RPDT10310 - Key concepts: interest in land: meaning of interest in land - section 36 Finance Act 2022

For the purposes of RPDT, a company holds an interest in land if it, or a related company, has ‘an estate, interest, right or power in or over the land’ that is not an excluded interest. This will include a freehold interest, a leasehold interest, and any other right or power that gives the holder legal and beneficial rights over land and property. That interest must form part of trading stock for the company or a related company. Guidance on the meaning of trading stock for RPDT purposes is at RPDT10330.

It is not always the case that the legal and beneficial interests in land are held by the same person, so the meaning of an interest in land for RPDT purposes is extended by FA22/S36(1)(a)(ii) to also include those having ‘the benefit of an obligation, restriction or condition affecting the value’ of an interest in land that is not an excluded interest.

Certain interests in land that do not necessarily give the holder a beneficial interest in that land are ‘excluded interests,’ which are ignored for RPDT purposes. These are defined at FA22/S36(2) and include the interest of a mortgagor or similar, and the interests of those who hold a licence to use or occupy land. Of these the most relevant for the purposes of RPDT is the ‘licence to use or occupy land’. Such a licence will be either explicitly or implicitly granted by any landowner that engages another person to carry out construction or other development work on their land. The exclusion of such ‘build licences’ ensures the profits of a third-party contractor undertaking work for a landowner are not brought within the charge to RPDT. A developer might ordinarily acquire a build licence where a development requires work to be undertaken on or across the land of adjacent landowners, for example to make connections to utility services. See RPDT10320 for certain licences with added features.

RPDT01100 contains a general introduction to RPDT and a list of abbreviations used.