Clause 49 - Chargeable transactions

Finance Bill – in a Public Bill Committee at 5:45 pm on 3rd June 2003.

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Question proposed, That the clause stand part of the Bill.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

The clause defines chargeable transactions through schedule 3 by providing for exemption. I trust therefore that it is in order for me to refer to that schedule, Sir Nicholas.

The Chairman indicated assent.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

Thank you for that guidance, Sir Nicholas. Under paragraph 2 of schedule 3, certain leases are exempted specifically for registered social landlords. I have studied the explanatory notes in detail to elicit the background to the provision. They state that the purpose of the proposal is

''to encourage social landlords to enter into such arrangements.''

Clearly, it is important that, when lettings to the homeless or other vulnerable groups are affected, barriers should be removed.

Can the Chief Secretary tell the Committee what representations he has received from registered social landlords about the applicability and enforceability of the clause? He admitted earlier that, over and above the money clawed in from anti-avoidance measures, there will be an additional gain for the Revenue of £190 million from the new land tax. Can the right hon. Gentleman say what estimate the Treasury has made of the money to be saved by granting the exemption for social landlords?

Paragraph 3 of schedule 3 will exempt transactions in connection with divorce. I wish to make two points, one of which is minor. I trust that it was not intentional to omit the word ''land'' from line 35. Clearly, only land transactions would or should be affected by the schedule, yet the word has been omitted. I am sure that the Chief Secretary will want to clear up that mistake. Has he considered altering or extending the provision so that it will help a brother or sister who live together, a matter that was referred to earlier? What representations has the right hon. Gentleman received about such matters?

I turn now to paragraph 4 of schedule 3, which is wonderfully entitled ''Variation of testamentary dispositions etc''. In plain English, that relates to wills and intestate estates that are varied. As such, I assume that the word ''land'' has been left out of paragraph (4)(1). Clearly, a transaction should relate only to a land transaction. I hope that the Chief Secretary can confirm that omission. Can he also confirm that the terms are identical to the existing arrangements in their meaning and scope? If they are not identical, how do they differ and whom will the provisions affect?

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

Before the Minister replies, I note that the hon. Member for Hertford and Stortford seems to have directed all his remarks to schedule 3. I am not unhappy that he should have done that but, if he considers that there will be a lengthy debate on the schedule, I must disappoint him.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

No, Sir Nicholas. Having looked at clause 49 and understood that it effects its purpose through the schedule 3, it is not my intention to revisit schedule 3 in its entirety.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I am grateful to the hon. Gentleman. I am sure that the Chief Secretary wishes to reply.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

I am grateful for the reassurance that there will be no further debate on schedule 3.

The clause defines chargeable land transactions as those that are not exempt. Chargeable transactions will usually give rise to a charge, unless, for example, they are for consideration below the charging threshold, which is £60,000 for residential land and £150,000 for non-residential or mixed-use land. Schedule 3 lists certain exempt transactions, the first of which includes gifts, transfer of policy following the death of the owner, transfers of property to beneficiaries under a trust in accordance with the terms of the trust, and most acquisitions by operation of law. That reflects the current position. I give the hon. Gentleman an assurance about that.

Secondly, certain leases are granted by registered social landlords under agreements to house the homeless. That is a new exemption that reflects Government policy to encourage such agreements. The hon. Gentleman asked how many representations the Government have received from registered social landlords in respect of that provision. I am not able to give him the answer for the whole Government; I personally have received one, which welcomes the provision. That is probably typical of the general response of the social landlord sector to the provision.

Thirdly, the Bill deals with transactions made in connection with the ending of a marriage. That reflects the current position. The Treasury has no power to add further exempt transactions by regulation. I hope that that reassures those who are always concerned about the potential of the Treasury to assume further powers in relation to such matters.

I was asked whether paragraphs 3 and 4 of the schedule should apply only to land transactions. The answer is yes, but the provision is not an error, because paragraph 1 contains a reference to land. Only land transactions are brought into charge into the first place, so the reference to transactions refers to paragraph 1. There is nothing unusual or erroneous in that. The additional cost of exempting registered social landlords—something I believe to be widely welcomed by the sector—will be marginal. Our estimate is that the additional cost will be less than £1 million per annum.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

I am grateful to the Chief Secretary for his clarification of some of the language used. He has confirmed that the benefit to social landlords is under £1 million or thereabouts, and I am grateful for that clarification.

Question put and agreed to.

Clause 49 ordered to stand part of the Bill.

Schedule 3 agreed to.