653AGA Deferral of residential zoned land tax in respect of grant of planning permission

Summary

This section provides for a deferral of residential zoned land tax arising in respect of a relevant site, from the date of grant of planning permission for a period of up to 12 months. Where a commencement notice is lodged prior to the expiration of the 12-month period, and that development relates to residential development, residential zoned land tax deferred under this section, relating to so much of the site that is being developed for residential purposes, will be deemed to be deferred residential zoned land tax for the purposes of the deferral provided in section 653AH. Where that development relates, in whole or in part, to non-residential development, the deferred residential zoned land tax, as provided for in this section, which relates to such non-residential development, shall no longer be due and payable. If the relevant site is sold or transferred, other than by way of transfer between group companies, prior to the expiry of the 12-month period, the deferred tax becomes due and payable. If no commencement notice is lodged in respect of the relevant site prior to the expiry of the 12-month period, the deferred tax becomes due and payable.

Details

(1) This section applies to a relevant site in respect of which planning permission has been granted, but development has not yet commenced on that relevant site and where the planning permission is not the subject of a relevant appeal or relevant petition, as defined in section 653AF.

(2) Where a grant of planning permission is the subject of a relevant appeal or relevant petition, this section applies from the date the grant of planning permission is upheld, following the determination of the relevant appeal and/or relevant petition, as the case may be. This ensures that a liable person can avail of the full 12-month period of deferral from the first date on which it is possible for them to commence development on foot of that planning permission.

(3) Any residential zoned land tax arising in respect of a relevant site on a liability date, falling after the grant of planning permission, will not be due and payable until the occurrence of the earlier of the following events –

• (a) the expiration of the period of 12 months from the date of grant of planning permission, and
• (b) the date on which the relevant site, or part thereof, is sold to a party other than a group company;

and the deferred residential zoned land tax under this section is referred to as ‘pre-development deferred residential zoned land tax’.

(4)(a) For the purposes of this subsection, “group” and “member of a group” have the same meaning as they have in section 616.

(b) This subsection will apply where a member of a group of companies (referred to as the ‘transferor company’) transfers a relevant site, or part thereof, to another member of the group (referred to as the ‘transferee company’), where both the transferor company and the transferee company are within the charge to corporation tax.

(c) Where this subsection applies:

• the transferee company is deemed to have acquired the relevant site, or part thereof, which is transferred to them when the transferor acquired it,
• any pre-development deferred residential zoned land tax relating to the transferred site, up to the date of the inter-group transfer, is deemed to become pre-development deferred residential zoned tax of the transferee company, and
• there is deemed to be no change in ownership of the transferred site as a result of the inter-group transfer for the purpose of subsection (3)(b).

(d) Where pre-development deferred residential zoned land tax becomes due and payable in accordance with subsections (3) or (6) in respect of the site, or part of the site, which transferred between group companies, the transferor company and transferee company will be held jointly and severally liable in respect of such tax.

(5)(a) This subsection applies where a commencement notice is lodged before the expiration of the 12-month period following the date of the grant of planning permission, such that section 653AG and/or section 653AH apply, as appropriate.

(b) Where this subsection applies, in respect of a liability date falling within the 12-month period following the date of grant of planning permission up to the date the commencement notice is lodged the following applies;

• the amount of pre-development deferred residential zoned land tax calculated in accordance with paragraph (c) and (d) (relating to residential development), is treated as deferred residential zoned land tax for the purposes of section 653AH. In this way, the amount of pre-development deferred residential zoned land tax which relates to residential development becomes subject to the provisions of section 653AH, where it may become due and payable or abated, depending on whether the landowner completes the residential development within the timeframe provided for in the planning permission, and
• the amount of pre-development deferred residential zoned land tax calculated in accordance with paragraph (e) (relating to non - residential development) is no longer be due and payable.

(c) Where development commenced on the relevant site is residential development only, the amount calculated under this paragraph is the total amount of pre-development deferred residential zoned land tax.

(d) The following formula apportions the amount of pre-development deferred residential zoned land tax relating to residential development, where development commenced on the relevant site is a mixture of residential and non-residential development:

              W = (A x B/C)) x D

Where –

A is the market value of the relevant site on the valuation date applicable to a liability date to which this subsection applies,

B is, in accordance with the planning permission granted, the portion of the gross floor space for all of the development to which the planning permission relates, which comprises dwellings,

C is the total gross floor space for all of the development to which the planning permission relates, and

D is the rate of 3%.

(e) The following formula apportions the amount of pre-development deferred residential zoned land tax relating to non-residential development, where development on the relevant site, or a portion thereof, relates to non-residential development;

              Y = (Z - (A x (B/C))) x D

Where –

Z is the market value of the relevant site on the valuation date applicable to a liability date to which this subsection applies,

A is the market value of the relevant site on the valuation date applicable to a liability date to which this subsection applies,

B is, in accordance with the planning permission granted, the portion of the gross floor space for all of the development to which the planning permission relates, which comprises dwellings,

C is the total gross floor space for all of the development to which the planning permission relates, and

D is the rate of 3%.

(6)(a) Where a transfer of part of a relevant site, referred to in this subsection as a ‘part ownership change’, is the earliest event to occur of the two events referred to in subsection (3), the amount of pre-development deferred residential zoned land tax relating to the transferred part of the relevant site, which :

• arises in respect of a liability date falling in the period from the date of grant of planning permission to the date of the part ownership change; and,
• becomes due and payable in accordance with subsection (3) on the date of the part ownership change, and is referred to as ‘part ownership change liability’,

is the amount represented by A in the following formula:

              A = (B – C) x D/E

where –

B is the pre-development deferred residential zoned land tax in respect of the relevant site before any change in ownership,

C is the sum of the part ownership change liabilities arising in respect of the relevant site prior to the change in ownership,

D is the area in square meters of the part of the relevant site which is transferred pursuant to the part ownership change, and

E is the total area in square meters of the relevant site as it was comprised immediately prior to the change in ownership.

(b) Following a part-ownership change, the part ownership change event is deemed not to have been the earliest to occur of the events referred to subsection (3). This ensures that the subsequent occurrence of an event referred in subsection (3) will trigger a crystallisation of the balance of the pre-development deferred residential zoned land tax in the normal manner.

(7) Where the pre-development deferred residential zoned land tax becomes due and payable in accordance with subsection (3) or (6), the liable person is required to amend each return and pay the tax and interest arising in respect of each liability date falling within the period of the deferral.

(8) This section shall only apply if a residential zoned land tax return, as provided for in section 653T, is submitted to the Revenue Commissioners in respect of the date to which this section applies.

(9) The deferral provided for in this section only applies once to a relevant site in respect of which planning permission is granted; should any other planning permission be granted in respect of that land, or a part thereof, this section will not apply.

Relevant Date: Finance Act 2024