The option to tax land and buildings

1 May 2008

New measures will be introduced to simplify the existing legislation covering the option to tax; to facilitate its revocation after 20 years, and to improve its practical administration. The new legislation will be effective on or after 1 June 2008 but revocations will not be allowed until 1 August 2009 at the earliest.

The current law and associated references will be changed by a Treasury Order laid after the Budget. This will include new appeal rights. There will also be a new public notice on the subject, which will have force of law.

The improvements to practical administration will deal with:

• opted properties held in a VAT group;
• opted buildings acquired for use as dwellings or relevant residential purpose and bare land acquired for construction of building for such purposes;
• the introduction of a new option to simplify the option to tax process for taxpayers with a number of properties;
• early revocation of an option to tax within a 'cooling-off' period;
• the automatic lapse of an option to tax six years after the taxpayer ceased to have any interest in a property that they had previously opted to tax;
• the ability, in certain circumstances, to exclude a new building from a previous option to tax; and
• late applications for permission to opt to tax.

†