and that sum is neither rent payable under a lease nor otherwise attributable to the acquisition (at any time) by the person paying that sum of an interest in that land, and this subsection applies in particular to—

(a ) sums received by way of compensation for any kind of damage to land in which that interest subsists or for any depreciation or risk of depreciation of that interest;

(b ) sums received in return for forfeiture or surrender of, or refraining from exercising, rights which are vested in the owner of the interest by virtue of his ownership thereof; and

(c ) sums received as consideration for use or exploitation of the land in which that interest subsists or of any assets, other than minerals, in, on or under that land;

and for the purposes of this Act such a part disposal shall be deemed to take place, subject to subsection (3) below, at the time at which the sum in question is received.

(3) In any case where—

(a ) there is a part disposal of an interest in land falling within subsection (2) above, and

(b ) before the sum in question is received but after the right to receive it has accrued, there is a disposal, other than a deemed disposal, of that interest or of an interest of which it is a part for the purposes of Part I of Schedule 2 to this Act,

the part disposal shall be deemed for the purposes of this Act to take place immediately before the disposal referred to in paragraph (b ) above.

(4) In subsection (2) above ‘sum’ means money or money's worth.

(5) In relation to a part disposal of an interest in land,—

(a ) references in this Act to the retained interest are references to that interest in land which, by virtue of his previous ownership of the interest disposed of, the chargeable person has immediately after the disposal; and

(b ) references in this Act to the granted interest apply only in the case of a disposal falling within subsection (1) above and, in such a case, are references to the interest granted as mentioned in paragraph (a ) or paragraph (b ) of that subsection.

S-4 Realised development value.

4 Realised development value.

(1) Subject to the following provisions of this Act, the realised development value accruing to a person on the disposal by him of an interest in land shall be the amount (if any) by which the net proceeds of the disposal exceed the relevant base value of that interest.

(2) In this Act, in relation to a disposal of an interest in land, ‘the chargeable person’ means the person making the disposal.

(3) References in this Act to the net proceeds of the disposal of an interest in land are references to the consideration for the disposal, less the incidental costs to the chargeable person of making the disposal.

(4) The provisions of Schedule 2 to this Act shall have effect for supplementing this section and sections 5 to 7 below and, for the purpose of determining the realised development value accruing on a disposal occurring on or after the appointed day, those provisions shall be taken to have had effect in relation to events before, as well as on or after, that day.

(5) Subject to any express provision contained in this Act for the purpose of determining the realised development value accruing to a person on the disposal of an interest in land, any necessary apportionment shall be made of any consideration, expenditure or value and the method of apportionment adopted shall be such as appears to the Board or, on an appeal, to the Commissioners concerned to be just and reasonable.

(6) In determining the amount of any realised development value for the purposes of this Act, no deduction shall be allowable under any provision of this Act moro than once from any amount or from more than one amount.

S-5...

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