The Taxation (Land Transaction) (Jersey) Law 2009 (the "Law"), now in force, places a legal obligation on the purchaser of share transfer property to pay a tax equal to the stamp duty payable on freehold transactions. This new tax charge is called land transaction tax ("LTT").
The Law is administered by the Comptroller of Income Tax (the "Comptroller"). It contains similar powers for the Comptroller, and similar rights of appeal for taxpayers, to those existing under the Income Tax (Jersey) Law 1961 (the "1961 Law").
Transactions subject to LTT
The Law applies to shares which, by virtue of the articles of association of the company involved, confer a right of occupation of land in Jersey (an "Occupation Share") in the following scenarios:
- the transfer to a person of an Occupation Share;
- a declaration that an Occupation Share is held on trust for a person, or an amendment to such a declaration of trust where such amendment changes the person for whose benefit the Occupation Share is held; and
- the creation of a security interest, pursuant to a security agreement1, in an Occupation Share.
The Law does not apply to shares in a company where the articles of association do not confer a right of occupation of land in Jersey: "land" for the purpose of this law means a unit of dwelling accommodation.
Obligation to declare LTT
Where there is a transfer of an Occupation Share, it is the transferee of it who will be under a duty to declare the transaction and pay the LTT. Where there is a declaration of trust concerning an Occupation Share made, or a change in such declaration, it is the beneficiary who must declare the transaction and pay the LTT. In cases where the transaction in question is the creation of a security interest, the secured party must declare the transaction and pay the LTT.
When LTT must be paid
LTT must be paid within 28 days following the transaction giving rise to it. Examples of calculations are shown below. Penalties for failure to pay LTT
The Law creates a number of criminal offences, chiefly for:
- failure to pay LTT;
- delivery of false or misleading statements; and
- registration by a company of a share transfer where LTT was payable and no LTT receipt was produced.
It should be noted that the Population Office has the power to provide the Comptroller with information regarding the issue of Housing consents.
A surcharge will be imposed where LTT is paid later than 28 days after the relevant transaction which gave rise to the obligation to make a payment. The surcharge will be 10% of the LTT due. The Comptroller will have discretion to waive or reduce the surcharge where payment is made late due to the fault of a person other than the occupier or secured party where death, serious illness, or other grave and exceptional circumstances prevented the payment from being made on time. A person aggrieved by the Comptroller's refusal to waive or reduce the surcharge will have a right of appeal to a Commission of Appeal, such commission to be constituted in the same way as it would be under the 1961 Law.
Comptroller's discretion to reduce or remit LTT
The Comptroller has a discretion to reduce or remit LTT in any case where he considers that it would be just to do so. There is no right of appeal against the exercise of this discretion.
Obligation to keep records
The Comptroller will be required to issue a receipt when LTT is paid.
The occupier of a share transfer property or, as the case may be, the secured party, will be required to keep such records as may be required to verify information which is, or may be, required to be provided to the Comptroller. Any such records must be kept for six years.
Calculation of LTT
Where there is no consideration payable, or where the gross value of the land exceeds the consideration, LTT is calculated on the gross value of the land. In all other cases, LTT is charged on the gross value of the transaction, not of the land. LTT will be charged on the value of the land or transaction as stated above at the rate of £50, plus:
- where the value does not exceed £50,000: 50p for each £100 or part of £100 subject to a minimum of £10;
- where the value exceeds £50,000 but does not exceed £300,000: £250 in respect of the first £50,000, plus £1.50 for each £100 or part of £100 in excess thereof;
- where the value exceeds £300,000 but does not exceed £500,000: £4,000 in respect of the first £300,000, plus £2 for each £100 or part thereof in excess thereof;
- where the value exceeds £500,000 but does not exceed £700,000: £8,000 in respect of the first £500,000, plus £2.50 for each £100 or part of £100 in excess thereof; or
- where the value exceeds £700,000: £13,000 in respect of the first £700,000 plus £3 for each £100 or part of £100 in excess thereof.
For first-time buyers2, the rate of LTT is £50, plus:
- where the value of the land does not exceed £150,000: £150;
- where the value of the land exceeds £150,000 but does not exceed £175,000: £62.50 in respect of the first £50,000, plus 25p for each £100 or part of £100 in excess thereof;
- where the value of the land exceeds £175,000 but does not exceed £200,000: £125 in respect of the first £50,000, plus 50p for each £100 or part of £100 in excess thereof; or
- where the value of the land exceeds £200,000 but does not exceed £250,000: £187.50 in respect of the first £50,000, plus for each £100 or part of £100 in excess thereof.
For first-time buyers only, the value of the land, if a dwelling has not yet been constructed on it, is the notional gross value of the land once a dwelling has been constructed on it.
Sole ownership into joint ownership: matrimonial property
LTT will be charged at the rate of £60 where ownership or occupation was by an individual, but becomes joint by reason of marriage, and the property in question is or was, at the relevant time, the matrimonial home.
Joint ownership into sole ownership: matrimonial property
LTT will be charged at the rate of £60 if a transaction takes place:
- by reason of an order for the transfer or settlement of property made by the Royal Court under Article 28 of the Matrimonial Causes (Jersey) Law 1949 (for example, where a divorce or separation has been granted and the court orders a transfer or settlement of property); or
- where the matrimonial home becomes solely owned or occupied by one of the spouses following divorce or separation.
LTT will be charged at £1 where the Comptroller is satisfied that the structure or beneficiary or secured party is a charity.
Deceased person's estates
Where a transaction is a transfer, declaration of trust or an amendment of a declaration of trust giving effect to a bequest or devolution on intestacy, LTT is charged at £50.