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Amendment of section 664 of Principal Act (relief for certain income from leasing of farm land)
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33. Section 664 of the Principal Act is amended—
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(a) in subsection (1)—
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(i) in paragraph (a), by—
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(I) the insertion of the following definitions:
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“ ‘own’, in relation to farm land, includes holding a leasehold interest in farm land;
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‘relevant lease’ means a lease of farm land which is for a definite term of 50 years or more;”,
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and
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(II) in the definition of “qualifying lessor”—
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(A) in paragraph (ii), the substitution of “arm’s length, and” for “arm’s length;”, and
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(B) the insertion of the following paragraph after paragraph (ii):
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“(iii) subject to paragraph (aa), has owned the farm land referred to in that paragraph for a continuous period of not less than 7 years beginning on the date of the contract to purchase the farm land concerned.”,
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and
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(ii) by the insertion of the following paragraph after paragraph (a):
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“(aa) (i) Subject to subsections (1A) to (1D), paragraph (iii) of the definition of ‘qualifying lessor’ shall apply to an individual who purchased farm land pursuant to a contract entered into on or after 1 January 2024 for a consideration equal to the market value of the farm land at the date of the purchase of that farm land.
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(ii) The reference in subparagraph (i) to the purchase by an individual of farm land shall be read as including a reference to the acquisition by an individual of a leasehold interest in farm land under a relevant lease and the reference in that subparagraph to the date of the purchase shall be read as including a reference to the date on which a relevant lease in respect of farm land is granted.”,
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and
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(b) by the insertion of the following subsections after subsection (1):
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“(1A) (a) Where an individual referred to in subsection (1)(aa)(i)—
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(i) within a period of 7 years from the date of the purchase referred to in subsection (1)(aa), transfers the farm land, in whole or in part (in this subsection referred to as the ‘transferred farm land’), other than by way of purchase for a consideration equal to the market value of the transferred farm land at the date of the transfer, to a person (in this subsection referred to as the ‘transferee’) who is connected with the individual, and
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(ii) it is reasonable to consider that the main purpose, or one of the main purposes, of the transfer referred to in subparagraph (i) is to avoid the application to the individual of paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ in respect of the transferred farm land,
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then—
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(I) the transferred farm land shall be treated as having been purchased by the transferee for a consideration equal to its market value at the date of the transfer,
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(II) for the purposes of subparagraph (i) of paragraph (aa) of subsection (1), a reference in that subparagraph to the date of the purchase shall be read as a reference to the date of the transfer, and
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(III) paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ shall apply to the transferee in respect of the transferred farm land and the reference in that paragraph to the date of the contract to purchase the farm land shall be read as a reference to the date of the transfer of the farm land to the transferee.
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(b) Where, within the period of 7 years from the date of the purchase referred to in subsection (1)(aa)—
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(i) the transferee transfers the transferred farm land, in whole or in part, other than by way of purchase for a consideration equal to its market value, to a person connected with the individual (in this subsection referred to as a ‘subsequent transferee’), and
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(ii) it is reasonable to consider that the main purpose, or one of the main purposes, of the transfer referred to in subparagraph (i) is to avoid the application to the transferee of paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ in respect of the transferred farm land,
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then—
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(I) the transferred farm land shall be treated as having been purchased by the subsequent transferee for a consideration equal to its market value at the date of the transfer to the subsequent transferee,
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(II) for the purposes of subparagraph (i) of paragraph (aa) of subsection (1), a reference in that subparagraph to the date of the purchase shall be read as a reference to the date of the transfer to the subsequent transferee, and
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(III) paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ shall apply to the subsequent transferee in respect of the transferred farm land and the reference in that paragraph to the date of the contract to purchase the farm land shall be read as a reference to the date of the transfer of the farm land to the subsequent transferee.
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(c) Paragraph (b) shall, with any necessary modifications, apply in respect of any transfer by a subsequent transferee to another person as it does to a transfer by a transferee to a subsequent transferee under that paragraph.
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(d) In this subsection, references to the transfer of farm land, in whole or in part, shall be read as including references to the grant of a leasehold interest in the farm land, in whole or in part, and, where the context requires, references to—
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(i) the transferee shall be read as a reference to the person to whom the lease has been granted,
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(ii) the person transferring the farm land shall be read as a reference to the person granting the leasehold interest in the farm land, and
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(iii) the date of the transfer shall be read as a reference to the date on which the leasehold interest in the farm land is granted.
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(1B) (a) Where, as part of, or in connection with, a scheme or arrangement—
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(i) farm land is acquired (in this subsection referred to as the ‘acquired farm land’) by an individual on or after 1 January 2024 from a person (not being an individual) with whom the individual is connected,
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(ii) the farm land is acquired by the individual other than by way of purchase for a consideration equal to its market value at the date of the acquisition, and
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(iii) it is reasonable to consider that the main purpose, or one of the main purposes, of the scheme or arrangement is to avoid the application to the individual of paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ in respect of the acquired farm land,
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then—
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(I) the acquired farm land shall be treated as having been purchased by the individual for a consideration equal to its market value at the date of the acquisition,
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(II) for the purposes of subparagraph (i) of paragraph (aa) of subsection (1), a reference in that subparagraph to the date of the purchase shall be read as a reference to the date of the acquisition, and
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(III) paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ shall apply to the individual in respect of the farm land and the reference in that paragraph to the date of the contract to purchase the farm land shall be read as a reference to the date of the acquisition of the farm land by the individual.
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(b) In this subsection, ‘acquire’, in relation to farm land, includes the acquisition of a leasehold interest in farm land and a reference in this subsection to the date of the acquisition shall, in relation to farm land, be read as including a reference to the date on which a leasehold interest in farm land was granted.
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(1C) (a) Where, on or after 1 January 2024, an individual purchases farm land pursuant to a contract entered into on or after that date, from a person who is not connected with the individual for a consideration that is greater or less than the market value of the farm land on the date of the purchase, then—
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(i) the farm land shall be treated as having been purchased by the individual for a consideration equal to its market value at the date of the purchase, and
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(ii) paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ and, where applicable, paragraph (a)(i) of subsection (1A), shall apply to the individual.
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(b) Where, as part of a scheme or arrangement entered into between an individual and another person in respect of farm land purchased by the individual pursuant to a contract entered into on or after 1 January 2024 (in this paragraph referred to as the ‘first-mentioned farm land’)—
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(i) the individual acquires farm land from such other person (in this paragraph referred to as the ‘second-mentioned farm land’) in exchange for the first-mentioned farm land, and
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(ii) it is reasonable to consider that the main purpose, or one of the main purposes, of the scheme or arrangement is to avoid the application to the individual of paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ in respect of the first-mentioned farm land,
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then—
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(I) the second-mentioned farm land shall be treated as having been purchased by the individual for a consideration equal to its market value at the date of the acquisition of that farm land by the individual, and
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(II) paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ and, where applicable, subsection (1A)(a)(i), shall apply to the individual in respect of the second-mentioned farm land.
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(c) In this subsection, ‘acquire’, in relation to farm land, includes the acquisition of a leasehold interest in farm land and a reference in this subsection to the date of the acquisition shall, in relation to farm land, be read as including a reference to the date on which a leasehold interest in farm land was granted.
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(1D) Paragraph (iii) of the definition in subsection (1) of ‘qualifying lessor’ shall not apply in respect of an individual who enters into a qualifying lease by reason of the death of the individual’s spouse or civil partner and the spouse or civil partner jointly owned the farm land with the individual immediately before the death of the spouse or civil partner.”.
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