(1) There is to be no charge to tax under section 93 or 96 in respect of an exempt capital-raising transfer.
(2) For the purposes of subsection (1), a transfer of chargeable securities is an “exempt capital-raising transfer” if the transfer is in the course of capital-raising arrangements.
(3) In this section, “capital-raising arrangements” means arrangements pursuant to which chargeable securities are issued by a company for the purpose of raising new capital.
(4) A transfer of chargeable securities is not prevented from being an exempt capital-raising transfer by reason only of a delay in transferring the chargeable securities where—
(a) a person (“the transferor”) acquires the chargeable securities—
(i) before capital-raising arrangements are entered into, or
(ii) in the course of capital-raising arrangements,
(b) the transferor is subject to a restriction that has the effect of preventing the transfer of the chargeable securities in the course of the capital-raising arrangements, and
(c) the transfer is made as soon as reasonably practicable after the time at which the restriction ceases to have effect.
(1) There is to be no charge to tax under section 93 or 96 in respect of an exempt listing transfer.
(2) For the purposes of subsection (1), a transfer of chargeable securities issued by a company is an “exempt listing transfer” if—
(a) it is a transfer in the course of qualifying listing arrangements, and
(b) those arrangements do not affect the beneficial ownership of the chargeable securities.
(3) In this section, “listing arrangements” means arrangements pursuant to which chargeable securities, or depositary receipts for chargeable securities, are listed on a recognised stock exchange.
(4) For the purposes of this section, listing arrangements are “qualifying” if, immediately before the first transfer of chargeable securities in the course of the listing arrangements, no chargeable securities in the company or depositary receipts for chargeable securities in the company are listed on the recognised stock exchange to which the listing arrangements relate.
(5) A transfer of chargeable securities is not prevented from being an exempt listing transfer by reason only of a delay in transferring the chargeable securities where—
(a) a person (“the transferor”) acquires the chargeable securities before qualifying listing arrangements are entered into,
(b) the transferor is subject to a restriction that has the effect of preventing the transfer of the chargeable securities in the course of the qualifying listing arrangements, and
(c) the transfer is made as soon as reasonably practicable after the time at which the restriction ceases to have effect.
(6) Section 1005 of the Income Tax Act 2007 (meaning of “recognised stock exchange”, “listed” etc) applies in relation to this section as it applies in relation to the Income Tax Acts.
97AD Exception for transfers of shares held by issuing company
There is to be no charge to tax under section 93 or 96 in respect of a transfer of shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise).
97B Transfer between depositary receipt system and clearance system.
(1) There shall be no charge to tax under section 93 or 96 above where securities are transferred between a depositary receipt system and a clearance system.
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) A transfer between a depositary receipt system and a clearance system means a transfer—
(a) from (or to) a company which at the time of the transfer falls within section 67(6) above, and
(b) to (or from) a company which at that time falls within section 70(6) above.
(3) This section does not apply to a transfer from a clearance system (that is, from such a company as is mentioned in subsection (2)(b) above) if at the time of the transfer an election is in force under section 97A above in relation to the clearance services for the purposes of which the securities are held immediately before the transfer.
(1) The Treasury may make regulations —
(a) providing that provisions of the Taxes Management Act 1970 specified in the regulations shall apply in relation to stamp duty reserve tax as they apply in relation to a tax within the meaning of that Act, with such modifications (specified in the regulations) as they think fit;
(b) making with regard to stamp duty reserve tax such further provision as they think fit in relation to administration, assessment, collection and recovery.
(1A) The power conferred on the Treasury by subsection (1) above includes power to make provision conferring or imposing on the Board functions which involve the exercise of a discretion.
(2) The power to make regulations under subsection (1) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
(1) This section applies for the purposes of this Part of this Act.
(1A) “Bearer instrument” has the same meaning as in Schedule 15 to the Finance Act 1999.
An instrument is a “UK bearer instrument” or “non-UK bearer instrument” according to whether it is issued by or on behalf of a UK company or a non-UK company within the meaning of that Schedule.
(2) “The Board” means the Commissioners of Inland Revenue.
(3) Subject to the following provisions of this section, “chargeable securities” means —
(a) stocks, shares or loan capital,
(b) interests in, or in dividends or other rights arising out of, stocks, shares or loan capital,
(c) rights to allotments of or to subscribe for, or options to acquire, stocks, shares or loan capital, and
(d) units under a unit trust scheme.
(4) “Chargeable securities” does not include securities falling within paragraph (a), (b) or (c) of subsection (3) above which are issued or raised by a body corporate not incorporated in the United Kingdom unless —
(a) they are registered in a register kept in the United Kingdom by or on behalf of the body corporate by which they are issued or raised, or
(b) in the case of shares, they are paired with shares issued by a body corporate incorporated in the United Kingdom, or
(c) in the case of securities falling within paragraph (b) or (c) of subsection (3) above, paragraph (a) or (b) above applies to the stocks, shares or loan capital to which they relate , or
(d) they are issued or raised by a UK Societas (whether or not in the course of its formation in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ....
(4A) “Chargeable securities” does not include securities falling within paragraph (a), (b) or (c) of subsection (3) above if—
(a) they are securities issued or raised by an SE (whether or not in the course of its formation in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea), ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4B) Chargeable securities” does not include securities falling within paragraph (a), (b) or (c) of subsection (3) which are admitted to trading on a recognised growth market but not listed on that or any other market.
(4C) In subsection (4B), “listed” and “recognised growth market” are to be construed in accordance with section 99A.
(5) “Chargeable securities” does not include securities falling within paragraph (a), (b) or (c) of subsection (3) above if—
(a) in the case of stock or marketable securities within the meaning of section 125 of the Finance Act 2003 (abolition of stamp duty except on instruments relating to stock or marketable securities), they are securities the transfer of which is exempt from all stamp duties;
(b) in any other case, they are securities the transfer of which, disregarding that section, would be exempt from all stamp duties.
(5ZA) “Chargeable securities” does not include securities falling within paragraph (b) or (c) of subsection (3) above if the stocks, shares or loan capital to which the securities relate—
(a) are stock or marketable securities within the meaning of section 125 of the Finance Act 2003 (abolition of stamp duty except on instruments relating to stock or marketable securities) the transfer of which is exempt from all stamp duties, or
(b) are securities the transfer of which, disregarding that section, would be exempt from all stamp duties.
(5A) “Chargeable securities” does not include a unit under a unit trust scheme if—
(a) all the trustees under the scheme are resident outside the United Kingdom and the unit is not registered in a register kept in the United Kingdom by or on behalf of the trustees under the scheme; or
(b) under the terms of the scheme the trust property can only be invested in exempt investments.
(5B) For the purposes of subsection (5A)(b)—
(a) an investment other than an interest under a collective investment scheme is an exempt investment if, and only if—
(i) it is not an investment on the transfer of which ad valorem stamp duty would be chargeable,...
(ia) it is not an investment on the acquisition of which stamp duty land tax would be chargeable under Part 4 of the Finance Act 2003, and
(ii) it is not a chargeable security;
(b) an interest under a collective investment scheme is an exempt investment , unless subsection (5C) applies to the scheme;
(c) a derivative is an exempt investment if, and only if, it relates wholly to one or more exempt investments; and
(d) funds held for the purposes of the day to day management of the unit trust scheme are not regarded as investments.
...
(5C) This subsection applies to a collective investment scheme if more than 20% of the market value of the investments in which the property subject to the scheme is invested is attributable to investments which are not exempt investments for the purposes of subsection (5A)(b).
(5D) In subsections (5B) and (5C) “collective investment scheme” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000.
(6) “Chargeable securities” does not include interests in depositary receipts for stocks or shares.
(6A) For the purposes of subsection (4) above, shares issued by a body corporate which is not incorporated in the United Kingdom (“the foreign company”) are paired with shares issued by a body corporate which is so incorporated (“the UK company”) where —
(a) the articles of association of the UK company and the equivalent instruments governing the foreign company each provide that no share in the company to which they relate may be transferred otherwise than as part of a unit comprising one share in that company and one share in the other, and
(b) such units have been offered for sale to the public in the United Kingdom and, at the same time, an equal number of such units have been offered for sale to the public at a broadly equivalent price in the country in which the foreign company is incorporated.
(7) A depositary receipt for stocks or shares is an instrument acknowledging —
(a) that a person holds stocks or shares or evidence of the right to receive them, and
(b) that another person is entitled to rights, whether expressed as units or otherwise, in or in relation to stocks or shares of the same kind, including the right to receive such stocks or shares (or evidence of the right to receive them) from the person mentioned in paragraph (a) above,
except that a depositary receipt for stocks or shares does not include an instrument acknowledging rights in or in relation to stocks or shares if they are issued or sold under terms providing for payment in instalments and for the issue of the instrument as evidence that an instalment has been paid.
(8) The Treasury may by regulations provide that for subsection (7) above (as it has effect for the time being) there shall be substituted a subsection containing a different definition of a depositary receipt; and the power to make regulations under this subsection shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
(9) “Unit” (except in subsection (6A) above) and “unit trust scheme” have the same meanings as in Part VII of the Finance Act 1946 .
(9A) But “unit trust scheme” does not include arrangements to which section 564G of the Income Tax Act 2007 or section 507 of the Corporation Tax Act 2009 (alternative finance investment bonds) applies.
(10) In interpreting “chargeable securities” in sections 93, 94 95, , 96 , 97 and 97A, 97ZA above —
(a) paragraph (a) of subsection (4) above and the reference to that paragraph in paragraph (c) of that subsection shall be ignored, and
(b) the effect of section 133(3) of the Companies Act 2006 (transactions in shares registered in overseas branch register) shall be ignored for the purposes of subsection (5) above.
(11) In interpreting “chargeable securities” in section 93 or 96 above in a case where —
(a) newly subscribed shares, or
(b) securities falling within paragraph (b) or (c) of subsection (3) above which relate to newly subscribed shares,
are issued in pursuance of an arrangement such as is mentioned in that section (or an arrangement which would be such an arrangement if the securities issued were chargeable securities), paragraph (b) of subsection (4) above and the reference to that paragraph in paragraph (c) of that subsection shall be ignored.
(12) In subsection (11) above, “newly subscribed shares” means shares issued wholly for new consideration in pursuance of an offer for sale to the public.
(13) Where the calculation of any tax in accordance with the provisions of this Part results in an amount which is not a multiple of one penny, the amount so calculated shall be rounded to the nearest penny, taking any½p as nearest to the next whole penny above.
99A Section 99(4B): “listed” and “recognised growth market”
(1) This section applies for the purposes of section 99(4B).
(2) Section 1005(3) to (5) of the Income Tax Act 2007 (meaning of “listed” etc) applies as it applies in relation to the Income Tax Acts.
(3) “Recognised growth market” means a market recognised as a growth market by the Commissioners for Her Majesty's Revenue and Customs.
(4) On an application made by a market, the market is to be recognised by the Commissioners as a growth market if, and only if, the Commissioners are satisfied, on the basis of evidence provided by the market, that the market qualifies for recognition.
(5) A market qualifies for recognition at any time (“the relevant time”) if it is a recognised stock exchange or a qualifying UK multilateral trading facility which meets one or both of the following conditions—
(a) a majority of the companies whose stock or marketable securities are admitted to trading on the market are companies with market capitalisations of less than £450 million;
(b) the Commissioners are satisfied that the admission requirements of the market include provision requiring companies to demonstrate compounded annual growth in gross revenue or employment of at least 20% over the last three periods of account preceding admission (“the pre-admission periods”).
(6) In subsection (5)—
“period of account” of a company means a period for which the company draws up accounts;
“recognised stock exchange” has the meaning given by section 1005(1) of the Income Tax Act 2007;
“UK multilateral trading facility” has the meaning given by Article 2.1.14A of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments as it forms part of assimilated law.
(6A) For the purposes of subsection (5) a UK multilateral trading facility is “qualifying” if—
(a) it is operated by an investment firm within the meaning given by article 3(1) of The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), and
(b) the investment firm has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity (within the meaning of that Act) of operating a multilateral trading facility.
(7) For the purposes of subsection (5)(a) a company's market capitalisation at the relevant time is the average of the closing market capitalisations of the company on the last trading day of each calendar month (or part of a calendar month) in the qualifying period.
(8) “The qualifying period” means whichever is the shorter of—
(a) the last three calendar years preceding the relevant time, or
(b) the period beginning with the day on which the company is admitted to trading on the market and ending at the end of the last calendar year preceding the relevant time.
(9) For the purposes of subsection (5)(a), a company is to be disregarded if it is admitted to trading on the market in the calendar year in which the relevant time falls.
(10) In the case of a company with a market capitalisation in a currency other than sterling, the closing market capitalisation for the last trading day of any calendar month is to be taken, for the purposes of subsection (7), to be the sterling equivalent of that capitalisation (calculated by reference to the spot rate of exchange for that last trading day).
(11) For the purposes of subsection (5)(b), the percentage of the compounded annual growth in gross revenue over the pre-admission periods is calculated by applying the formula—
( ( EV BV ) 1/3 - 1 ) × 100
where—
“EV” is the company's gross revenue for the last of the pre-admission periods,
“BV” is the company's gross revenue for the period of account immediately preceding the pre-admission periods.
(12) For those purposes, the percentage of the compounded annual growth in employment over the pre-admission periods is calculated by applying the formula—
( ( EV BV ) 1/3 - 1 ) × 100
where—
“EV” is the number of employees of the company at the end of the last of the pre-admission periods,
“BV” is the number of employees of the company at the end of the period of account immediately preceding the pre-admission periods.
(13) The Treasury may by regulations—
(a) make provision for the revocation by the Commissioners of a recognition under this section and about the consequences of a revocation;
(b) amend this section so as to add, remove or alter a condition which must be met in relation to a market for it to be recognised by the Commissioners under this section.
(14) Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.
(15) The power to make regulations under this section is exercisable by statutory instrument, and any statutory instrument containing such regulations is subject to annulment in pursuance of a resolution of the House of Commons.
(16) This section is to be construed as one with the Stamp Act 1891.
100 Capital transfer tax to be known as inheritance tax.
(1) On and after the passing of this Act, the tax charged under the Capital Transfer Tax Act 1984 (in this Part of this Act referred to as “the 1984 Act”) shall be known as inheritance tax and, accordingly, on and after that passing,—
(a) the 1984 Act may be cited as the Inheritance Tax Act 1984 ; and
(b) subject to subsection (2) below, any reference to capital transfer tax in the 1984 Act, in any other enactment passed before or in the same Session as this Act or in any document executed, made, served or issued on or before the passing of this Act or at any time thereafter shall have effect as a reference to inheritance tax.
(2) Subsection (1)(b) above does not apply where the reference to capital transfer tax relates to a liability arising before the passing of this Act.
(3) In the following provisions of this Part of this Act, any reference to tax except where it is a reference to a named tax is a reference to inheritance tax and, in so far as it occurs in a provision which relates to a time before the passing of this Act, includes a reference to capital transfer tax.
(1) The 1984 Act shall have effect subject to the amendments in Part I of Schedule 19 to this Act, being amendments—
(a) removing liability for tax on certain transfers of value where the transfer occurs at least seven years before the transferor’s death;
(b) providing for one Table of rates of tax;
(c) abolishing exemptions for mutual transfers;
(d) making provision with respect to the amounts of tax to be charged on transfers occurring before the death of the transferor;
(e) making provision with respect to the application of relief under Chapter I (business property) and Chapter II (agricultural property) of Part V of the 1984 Act to such transfers; and
(f) reducing the period during which the values transferred by chargeable transfers are aggregates from ten years to seven;
and amendments making provisions consequential on or incidental to the matters referred to above and to sections 102 and 103 below.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Part I of Schedule 19 to this Act has effect, subject to Part II of that Schedule, with respect to transfers of value made, and other events occcurring, on or after 18th March 1986.
(4) The transitional provisions in Part II of Schedule 19 to this Act shall have effect.
(1) Subject to subsections (5), (6) and (7A) below, this section applies where, on or after 28th March 1986, an individual disposes of any property by way of gift and either—
(a) possession and enjoyment of the property is not bona fide assumed by the donee at or before the beginning of the relevant period; or
(b) at any time in the relevant period the property is not enjoyed to the entire exclusion, or virtually to the entire exclusion, of the donor and of any benefit to him by contract or otherwise;
and in this section “the relevant period” means a period ending on the date of the donor’s death and beginning seven years before that date or, if it is later, on the date of the gift.
(2) If and so long as—
(a) possession and enjoyment of any property is not bona fide assumed as mentioned in subsection (1)(a) above, or
(b) any property is not enjoyed as mentioned in subsection (1)(b) above,
the property is referred to (in relation to the gift and the donor) as property subject to a reservation.
(3) If, immediately before the death of the donor, there is any property which, in relation to him, is property subject to a reservation then, to the extent that the property would not, apart from this section, form part of the donor’s estate immediately before his death, that property shall be treated for the purposes of the 1984 Act as property to which he was beneficially entitled immediately before his death.
(4) If, at a time before the end of the relevant period, any property ceases to be property subject to a reservation, the donor shall be treated for the purposes of the 1984 Act as having at that time made a disposition of the property by a disposition which is a potentially exempt transfer.
(5) This section does not apply if or, as the case may be, to the extent that the disposal of the property by way of gift is an exempt transfer by virtue of any of the following provisions of Part II of the 1984 Act,—
(a) section 18 (transfers between spouses or civil partners) , except as provided by subsections (5A) and (5B) below;
(b) section 20 (small gifts);
(c) section 22 (gifts in consideration of marriage or civil partnership);
(d) section 23 (gifts to charities);
(e) section 24 (gifts to political parties);
(ee) section 24A (gifts to housing associations);
(f) section 25 (gifts for national purposes, etc);
(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(h) section 27 (maintenance funds for historic buildings); ...
(i) section 28 (employee trusts); and
(j) section 28A (employee-ownership trusts).
(5A) Subsection (5)(a) above does not prevent this section from applying if or, as the case may be, to the extent that—
(a) the property becomes settled property by virtue of the gift,
(b) by reason of the donor’s spouse or civil partner (“the relevant beneficiary”) becoming beneficially entitled to an interest in possession in the settled property, the disposal is or, as the case may be, is to any extent an exempt transfer by virtue of section 18 of the 1984 Act in consequence of the operation of section 49 of that Act (treatment of interests in possession),
(c) at some time after the disposal, but before the death of the donor, the relevant beneficiary’s interest in possession comes to an end, and
(d) on the occasion on which that interest comes to an end, the relevant beneficiary does not become beneficially entitled to the settled property or to another interest in possession in the settled property.
(5B) If or, as the case may be, to the extent that this section applies by virtue of subsection (5A) above, it has effect as if the disposal by way of gift had been made immediately after the relevant beneficiary’s interest in possession came to an end.
(5C) For the purposes of subsections (5A) and (5B) above—
(a) section 51(1)(b) of the 1984 Act (disposal of interest in possession treated as coming to end of interest) applies as it applies for the purposes of Chapter 2 of Part 3 of that Act; and
(b) references to any property or to an interest in any property include references to part of any property or interest.
(6) This section does not apply if the disposal of property by way of gift is made under the terms of a policy issued in respect of an insurance made before 18th March 1986 unless the policy is varied on or after that date so as to increase the benefits secured or to extend the term of the insurance; and, for this purpose, any change in the terms of the policy which is made in pursuance of an option or other power conferred by the policy shall be deemed to be a variation of the policy.
(7) If a policy issued as mentioned in subsection (6) above confers an option or other power under which benefits and premiums may be increased to take account of increases in the retail price index (as defined in section 8(3) of the 1984 Act) or any similar index pecified in the policy, then, to the extent that the right to exercise on or before 1st August 1986, the exercise of that option or power before that date shall be disregarded for the purposes of subsection (6) above.
(7A) This section does not apply if—
(a) the disposal of property by way of gift took place before 30 October 2024,
(b) the property became settled property by virtue of the disposal and remained settled property at all times after the disposal and before the relevant time,
(c) immediately before 30 October 2024, the property was excluded property for the purposes of the 1984 Act by virtue of section 48(3) or (3A) (as it had effect at that time), and
(d) immediately before the relevant time, the property—
(i) was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 to the 1984 Act applied (overseas property with value attributable to UK residential property or UK agricultural property), or
(ii) was a holding in an authorised unit trust or a share in an open-ended investment company (within the meaning, in either case, of the 1984 Act).
(7B) In subsection (7A), “the relevant time” means—
(a) if the property ceases to meet the condition in subsection (2) at any time before the donor’s death, that time;
(b) otherwise, the time of the donor’s death.
(7C) In subsection (7A)(c), “for the purposes of the 1984 Act” includes for the purposes only of Chapter 3 of Part 3 of that Act (ten-year anniversary charges etc) because of the operation of section 81 of that Act (property moving between settlements).
(8) Schedule 20 to this Act has effect for supplementing this section.
102ZA Gifts with reservation: termination of interests in possession
(1) Subsection (2) below applies where—
(a) an individual is beneficially entitled to an interest in possession in settled property,
(b) either—
(i) the individual became beneficially entitled to the interest in possession before 22nd March 2006, or
(ii) the individual became beneficially entitled to the interest in possession on or after 22nd March 2006 and the interest is an immediate post-death interest, a disabled person's interest or a transitional serial interest or falls within section 5(1B) of the 1984 Act, and
(c) the interest in possession comes to an end during the individual's life.
(2) For the purposes of—
(a) section 102 above, and
(b) Schedule 20 to this Act,
the individual shall be taken (if, or so far as, he would not otherwise be) to dispose, on the coming to an end of the interest in possession, of the no-longer-possessed property by way of gift.
(3) In subsection (2) above “the no-longer-possessed property” means the property in which the interest in possession subsisted immediately before it came to an end, other than any of it to which the individual becomes absolutely and beneficially entitled in possession on the coming to an end of the interest in possession.
(1) This section applies where an individual disposes of an interest in land by way of gift on or after 9th March 1999.
(2) At any time in the relevant period when the donor or his spouse or civil partner enjoys a significant right or interest, or is party to a significant arrangement, in relation to the land—
(a) the interest disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and
(b) section 102(3) and (4) above shall apply.
(3) Subject to subsections (4) and (5) below, a right, interest or arrangement in relation to land is significant for the purposes of subsection (2) above if (and only if) it entitles or enables the donor to occupy all or part of the land, or to enjoy some right in relation to all or part of the land, otherwise than for full consideration in money or money’s worth.
(4) A right, interest or arrangement is not significant for the purposes of subsection (2) above if—
(a) it does not and cannot prevent the enjoyment of the land to the entire exclusion, or virtually to the entire exclusion, of the donor; or
(b) it does not entitle or enable the donor to occupy all or part of the land immediately after the disposal, but would do so were it not for the interest disposed of.
(5) A right or interest is not significant for the purposes of subsection (2) above if it was granted or acquired before the period of seven years ending with the date of the gift.
(6) Where an individual disposes of more than one interest in land by way of gift, whether or not at the same time or to the same donee, this section shall apply separately in relation to each interest.
102B Gifts with reservation: share of interest in land.
(1) This section applies where an individual disposes, by way of gift on or after 9th March 1999, of an undivided share of an interest in land.
(2) At any time in the relevant period, except when subsection (3) or (4) below applies—
(a) the share disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and
(b) section 102(3) and (4) above shall apply.
(3) This subsection applies when the donor—
(a) does not occupy the land; or
(b) occupies the land to the exclusion of the donee for full consideration in money or money’s worth.
(4) This subsection applies when—
(a) the donor and the donee occupy the land; and
(b) the donor does not receive any benefit, other than a negligible one, which is provided by or at the expense of the donee for some reason connected with the gift.
(1) In sections 102A and 102B above “the relevant period” has the same meaning as in section 102 above.
(2) An interest or share disposed of is not property subject to a reservation under section 102A(2) or 102B(2) above if or, as the case may be, to the extent that the disposal is an exempt transfer by virtue of any of the provisions listed in section 102(5) above.
(3) In applying sections 102A and 102B above no account shall be taken of—
(a) occupation of land by a donor, or
(b) an arrangement which enables land to be occupied by a donor,
in circumstances where the occupation, or occupation pursuant to the arrangement, would be disregarded in accordance with paragraph 6(1)(b) of Schedule 20 to this Act.
(4) The provisions of Schedule 20 to this Act, apart from paragraph 6, shall have effect for the purposes of sections 102A and 102B above as they have effect for the purposes of section 102 above; and any question which falls to be answered under section 102A or 102B above in relation to an interest in land shall be determined by reference to the interest which is at that time treated as property comprised in the gift.
(5) Where property other than an interest in land is treated by virtue of paragraph 2 of that Schedule as property comprised in a gift, the provisions of section 102 above shall apply to determine whether or not that property is property subject to a reservation.
(6) Sections 102 and 102A above shall not apply to a case to which section 102B above applies.
(7) Section 102A above shall not apply to a case to which section 102 above applies.
(1) Subject to subsection (2) below, if, in determining the value of a person’s estate immediately before his death, account would be taken, apart from this subsection, of a liability consisting of a debt incurred by him or an incumbrance created by a disposition made by him, that liability shall be subject to abatement to an extent proportionate to the value of any of the consideration given for the debt or incumbrance which consisted of—
(a) property derived from the deceased; or
(b) consideration (not being property derived from the deceased)given by any person who was at the time entitled to, or amongst whose resources there were at any time included, any property derived from the deceased.
(2) If, in the case where the whole or part of the consideration given for a debt or incumbrance consisted of such consideration as is mentioned in subsection (1)(b) above, it is shown that the value of the consideration given, or of that part thereof, as the case may be, exceeded that which could have been rendered available by application of all the property derived from the deceased, other than such (if any) of that property—
(a) as is included in the consideration given, or
(b) as to which it is shown that the disposition of which it, or the property which it represented, was the subject matter was not made with reference to, or with a view to enabling or facilitating, the giving of the consideration or the recoupment in any manner of the cost thereof, no abatement shall be made under subsection (1) above in respect of the excess.
(3) In subsections (1) and (2) above “property derived from the deceased” means, subject to subsection (4) below, any property which was the subject matter of a disposition made by the deceased, either by himself alone or in concert or by arrangement with any other person or which represented any of the subject matter of such a disposition, whether directly or indirectly, and whether by virtue of on or more intermediate dispositions.
(4) If the disposition first-mentioned in subsection (3) above was not a transfer of value and it is shown that the disposition was not part of associated operations which included—
(a) a disposition by the deceased, either alone or in concert or by arrangement with any other person, otherwise than for full consideration in money or money’s worth paid to the deceased for his own use or benefit; or
(b) a disposition by any other person operating to reduce the value of the property of the deceased,
that first-mentioned disposition shall be left out of account for the purposes of subsections (1) to (3) above.
(5) If, before a person’s death but on or after 18th March 1986, money or money’s worth is paid or applied by him—
(a) in or towards the satisfaction or discharge of a debt or incumbrance in the case of which subsection (1) above would have effect on his death if the debt or incumbrance had not been satisfied or discharged, or
(b) in reduction of debt or incumbrance in the case of which that subsection has effect on his death,
the 1984 Act shall have effect as if, at the time of the payment or application, the person concerned had made a transfer of value equal to the money or money’s worth and that transfer were a potentially exempt transfer.
(6) Any reference in this section to a debt is a reference to a debt incurred on or after 18th March 1986 and any reference to an incumbrance created by a disposition is a reference to an incumbrance created by an disposition made on or after that date; and in this section “subject matter” includes, in relation to any disposition, any annual or periodical payment made or payable under or by virtue of the disposition
(7) In determining the value of a person’s estate immediately before his death, no account shall be taken (by virtue of section 5 of the 1984 Act) of any liability arising under or in connection with a policy of life insurance issued in respect of an insurance made on or after 1st July 1986 unless the whole of the sums assured under that policy form part of that person’s estate immediately before his death.
(1) For the purposes of the 1984 Act the Board may by regulations make such provision as is mentioned in subsection (2) below with respect to transfers of value made, and other events occurring, on or after 18th March 1986 where—
(a) a potentially exempt transfer proves to be a chargeable transfer and, immediately before the death of the transferor, his estate includes property acquired by him from the transferee otherwise than for full consideration in money or money’s worth;
(b) an individual disposes of property by a transfer of value which is or proves to be a chargeable transfer and the circumstances are such that subsection (3) or subsection (4) of section 102 above applies to the property as being or having been property subject to a reservation;
(c) in determining the value of a person’s estate immediately before his death, a liability of his to any person is abated as mentioned in section 103 above and, before his death, the deceased made a transfer of value by virtue of which the estate of that other person was increased or by virtue of which property becomes comprised in a settlement of which that other person is a trustee; or
(d) the circumstances are such as may be specified in the regulations for the purposes of this subsection, being circumstances appearing to the Board to be similar to those referred to in paragraphs (a) to (c) above.
(2) The provision which may be made by regulations under this section is provision for either or both of the following,—
(a) treating the value transferred by a transfer of value as reduced by reference to the value transferred by another transfer of value ; and
(b) treating the whole or any part of the tax paid or payable on the value transferred by a transfer of value as a credit against the tax payable on the value transferred by another transfer of value.
(3) The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.
105 Application of business and agricultural relief where transfer partly exempt.
With respect to transfers of value made on or after 18th March 1986, after section 39 of the 1984 Act there shall be inserted the following section—
Operation of sections 38 and 39 in cases of business or agricultural relief.
39A (1) Where any part of the value transferred by a transfer of value is attributable to—
(a) the value of the relavant business property, or
(b) the agricultural value of agricultural property,
then, for the purpose of attributing the value transferred (as reduced in accordance with section 104 or 116 below), to specific gifts and gifts of residue, sections 38 and 39 above shall have effect subject to the following provisions of this section.
(2) The value of any specific gifts of relevant business property or agricultural property shall be taken to be their value as reduced in accordance with section 104 or 116 below.
(3) The value of any specific gifts not falling within subsection (2) above shall be taken to be the appropriate fraction of their value.
(4) In subsection (3) above “the appropriate fraction” means a fraction of which—
(a) the numerator is the difference between the value transferred and the value, reduced as mentioned in subsection (2) above, of any gifts falling within that subsection, and
(b) the denominator is the difference between the unreduced value transferred and the value, before the reduction mentioned in subsection (2) above, of any gifts falling within that subsection;
and in paragraph (b) above “the unreduced value transferred” means the amount which would be the value transferred by the transfer but for the reduction required by sections 104 and 116 below.
(5) If or to the extent that specific gifts fall within paragraphs (a) and (b) of subsection (1) of section 38 above, the amount corresponding to the value of the gifts shall be arrived at in accordance with subsections (3) to (5) of that section by reference to their value reduced as mentioned in subsection (2) or, as the case may be, subsection (3) of this section.
(6) For the purposes of this section the value of a specific gift of relevant business property or agricultural property does not include the value of any other gift out of that property; and that other gift shall not itself be treated as a specific gift of relevant business property or agricultural property.
(7) In this section—
“agricultural property” and “the agricultural value of agricultural property” have the samemeaning as in Chapter II of Part V of this Act; and
“relevant business property” has the same meaing as in Chapter I of that Part.
106 Changes in financial institutions business property.
(1) In section 105 of the 1984 Act (relevant business property) the following shall be substituted for subsection (4)(a)—
(a) does not apply to any property if the business concerned is wholly that of a market maker or is that of a discount house and (in either case) is carried on in the United Kingdom, and
.
(2) At the end of that section there shall be inserted—
(7) In this section “market maker” means a person whom—
(a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks and shares at a price specified by him, and
(b) is recognised as doing so by the Council of The Stock Exchange.
(3) Subsections (1) and (2) above apply in relation to transfers of value made, and otehr events occurring, on or after the day of the Stock Exchange reforms.
(4) The Board may by regulations provided that section 105(7) of the 1984 Act (as inserted by subsection (2) above) shall have effect—
(a) as if the reference to The Stock Exchange in paragraph (a) were to any recognised investment exchange (within the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000) or to any of those exchanges specified in the regulations, and
(b) as if the reference to the Council of Stock Exchange in paragraph (b) were to the investment exchange concerned.
(5) The Board may by regulations amend section 105 of the 1984 Act so as to secure that section 105(3) does not apply to any property if the business concerned is of such description as is set out in the regulations; and the regulations may include such incidental and consequential provisions as the Board think fit.
(6) Regulations under subsection (4) or (5) above shall apply in relation to transfers of value made, and other events occurring, on or after such day, after the Stock Exchange reforms, as is specified in the regulations.
(7) The power to make regulations under subsection (4) and (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.
(8) In this section “the day of the Stock Exchange reforms” means trhe day on which the rule of The Stock Exhcange that prohibits a person from carrying on business as both a broker and a jobber is abolished .
(1) In section 234 of the 1984 Act (interest in instalments) the following shall be substituted for subsection (3)(c)—
(c) any company whose business is wholly that of a amrket maker or is that of a discount house and (in either case) is carried on in the United Kingdom.
(2) At the end of that section there shall be inserted—
(4) In this section “market maker” means a person who—
(a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks or shares at a price specified by him, and
(b) is recognised as doing so by the Council of The Stock Exchange.
(3) Subsections (1) and (2) above apply in relation to chargeable transfers made, and other events occurring, on or after the day of The Stock Exchange reforms.
(4) The Board may by regulations provide that section 234(4) of the 1984 Act (as inserted by subsection (2) above) shall have effect—
(a) as if the reference to The Stock Exchange in paragraph (a) were to any recognised investment exchange (within the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000) or to any of those exchanges specified in the regulations, and
(b) as if the reference to the Council of The Stock Exchange in paragraph (b) were to the investment exchange concerned.
(5) The Board may by regulations amend section 234 of the 1984 Act so as to secure that companies of a description set out in the regulations fall within section 234(3)(c); and the regulations may include such incidental and consequential provisions as the Board think fit.
(6) Regulations under subsection (4) or (5) above shall apply in relation to chargeable transfers made, and by other events occurring, on or after such day, after the day of The Stock Exchange reforms, as is specified in the regulations.
(7) The power to make regulations under subsection (4) or (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.
(8) In this section “the day of The Stock Exchange reforms” has the same meaning as in section 106 above.
(1) For the purposes of the enactments relating to oil taxation, land lying between the landward boundary of the territorial sea and the shoreline of the United Kingdom (as defined below) shall be treated as part of the bed of the territorial sea of the United Kingdom and any reference in those enactments to the territorial sea or the subsoil beneath it shall be construed accordingly.
(2) Any reference to the United Kingdom in the enactments relating to oil taxation, where that reference is a reference to a geographical area, shall be treated as a reference to the United Kingdom exclusive of the land referred to in subsection (1) above and of any waters for the time being covering that land.
(3) In this section—
(a) “the landward boundary of the territorial sea” means the line for the time being ordered by Her Majesty in Council to be the baseline from which the breadth of the territorial sea is measured; and
(b) “the shoreline of the United Kingdom” means, subject to subsection (4) below, the high-water line along the coast, including the coast of all islands comprised in the United Kingdom.
(4) In the case of waters adjacent to a bay, as defined in the Territorial Waters Order in Council 1964, the shoreline means—
(a) if the bay has only one mouth and the distance between the high-water lines of the natural entrance points of the bay does not exceed 5,000 metres, a straight line joining those high-water lines;
(b) if, because of the presence of islands, the bay has more than one mouth and the distances between the high-water lines of the natural entrance points of each mouth added together do not exceed 5,000 metres, a series of straight lines across each of the mouths drawn so as to join those high-water lines; and
(c) if neither paragraph (a) nor paragraph (b) above applies, a straight line 5,000 metres in length drawn from high-water line to high-water line within the bay in such a manner as to enclose the maximum area of water that is possible with a line of that length.
(5) If, by virtue of this section, it becomes necessary at any time to establish the high-water line at any place, it shall be taken to be the line which, on the current Admiralty chart showing that place, is depicted as “the coastline”, and for this purpose,—
(a) an Admiralty chart means a chart published under the superintendence of the Hydrographer of the Navy;
(b) if there are two or more Admiralty charts of different scales showing the place in question and depicting the coastline, account shall be taken only of the largest scale chart; and
(c) subject to paragraph (b) above, the current Admiralty chart at any time is that most recently published before that time.
(6) In this section “the enactments relating to oil taxation” means Part I of the Oil Taxation Act 1975 and any enactment which is to be construed as one with that Part.
(7) This section shall be deemed to have come into force on 1st April 1986.
(1) Where an election is made under this section before 1st January 1994 and accepted by the Board, the market value for the purposes of the Oil Taxation Acts of any light gases to which the election applies shall be determined, not in accordance with paragraphs 2, 2A and 3 of Schedule 3 to the principal Act (value under a notional contract), but by reference to a price formula specified in the election; and, in relation to any such light gases, any reference to market value in any other provision of the Oil Taxation Acts shall be construed accordingly.
(2) No election may be made under this section in respect of light gases which are “ethane” as defined in subsection (6)(a) of section 134 of the Finance Act 1982 (alternative valuation of ethane used for petrochemical purposes) if the principal purpose for which the gases are being or are to be used is that specified in subsection (2)(b) of the said section 134 (use for petrochemical purposes).
(3) Subject to subsection (4) below, an election under this section applies only to light gases—
(a) which, during the period covered by the election, are either disposed of otherwise than in sales at arm’s length or relevantly appropriated; and
(b) which are not subject to fractionation between the time at which they are so disposed of or appropriated and the time at which they are applied or used for the purposes specified in the election.
(4) In any case where,—
(a) at a time during the period covered by an election, a market value falls to be determined for light gases to which subsection (4)(b) or (5)(d) of section 2 of the principal Act applies (oil stocks at the end of chargeable periods), and
(b) after the expiry of the chargeable period in question, the light gases are disposed of or appropriated as mentioned in subsection (3) above,
the market value of those light gases at the time referred to in paragraph (a) above shall be determined as if they were gases to which the election applies.
(5) Schedule 18 to the Finance Act 1982 (which applies to elections under section 134 of that Act relating to ethane used or to be used for petrochemical purposes) shall have effect for supplementing this section but subject to the modifications in Schedule 21 to this Act (in which “the 1982 Schedule” means the said Schedule 18).
(6) This section shall be construed as one with Part I of the principal Act and in this section—
(a) “light gases” means oil consisting of gas of which the largest component by volume over any chargeable period is methane or ethane or a combination of those gases and which—
(i) results from the fractionation of gas before it is disposed of or appropriated as mentioned in subsection (3)(a) above, or
(ii) before being so disposed of or appropriated, is not subjected to initial treatment or is subjected to initial treatment which does not include fractionation;
(b) “the principal Act” means the Oil Taxation Act 1975; and
(c) “the Oil Taxation Acts” means Part I of the principal Act and any enactment which is to be construed as one with that Part.
(7) In this section “fractionation” means the treatment of gas in order to separate gas of one or more kinds as mentioned in paragraph 2A(3) of Schedule 3 to the principal Act; and for the purposes of subsection (6)(a) above,—
(a) the proportion of methane, ethane or a combination of the two in any gas shall be determined at a temperature of 15[2B]dgC and at a pressure of one atmosphere; and
(b) any component other than methane, ethane or liquified petroleum gas shall be disregarded.
110 Attribution of certain receipts and expenditure between oil fields.
(1) Section 8 of the Oil Taxation Act 1983 (qualifying assets) shall have effect, and be deemed always to have had effect, subject to the amendments in subsections (2) and (3) below.
(2) In subsection (3) (which determines the oil field to which are attributable tariff receipts or disposal receipts referable to a qualifying asset) after the word “above”, both where it occurs in paragraph (c) and also in the words following paragraph (c), there shall be inserted “and subsection (3A) below”.
(3) After subsection (3) there shall be inserted the following subsection—
(3A) If development decisions were first made in relation to two or more oil fields on the same day, then, for the purposes of subsection (3)(c) above, it shall be conclusively presumed that the first of those decisions was made in relation to that one of those fields in connection with which it appeared—
(a) at the time of the decision, or
(b) if it is later, at the time the asset was acquired or brought into existence by the participator in question for use in connection with an oil field,
that the participator in question would make the most use of the asset.
(4) Paragraph 6 of Schedule 1 to the Oil Taxation Act 1983 (attribution of allowable expenditure) shall have effect and be deemed always to have had effect with the addition of the following sub-paragraph—
(3) Subsection (3A) of section 8 of this Act applies for the purposes of sub-paragraph (1) above as it applies for the purposes of subsection (3)(c) of that section.
111 Broadcasting: additional payments by programme contractors.
(1) The Broadcasting Act 1981 shall have effect with respect to additional payments payable by programme contractors under that Act subject to the amendments made by Part I of Schedule 22 to this Act.
(2) The transitional provisions made by Part II of that Schedule shall have effect.
(3) This section shall be deemed to have come into force on 1st April 1986.
In section 4(1) of the National Loans Act 1968 (which provides that the aggregate of any commitments of the Public Works Loan Commissioners in respect of undertakings to grant local loans and any amount outstanding in respect of the principal of such loans shall not exceed £28,000 million or such other sum not exceeding £35,000 million as the Treasury may specify by order) for the words “£28,000 million” and “£35,000 million” there shall be substituted respectively “£42,000 million” and “£50,000 million”.
113 “Securities” for purposes of Exchange Equalisation Account Act 1979.
—At the end of section 3 of the Exchange Equalisation Account Act 1979 (investment of the funds of the Exchange Equalisation Account) there shall be added the following subsection—
(4) Without prejudice to the reference in subsection (1)(b) above to special drawing rights, the reference in subsection (3) above to currency of any country includes a reference to units of account defined by reference to more than one currency.
114 Short title, interpretation, construction and repeals.
(1) This Act may be cited as the Finance Act 1986.
(2) In this Act “the Taxes Act” means the Income and Corporation Taxes Act 1970.
(3) Part II of this Act, so far as it relates to income tax, shall be construed as one with the Income Tax Acts, so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts and, so far as it relates to capital gains tax, shall be construed as one with the Capital Gains Tax Act 1979.
(4) Part III of this Act shall be construed as one with the Stamp Act 1891.
(5) Part V of this Act, other than section 100, shall be construed as one with the Capital Transfer Tax Act 1984.
(6) The enactments and Orders specified in Schedule 23 to this Act are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.
Part I Provision Substituted for Part II of Schedule 2 to the Acts of 1971 and 1972
Description of vehicle | Rate of duty
£
Hackney carriages | 52·50
with an additional £1·05 for each person above 20 (excluding the driver) for which the vehicle has seating capacity.
Part II Tables Substituted in Part II of Schedule 4 to the Acts of 1971 and 1972
Table A(1) Rates of Duty on Rigid Goods Vehicles Exceeding 12 Tonnes Plated Gross Weight
Rates for Farmers’ Goods Vehicles
Plated gross weight of vehicle | Rate of duty
1. | 2. | 3. | 4. | 5.
Exceeding | Not exceeding | Two axle vehicle | Three axle vehicle | Four or more axle vehicle
tonnes | tonnes | £ | £ | £
12 | 13 | 210 | 170 | 170
13 | 14 | 280 | 175 | 175
14 | 15 | 350 | 175 | 175
15 | 17 | 475 | 180 | 175
17 | 19 | 240 | 175
19 | 21 | 320 | 180
21 | 23 | 420 | 245
23 | 25 | 720 | 330
25 | 27 | 465
27 | 29 | 665
29 | 30·49 | 1,090
Table C(1) Rates of duty on Tractor Units Exceeding 12 Tonnes Plated Train Weight and Having Only 2 Axles
Rates for Farmers’ Goods Vehicles
Plated train weight of tractor unit | Rate of duty
1. | 2. | 3. | 4. | 5.
Exceeding | Not exceeding | For a tractor unit to be used with semi-trailers with any number of axles | For a tractor unit to be used only with semi-trailers with not less than two axles | For a tractor unit to be used only with semi-trailers with not less than three axles
tonnes | tonnes | £ | £ | £
12 | 14 | 235 | 215 | 215
14 | 16 | 290 | 220 | 220
16 | 18 | 330 | 220 | 220
18 | 20 | 385 | 220 | 220
20 | 22 | 435 | 270 | 220
22 | 23 | 465 | 300 | 220
23 | 25 | 530 | 365 | 225
25 | 26 | 530 | 405 | 265
26 | 28 | 530 | 500 | 345
28 | 29 | 555 | 555 | 390
29 | 31 | 765 | 765 | 495
31 | 33 | 1,115 | 1,115 | 780
33 | 34 | 1,230 | 1,230 | 1,150
34 | 36 | 1,405 | 1,405 | 1,405
36 | 38 | 1,580 | 1,580 | 1,580
Table D(1) Rates of duty on Tractor Units Exceeding 12 Tonnes Plated Train Weight and Having Three or More Axles
Rates for Farmers’ Goods Vehicles
Plated train weight of tractor unit | Rate of duty
1. | 2. | 3. | 4. | 5.
Exceeding | Not exceeding | For a tractor unit to be used with semi-trailers with any number of axles | For a tractor unit to be used only with semi-trailers with not less than two axles | For a tractor unit to be used only with semi-trailers with not less than three axles
tonnes | tonnes | £ | £ | £
12 | 14 | 215 | 215 | 215
14 | 20 | 220 | 220 | 220
20 | 22 | 270 | 220 | 220
22 | 23 | 300 | 220 | 220
23 | 25 | 365 | 220 | 220
25 | 26 | 405 | 225 | 220
26 | 28 | 500 | 230 | 225
28 | 29 | 555 | 270 | 230
29 | 31 | 765 | 325 | 240
31 | 33 | 1,115 | 495 | 250
33 | 34 | 1,140 | 725 | 315
34 | 36 | 1,205 | 1,035 | 475
36 | 38 | 1,390 | 1,390 | 710
Section 3(7).
Part I
Additional days to be included in duration of certain licences
1 (1) In the Vehicles (Excise) Act 1971 (in this Part of this Schedule referred to as “the 1971 Act”), section 2A (power to modify duration of licences and rates of duty) as set out in paragraph 5 of Schedule 7 to that Act (transitional provisions) shall be amended as follows.
(2) In subsection (1) after paragraph (a) there shall be inserted the following paragraph—
(aa) in the case of licences taken out on the first registration of vehicles of such description as may be so specified, periods exceeding by such number of days (not exceeding thirty) as may be determined by or under the order the periods for which the licence would otherwise have effect by virtue of section 2(1) above or any provision made under paragraph (a) above; or
.
(3) In subsection (2), in paragraph (a) of the proviso, for the words “other than one of twelve months” there shall be substituted the words “of a fixed number of months other than twelve or for a period of less than a month”.
Tower wagons used by street lighting authorities etc.
2 In section 4 of the 1971 Act (exemptions from duty) in subsection (2) for the definition of “tower wagon” there shall be substituted the following—
“tower wagon” means a goods vehicle—
(a) into which there is built, as part of the vehicle, any expanding or extensible contrivance designed for facilitating the erection, inspection, repair or maintenance of overhead structures or equipment, and
(b) which is neither constructed nor adapted for use nor used for the conveyance of any load other than—
(i) such a contrivance and articles used in connection therewith, and
(ii) articles used in connection with the installation or maintenance, by means of such a contrivance, of materials or apparatus for lighting streets, roads or public places
.
Visiting forces
3 In section 7 of the 1971 Act (miscellaneous exemptions from duty) after subsection (3) there shall be inserted the following subsection—
(3A) Regulations under this Act may provide that, in such cases, subject to such conditions and for such period as may be prescribed, a mechanically propelled vehicle shall not be chargeable with any duty under this Act if it has been imported by—
(a) a person for the time being appointed to serve with any body, contingent or detachment of the forces of any prescribed country, being a body, contingent or detachment which is for the time being present in the United Kingdom on the invitation of Her Majesty’s Government in the United Kingdom, or
(b) a member of any country’s military forces, except Her Majesty’s United Kingdom forces, who is for the time being appointed to serve in the United Kingdom under the orders of any prescribed organisation, or
(c) a person for the time being recognised by the Secretary of State as a member of a civilian component of such a force as is mentioned in paragraph (a) above or as a civilian member of such an organisation as is mentioned in paragraph (b) above, or
(d) any prescribed dependant of a person falling within paragraph (a), paragraph (b) or paragraph (c) above.
Trade licences
4 (1) Section 16 of the 1971 Act (trade licences) shall be amended as follows.
(2) In subsection (1) (issue of trade licences)—
(a) at the end of paragraph (iii) (vehicles for which a manufacturer may use a trade licence) there shall be inserted the words “and all vehicles which are from time to time submitted to him by other manufacturers for testing on roads in the course of that business”; and
(b) at the beginning of paragraph (c) of the proviso (restrictions on use of trade licence) there shall be inserted the words “except in such circumstances as may be prescribed”.
(3) After subsection (1) there shall be inserted the following subsection—
(1A) Subsection (1) above has effect in relation to an application made by a person who satisfies the Secretary of State that he intends to commence business as a motor trader or vehicle tester as it has effect in relation to an application made by a motor trader or vehicle tester.
(4) In subsection (3) (which specifies the cases in which regulations may allow a vehicle to be used under a trade licence to carry a load) after paragraph (b) there shall be inserted the following paragraph—
(bb) in the case of a vehicle is being delivered or collected, a load consisting of another vehicle used or to be used for travel from or to the place of delivery or collection; or
.
(5) Subsection (4) (duration of trade licence) shall be amended as follows—
(a) for the words “A trade licence”. . . to the 1971 Act, there shall be substituted “Subject to subsections (4A) and (4B) below, a trade licence”;
(b) for paragraph (b) there shall be substituted—
“(b) for a period of six months”; and
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) After subsection (4) there shall be inserted the following subsections—
(4A) A trade licence taken out by a person who is not a motor trader or vehicle tester (having satisfied the Secretary of State as mentioned in subsection (1A) above) shall be for a period of six months only.
(4B) The Secretary of State may require that a trade licence taken out by a motor trader or vehicle tester who does not hold any existing trade licence shall be for a period of six months only.
(7) Subsection (5) (fees) shall be amended as follows—
(a) for the words “four months” and “eleven thirtieths” there shall be substituted respectively “six months” and “eleven twentieths”; and
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) In subsection (8), in the definition of “motor trader”, for the words from “means” to “this section” there shall be substituted
means—
(a) a manufacturer or repairer of, or dealer in, mechanically propelled vehicles, or
(b) any person not falling within paragraph (a) above who carries on a business of such description as may be prescribed;
and a person shall be treated for the purposes of paragraph (a) above
.
Surrender of licences
5 In section 17(2) of the 1971 Act (surrender of licences) as set out in paragraph 13 of Part I of Schedule 7 to the Act, paragraph (a) and, in paragraph (b), the words from the beginning to “class” shall be omitted.
Removal of fee for duplicate registration document
6 Section 23 of the 1971 Act (regulations with respect to the transfer and identification of vehicles) shall be amended as follows—
(a) in paragraph (f) (replacement documents) the words “and as to the fee payable in prescribed circumstances in respect of any replacement” shall be omitted; and
(b) in the section as set out in paragraph 20 of Part I of Schedule 7 to the Act in subsection (1)(e) (replacement books) the words “and for the fee to be paid on the issue of a new registration book” shall be omitted.
Part II
Additional days to be included in duration of certain licences
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tower wagons used by street lighting authorities etc.
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade licences
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Surrender of licences
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Removal of fee for duplicate registration document
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5.
1 Section 93 of the Customs and Excise Management Act 1979 (warehousing regulations) shall be amended in accordance with paragraphs 2 to 7 below.
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 The following shall be inserted after subsection (2)(e)—
(ee) providing that goods which are to be warehoused, or which have been lawfully permitted to be removed from a warehouse without payment of duty, are to be treated as if, for all or any prescribed purposes of the customs and excise Acts, they were warehoused;
.
4 The following shall be substituted for subsection (2)(g) (business records)—
(g) imposing or providing for the imposition under the regulations of requirements on the occupier of a warehouse or the proprietor of goods in a warehouse or goods which have been in or are to be deposited in a warehouse to keep and preserve such records as may be prescribed relating to his occupation of the warehouse or proprietorship of the goods;
(h) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to preserve all other records kept by him for the purposes of any relevant business or activity, except any records which (or records of a class which) the Commissioners specify as not needing preservation;
(j) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to produce or cause to be produced any records which he has been required to preserve by virtue of paragraph (g) or (h) above to an officer when required to do so for the purpose of allowing the officer to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period;
(k) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to furnish the Commissioners with any information relating to any relevant business or activity which they specify as information which they think it is necessary or expedient for them to be given for the protection of the revenue;
(l) allowing a requirement to preserve any records which has been imposed by virtue of paragraph (h) above to be discharged by the preservation in a form approved by the Commissioners of the information contained in the records.
5 The following shall be inserted at the end of subsection (2)—
In this subsection ”relevant business or activity’ means, in relation to an occupier or proprietor, any business or activity of his which includes occupation of a warehouse or (as the case may be) proprietorship of goods in a warehouse or goods which have been in or are to be deposited in a warehouse, where the goods are of a kind in which the proprietor trades or deals.
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 The following shall be substituted for subsection (7) (interpretation)—
(7) In this section—
(a) “prescribed” means prescribed by warehousing regulations;
(b) references to goods which are to be warehoused are references to goods which have been entered for warehousing on importation, which have been removed from a producer’s premises for warehousing without payment of duty or which are to be warehoused on drawback.
8 In consequence of the amendments made by the preceding provisions of this Schedule, the following provisions of section 15 of the Alcoholic Liquor Duties Act 1979 (which relate to regulations about distillers’ warehouses) shall cease to have effect—
(a) subsections (6A) and (6B), and
(b) the words “restriction or requirement” in subsection (7) and in subsection (8).
SCHEDULE 4 Extension to Northern Ireland of Provisions of Betting and Gaming Duties Act 1981
Section 6.
Part I Amendments of the Betting and Gaming Duties Act 1981
General betting duty and pool betting duty
1 (1) In section 1 (general betting duty) in subsection (1) for the words “Great Britain” there shall be substituted “the United Kingdom”.
(2) In subsection (3) of that section after the words “Act 1963” there shall be inserted the words “or Article 37 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985”.
2 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 (1) In section 9 (prohibitions for protection of revenue) for the words “Great Britain”, wherever they occur, there shall be substituted “the United Kingdom”.
(2) In subsection (3)(a) of that section the words “Northern Ireland or” and “of the Parliament of Northern Ireland or, as the case may be,” shall be omitted.
4 In section 12(4) (interpretation of provisions relating to betting duties)—
(a) before the definition of “meeting” there shall be inserted the following definitions—
“betting office licence”—
(a) in Great Britain, has the meaning given by section 9(1) of the Betting, Gaming and Lotteries Act 1963, and
(b) in Northern Ireland, means a bookmaking office licence as defined in Article 2(2) of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985;
“bookmaker”—
(a) in Great Britain, has the meaning given by section 55(1) of the said Act of 1963, and
(b) in Northern Ireland, has the meaning given by Article 2(2) of the said Order of 1985;
and (in either case) the expression ”bookmaking’ shall be construed accordingly;
“bookmaker’s permit”—
(a) in Great Britain, has the meaning given by section 2(1) of the said Act of 1963, and
(b) in Northern Ireland, means a bookmaker’s licence as defined in Article 2(2) of the said Order of 1985;
;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) the words from “and ”betting office licence”’to the end shall be omitted.
Bingo duty
5 In section 17(1) (charge of bingo duty) for the words “Great Britain” there shall be substituted “the United Kingdom”.
6 In section 19(2) (bingo played in more than one place)—
(a) for the words “Great Britain”, in both places where they occur, there shall be substituted “the United Kingdom”; and
(b) the words “Northern Ireland or” and the words “the Parliament of Northern Ireland or, as the case may be,” shall be omitted.
7 In section 20(2) (interpretation of provisions relating to bingo duty) the definition of “Great Britain” shall be omitted and after the definition of “the promoter” there shall be inserted the following definition—
”United Kingdom’ includes the territorial waters of the United Kingdom;
.
General
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 (1) In section 35, for subsection (3) (extent) there shall be substituted—
(3) The following provisions of this Act do not extend to Northern Ireland—
(a) sections 13 to 16;
(b) sections 29 and 30;
(c) Schedule 2;
(d) paragraph 15 of Schedule 4;
and sections 27 and 31 do not extend there in their application to the enactment relating to gaming licence duty.
(2) Subsection (4) of that section shall be omitted.
Administration of betting duties
11 (1) In Schedule 1 (betting duties) ....
(2) In paragraph 15 of that Schedule—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) after that sub-paragraph there shall be inserted the following sub-paragraphs—
(5) Subject to sub-paragraph (6) below, where under sub-paragraph (1) above a court orders that a betting office licence held by a person in respect of premises in Northern Ireland shall be forfeited and cancelled, no court of summary jurisdiction shall entertain an application by that person for the grant (or provisional grant) of a new betting office licence in respect of those premises or any other premises situated in the same petty sessions district as those premises made less than twelve months after that forfeiture and cancellation.
(6) Sub-paragraph (5) above—
(a) shall not prejudice the right of such a person as is mentioned in that sub-paragraph to seek the renewal of any betting office licence (other than that which is forfeited) which he holds; and
(b) applies notwithstanding anything in Article 12 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985.
.
Exemptions from, and administration of, bingo duty
12 (1) In Schedule 3 in paragraph 2(1) (small-scale bingo) after the words “Act 1968” there shall be inserted the words “or under Chapter II of Part III of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985”.
(2) In paragraph 5 of that Schedule (small-scale amusements provided commercially) in sub-paragraph (1) after paragraph (a) there shall be inserted the following paragraph—
(aa) on any premises in Northern Ireland in respect of which an amusement permit under Article 111 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 or a pleasure permit under Article 157 of that Order has been granted;
.
(3) In paragraph 10(2) of that Schedule (registration of bingo-promoters) after the words “Act 1968” there shall be inserted the words “or under Chapter II of Part III of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985”.
Part II Consequential Amendments of Northern Ireland Legislation
13 In section 287(1)(a) of the Companies Act (Northern Ireland) 1960 (preferential payments), for head (iv) there shall be substituted the following head—
(iv) any amount due from the company at the relevant date by way of general betting duty or bingo duty, or by virtue of section 12(1) of the Betting and Gaming Duties Act 1981, which became due within 12 months next before that date;
.
14 In Article 19(a) of the Bankruptcy Amendment (NorthernIreland) Order 1980 (preferential payments), for head (v) there shall be substituted the following head—
(v) any amount due from the bankrupt at the relevant date by way of general betting duty or bingo duty, or by virtue of section 12(1) of the Betting and Gaming Duties Act 1981, which became due within 12 months next before that date;
.
15 (1) The Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 shall be amended as follows.
(2) In Article 7, after paragraph (4), there shall be inserted the following paragraph—
(4A) In considering the fitness of any applicant to hold a bookmaker’s licence, the court shall have regard to—
(a) any failure of the applicant or of any other person mentioned in paragraph (3)(b); and
(b) where the applicant is a body corporate, any failure of any director of the applicant or of any other person mentioned in paragraph (4);
to pay any amount due from him or it by way of general betting duty or pool betting duty.
.
(3) In Article 61, after paragraph (4) there shall be inserted the following paragraph—
(4A) In considering the fitness of any applicant to hold a bingo club licence, a court shall have regard to—
(a) any failure of the applicant or of any other person mentioned in paragraph (3)(b); and
(b) where the applicant is a body corporate, any failure of any director of the applicant or of any other person mentioned in paragraph (4);
to pay any amount due from him or it by way of bingo duty.
.
(4) In Article 174 (registration of licences, etc)—
(a) in paragraph (2), after head (g) there shall be inserted the following head—
(gg) particulars of the forfeiture and cancellation of any bookmaking office licence in consequence of an order made under paragraph 15(1) of Schedule 1 to the Betting and Gaming Duties Act 1981;
;
(b) in paragraph (4), after head (b) there shall be inserted the following—
or
(c) orders the forfeiture and cancellation of a book-making office licence under paragraph 15(1) of Schedule 1 to the Betting and Gaming Duties Act 1981;
.
(5) In the following provisions, namely—
(a) Article 2(16), in so far as it is relevant for the purposes of the provisions mentioned in heads (b) and (c);
(b) Article 185(3) and Schedule 7, in so far as those provisions relate to a bookmaker’s licence, a bookmaking office licence or a bingo club licence; and
(c) Schedules 1 to 6 and Schedules 9 and 10;
any reference to the sub-divisional commander of the police sub-division shall be construed as including a reference to the Collector of Customs and Excise for the area, and any reference to the police sub-division shall be construed as including a reference to the area for which the Collector is responsible.
Part III Subordinate Legislation
16 (1) Any regulations made under Schedule 1 (betting duties) to the Betting and Gaming Duties Act 1981, in so far as they have effect immediately before the betting commencement date, shall have effect on and after that date in relation to Northern Ireland as if—
(a) that Act extended to Northern Ireland at the time when the regulations were made, and
(b) the regulations were made in relation to Northern Ireland as well as to Great Britain.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 5 Licences Under the Customs and Excise Acts
General provisions as to payment of duty on excise licences
1 In section 101 of the Customs and Excise Management Act 1979 (grant of excise licences)—
(a) in subsection (1), for the words “the appropriate duty” there shall be substituted “any appropriate duty”; and
(b) in subsection (3), for the words “taken out” there shall be substituted “held” and for the words “in any one licence year” there shall be substituted “at any one time”.
2 In sections 102(1) and 104(3) of the Customs and Excise Management Act 1979 (payment for and transfer of excise licences), for the words “the duty” there shall be substituted “any duty”.
Licences to manufacture spirits
3 (1) Section 12 of the Alcoholic Liquor Duties Act 1979 (distillers’ licences) shall be amended in accordance with this paragraph.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) At the end of subsection (5) there shall be added the words “and where the largest still so used on any premises in respect of which a licence is held is of less than that capacity, the Commissioners may revoke the licence or attach to it such conditions as they see fit to impose”.
(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Licences relating to hydrocarbon oil etc.
4 In Schedule 3 to the Hydrocarbon Oil Duties Act 1979 (subjects for regulations under section 21 of that Act), in paragraphs 2, . . . and 18 (which relate to licences for the production etc. of hydrocarbon oil, petrol substitutes and road fuel gas respectively) for the words “Fixing the date of expiration of any such licence” there shall be substituted “Specifying the circumstances in which any such licence may be surrendered or revoked”.
Licences to manufacture mechanical lighters
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 This Schedule has effect to determine the consideration referred to in subsection (7) of section 9 of this Act in respect of any one vehicle; and in this Schedule—
(a) “the principal section” means that section;
(b) “the prescribed accounting period” means that in respect of supplies in which the consideration is to be determined; and
(c) “the individual” means the individual to whom those supplies are treated as made.
2 (1) . . .Where the prescribed accounting period is a period of three months, the consideration appropriate to any vehicle is that specified in relation to a vehicle of the appropriate description in the second column of Table A below.
(2) . . .Where the prescribed accounting period is a period of one month, the consideration appropriate to any vehicle is that specified in relation to a vehicle of the appropriate description in the third column of Table A below.
TABLE A
Description of vehicle (Type of engine and cylinder capacity in cubic centimetres) | 3 month period | 1 month period
£ | £
Diesel engine
2000 or less | 145 | 48
More than 2000 | 187 | 62
Any other type of engine
1400 or less | 160 | 53
More than 1400 but not more than 2000 | 202 | 67
More than 2000 | 300 | 100
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4 The Treasury may by order taking effect from the beginning of any prescribed accounting period beginning after the order is made substitute a different Table for either of the Tables set out above.
5 (1) Where, by virtue of subsection (8) of the principal section, subsection (7) of that section has effect as if, in the prescribed accounting period, supplies of fuel for private use made in respect of two or more vehicles were made in respect of only one vehicle, the consideration appropriate shall be determined as follows—
(a) if each of the two or more vehicles falls within the same description of cubic capacity specified in Table A or Table B above, the Table in question shall apply as if only one of the vehicles were to be considered throughout the whole period; and
(b) if one of those vehicles falls within a description of cubic capacity specified in those Tables which is different from the other or others the consideration shall be the aggregate of the relevant fractions of the consideration appropriate for each description of vehicle under the Table in question.
(2) For the purposes of sub-paragraph (1)(b) above, the relevant fraction in relation to any vehicle is that which the part of the prescribed accounting period in which fuel for private use was supplied in respect of that vehicle bears to the whole of that period.
6 (1) In the case of a vehicle having an internal combustion engine one or more reciprocating pistons, its cubic capacity for the purposes of Tables A and B above is the capacity of its engine as calculated for the purposes of the Vehicles (Excise) Act 1971 or the Vehicles (Excise) Act (Northern Ireland) 1972.
(2) In the case of a vehicle not falling within sub-paragraph (1) above, its cubic capacity shall be such as may be determined for the purposes of Tables A and B above by order by the Treasury.
Section 40.
Part I
1—21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II Consequential Amendments
22 In the Taxes Management Act 1970 the following section shall be inserted after section 47A—
Special jurisdiction relating to Business Expansion Scheme.
47B If and so far as the question in dispute on any appeal against the refusal of relief under Schedule 5 to the Finance Act 1983 (relief for investment in corporate trades), or against an assessment withdrawing any such relief, is a question of the value of an interest in land (within the meaning of paragraph 5A(5) of that Schedule), it shall be determined—
(a) if the land is in England and Wales, on a reference to the Lands Tribunal;
(b) if the land is in Scotland, on a reference to the Lands Tribunal for Scotland; and
(c) if the land is in Northern Ireland, on a reference to the Lands Tribunal for Northern Ireland
23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 63.
Sale and re-purchase of securities
1—6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 (1) In section 25 of the Taxes Management Act 1970 (information: chargeable gains) in subsection (4) for the word “jobber” there shall be substituted the words “market maker”.
(2) At the end of section 25 there shall be inserted—
(10) In this section “market maker”, in relation to shares or securities, means a person who—
(a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell shares or securities of the kind concerned at a price specified by him, and
(b) is recognised as doing so by the Council of The Stock Exchange.
(3) Sub-paragraphs (1) and (2) above apply in relation to transactions on or after the day of The Stock Exchange reforms.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General
10 (1) In this Schedule “the day of The Stock Exchange reforms” means the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.
(2) In this Schedule “recognised investment exchange” means a recognised investment exchange within the meaning of the Financial Services Act 1986.
(3) Any power to make regulations under this Schedule shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
Section 101.
PART I AMENDMENTS OF 1984 ACT
1 After section there shall be inserted the following section—
Potentially exempt transfers.
3A (1) Any reference in this Act to a potentially exempt transfer is a reference to a transfer of value—
(a) which is made by an individual on or after 18th March 1986; and
(b) which, apart from this section, would be a chargeable transfer (or to the extent to which, apart from this section, it would be such a transfer); and
(c) to the extent that it constitutes either a gift to another individual or a gift into an accumulation andmaintenance trust or a disabled trust;
but this subsection has effect subject to any provision of this Act which provides that a disposition (or transfer of value) of a particular description is not a potentially exempt transfer.
(2) Subject to subsection (6) below, a transfer of value falls within subsection (1)(c) above, as a gift to another individual,—
(a) to the extent that the value transferred is attributable to property which, by virtue of the transfer, becomes comprised in the estate of that other individual, otherwise than as settled property, or
(b) so far as that value is not attributable to property which becomes comprised in the estate of another person, to the extent that, by virtue of the transfer, the estate of that other individual is increased, otherwise than by an increase in the value of settled property comprised in this estate.
(3) Subject to subsection (6) below, a transfer of value falls within subsection (1)(c) above, as a gift into an accumulation and maintenance trust or a disabled trust, to the extent that the value transferred is attributable to property which, by virtue of the transfer, becomes settled property to which section 71 or 89 of this Act applies.
(4) A potentially exempt transfer which is made seven years or more before the death of the transferor is an exempt transfer and any other potentially exempt transfer is a chargeable transfer.
(5) During the period beginning on the date of a potentially exempt transfer and ending immediately before—
(a) the seventh anniversary of that date, or
(b) if it is earlier, the death of the transferor,
it shall be assumed for the purposes of this Act that the transfer will prove to be an exempt transfer.
(6) Where, under any provision of this Act, tax is in any circumstances to be charged as if a trnafer of value had been made, that transfer shall be taken to be a transfer which is not a potentially exempt transfer.
2 (1) In section 7 (rates of tax), in subsection (1)—
(a) at the beginning there shall be inserted the words “Subject to subsections (2), (4) and (5) below”;
(b) for the words “ten years” there shall be substituted “ seven years ”; and
(c) the word “appropriate” shall be omitted.
(2) For subsection (2) of that section there shall be substituted the following subsection—
(2) Except as provided by subsection (4) below, the tax charged on the value transferred by a chargeable transfer made before the death of the transferor shall be charged at one-half of the rate or rates referred to in subsection (1) above.
(3) In subsection (3) of that section for the words “each of the Tables” there shall be substituted “ Table ”.
(4) After subsection (3) of that section there shall be inserted the following subsections—
(4) Subject to subsection (5) below, subsection (2) does not apply in the case of a chargeable transfer made at any time within the period of seven years ending with the death of the transferor but, in the case of a chargeable transfer made within that period but more that three years before the death, the tax charged on the value transferred shall be charged at the following percentage of the rate or rates referred to in subsection (1) above—
(a) where the transfer is made more than three but not more than four years before the death, 80 per cent;
(b) where the transfer is made more than four but not more than five years before the death, 60 per cent;
(c) where the transfer is made more than five but not more than six years before the death, 40 per cent; and
(d) where the transfer is made more than six but not more than seven years before the death, 20 per cent.
(5) If, in the case of a chargeable transfer made before the death of the transferor, the tax which would fall to be charged in accordance with subsection (4) above is less than the tax which would have been chargeable (in accordance with subsection (2) above) if the transferor had not died within the period of seven years beginning with the date of the transfer, subsection (4) above shall not apply in the case of that transfer.
3 (1) In section 8 (indexation) in subsection (1) for the words “new Tables for the Tables” there shall be substituted “ a new Table for the Table ”.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In subsection (2) of that section for the word “Tables”, in each place where it occurs, there shall be substituted “ Table ” and for the words “they replace” there shall be substituted “ it replaces ”.
(4) In subsection (4) of that section, for the word “Tables” there shall be substituted “ Table ”.
4 In section 9 (transitional provisions on reduction of tax) for the words “new Tables” there shall be substituted “ a new Table ”.
5 In section 19 (annual exemption), after subsection (3) there shall be inserted the following subsection—
(3A) A transfer of value which is a potentially exempt transfer—
(a) shall in the first instance be left out of account for the purposes of subsections (1) to (3) above; and
(b) if it proves to be a chargeable transfer, shall for the purposes of those subsections be taken into account as if, in the year in which it was made, it was made later than any transfer of value which was not a potentially exempt transfer.
6 After section 26 there shall be inserted the following section—
Potentially exempt transfer of property subsequently held for national purposes etc.
26A A potentially exempt transfer which would (apart from this section) have proved to be a chargeable transfer shall be an exempt transfer to the extent that the value transferred by it is attributable to property which has been or could be designated under section 31(1) below and which, during the period beginning with the date of the transfer and ending with the death of the transferor,—
(a) has been disposed of by sale of private treaty to a body mentioned in Schedule 3 to this Act or has been disposed of to such a body otherwise than by sale, or
(b) has been disposed of in pursuance of section 230 below.
7 In section 30 (conditionally exempt transfers) after subsection (3) there shall be inserted the following subsections—
(3A) The provisions of this section shall be disregarded in determining under section 3A above whether a transfer of value is a potentially exempt transfer.
(3B) No claim may be made under subsection (1) above with respect to a potentially exempt transfer until the transferor has died.
(3C) Subsection (1) above shall not apply to a potentially exempt transfer to the extent that the value transferred by it is attributable to property which has been disposed of by sale during the period beginning with the date of the transfer and ending with the death of the transferor.
8 (1) In section 31 (designation and undertakings) after subsection (1) there shall be inserted the following subsection—
(1A) Where the transfer of value in relation to which the claim for designation is made is a potentially exempt transfer which (apart from section 30 above) has proved to be a chargeable transfer, the question whether any property is appropriate for designation under this section shall be determined by reference to circumstances existing after the death of the transferor.
(8) After subsection (4F) of that section there shall be inserted the following subsection—
(4G) In a case where—
(a) the transfer of a value in question is a potentially exempt transfer which, (apart from section 30 above) has proved to be a chargeable transfer, and
(b) at the time of the transferor’s death an undertaking by such a person as is mentioned in section 30(1)(b) above given under paragraph 3(3) of Schedule 4 to this Act or under section 147 of the Capital Gains Tax Act 1979 is in force with respect to any property to which the value transferred by the transfer is attributable,
that undertaking shall be treated for the purposes of this Chapter as an undertaking given under section 30 above.
9 In section 32 (chargeable events) in subsection (1) after the words “after the transfer” there shall be inserted “ (or, if the transfer was a potentially exempt transfer, after the death of the transferor) ”.
10 In section 32A (associated properties) in subsection (2) after the words “after the transfer” there shall be inserted “ (or, if the transfer was a potentially exempt transfer, after the death of the transferor) ”.
11 (1) In section 33 (amount of the charge in relation to conditionally exempt transfers) in subsection (1)(b)—
(a) in sub-paragraph (i) for the words “under the second Table in Schedule 1 to this Act” there shall be substituted “ in accordance with section 7(2) above ”; and
(b) in sub-paragraph (ii) for the words “under the appropriate Table” there shall be substituted “ in accordance with the appropriate provision of section 7 above ”.
(2) For subsection (2) of that section there shall be substituted the following subsections—
(2) For the purposes of subsection (1)(b)(ii) above the appropriate provision of section 7 above is—
(a) if the conditionally exempt transfer by the relevant person made on eath (but the property was not treated as forming part of his estate immediately before his death only by virtue of section 102(3) of the Finance Act 1986) subsection (1) of section 7; and
(b) in any other case, subsection (2) of section 7.
(2A) The rate or rates of tax determined under subsection (1)(b)(i) above in respect of any charegable event shall not be affected by the death of the relevant person after that event.
.
(3) In subsection (7) of that section at the beginning there shall be inserted the words “ Subject to subsection (8) below ”.
(4) After that subsection there shall be added the following subsection—
(8) Where after a conditionally exempt trnafer of any property there is a potentially exempt transfer the value transferred by which is w h olly or partly attributable to that property and either—
(a) the potentially exempt transfer is a chargeable event with respect to the property, or
(b) after the potentially exempt transfer, but before the death of the person who is the transferor in relation to the potentially exempt transfer, a chargeable event occurs with respect to the property,
the tax charged in accordance with this section by reference to that chargeable event shall be allowed as a credit against any tax which may become chargeable, by reason of the potentially exempt transfer proving to be a chargeable transfer, on so much of the value transferred by that transfer as is attributable to the property; and subsection (7) above shall not apply with respect to any tax so becoming chargeable.
12 In section 35 (conditional exemption on death before 7th April 1976) in subsection (3) for the words “section 33(7) above, the reference” there shall be substituted “ section 33(7) and (8) above, references ”, and for the words “includes a reference” there shall be substituted “ include references ”.
13 In section 38 (attribution of value to specific gifts) in subsection (6) after the words “section 5(5) above” there shall be inserted “ or by virtue of section 103 of the Finance Act 1986 ” and at the end of that subsection there shall be added “ and, to the extent that any liability of the transferor is abated under the said section 103, that liability shall be treated as a specific gift ”.
14 At the end of section 49 (treatment of interests in possession) there shall be added the following subsection— For text see IHTA 1984 s. 49(3).
15 In section 55 (reversionary interst acquired by beneficiary) at the end of subsection (2) there shall be added “and such a dispostition is not a potentially exempt transfer”.
16 (1) In section 66 (rate of ten-yearly charge) in subsection (3)(b) for the words “preceding ten years” there shall be substituted “ preceding seven years ”.
(2) For paragraph (c) of subsection (3) of that section there shall be substituted—
(c) on which tax is charged in accordance with section 7(2) of this Act
.
(3) In subsection (5)(a) of that section for the word “ten” there shall be substituted “ seven ”.
17 In section 67 (added property etc.) in subsections (3)(b) and (4) for the word “ten” there shall be substituted “ seven ”.
18 (1) In section 68 (rate before first-year anniversary) in subsection (4)(b) for the word “ten”, in both places where it occurs, there shall be substituted “ seven ”.
(2) For paragraph (c) of subsection (4) and for paragraph (c) of subsection (6) of that section there shall be substituted—
(c) on which tax is charged in accordance with section 7(2) of this Act
.
(3) In subsection (6)(b) of that section—
(a) for the word “ten”, in the first place where it occurs, there shall be substituted “ seven ”; and
(b) in sub-paragraph (i) for the words “that period of ten years” there shall be substituted “ the period of ten years ending with that day ”.
19 (1) In section 78 (conditionally exempt occasions) in subsection (4) for the words from “and the appropriate Table” to the end there shall be substituted “ and the appropriate provision of section 7 for the purposes of section 33(1)(b)(ii) is, if the settlement was created on his death, subsection (1) and, if not, subsection (2). ”
(2) In subsection (5) of that section, in the substituted sub-paragraph (ii) for section 33(1)(b), for the words “under the appropriate Table” there shall be substituted “ in accordance with the appropriate provision of section 7 above. ”
20 At the end of section 98 (effect of alteration of capital of close company etc.) there shall be added the following subsection—
(3) The disposition referred to in subsection (1) above shall be ataken to be one which is not a potentially exempt transfer.
21 After section 113 there shall be inserted the following sections—
Transfers within seven years before death of transferor.
113A (1) Where any part of the value transferred by a potentially exempt transfer which proves to be a chargeable transfer would (apart from this section) be reduced in accordance with the preceding provisions of this Chapter, it shall not be so reduced unless the conditions in subsection (3) are satisfied.
(2) Where—
(a) any part of the value transferred by any chargeable transfer, other than a potentially exempt transfer, is reduced in accordance with the preceding provisions of this Chapter, and
(b) the transfer is made within seven years of the death of the transferor,
then, unless the conditions in subsection (3) are satisfied, the additional tax chargeable by reason of the death shall be calculated as if the value transferred had not been so reduced.
(3) The conditions referred to in subsections (1) and (2) above are—
(a) that the original property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor; and
(b) that, in relation to a notional transfer of value made by the transferee immediately before the death, the original property would (apart from section 106 above) be relevant business property.
(4) If the transferee has dies before the transferor, the reference in subsection (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) If the conditions in subsection (3) above are satisfied only with respect to part of the orginal property, then—
(a) in a case falling within subsection (1) above, only a proprtionate part of so much of the value tranferred as is attributable to the original property shall be reduced in accordance with the preceding provisions of this Chapter, and
(a) in a case falling within subsection (2) above, the additional tax shall be calculated as if only a proportionate part of so much of the value transferred was attributable to the original property had been so reduced.
(6) Where any shares owned by the transferee immediately before the death in question—
(a) would under any of the provisions of sections 77 to 86 of the Capital Gains Tax Act 1979 be identified with the original property (or part of it), or
(b) were issued to him in consideration of the transfer of a business or interest in a business consisting of the original property (or part of it),
they shall be treated for the purposes of this section as if they were the original property (or that part of it).
(7) This section has effect subject to section 113B below.
(8) In this section—
“the original property” means the property which was relevant business property in relation to the chargeable transfer referred to in subsection (1) or subsection (2) above; and
“the transferee” means the person whose property the original property became on that chargeable transfer or, where on the transfer the original property became or remained settled property in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.
Applciation of section 113A to replacement property.
113B (1) Subject to subsection (2) below, this section applies where—
(a) the transferee has disposed of all or part of the original property before the death of the transferor; and
(b) the whole of the consideration received by him for the disposal has been applies by him in acquiring other property (in this section referred to as “the replacement property”).
(2) This section does not apply unless—
(a) the replacement property is acquired, or binding contract for its acquisition is entered into, within twelve months after the disposal of the original property (or, as the case may be, the part concerned); and
(b) the disposal and acquisition are both made in transactions at arm’s length or on terms such as might be expected to be included in a transaction at arm’s length.
(3) Where this section applies, the conditions in section 113A(3) above shall be taken to be satisfied in relation ro the original proeprty (or, as the case may be, the part concerned) if—
(a) the replacement property is owned by the transferee immediately before the death of the transferor; and
(b) throughout the period beginning with the date of the chargeable transfer and ending with the death (disregarding any period between the disposal and acquisition) either the original property or the replacement property was owned by the transferee; and
(c) in relation to notional transfer of value made by the transferee immediately before the death, the replacement property would (apart from section 106 above) be relevant business property.
(4) If the transferee has dies before the transferor, any reference in subsections (1) to (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) In any case where—
(a) all or part of the original property has been disposed of before the death of the transferor or is excluded by section 113 above from being relevant business property in relation to the notional transfer of value referred to in section 113A(b) abvoe, and
(b) the replacement property is acquired, or a binding contract for its acquisition is entered into, after the death of the transferor but within twelve months after the disposal of the original property or part, and
(c) the transferor dies before the transferee,
subsection (3) above shall have effect with the omission of paragraph (a), and as if any reference to a time immediately before the death of the transferor or to the death were a reference to the time when the replacement property is acquired.
(6) Section 113A(6) above shall have effect in relation to the replacement property as it has effect in relation to the original property.
(7) Where a binding contract for the disposal of any property is entered into at any time before the disposal of the property, the disposal shall be regarded for the purposes of subections (2)(a) and (5)(b) above as taking place at that time.
(8) In this section “the original property” and “the transferee” have the same meaning as in section 113A above.
22 After section 124 there shall be inserted the following sections—
Transfers within seven years before the death of the transferor.
124A (1) Where any part of the value transferred by a potentially exempt transfer which proves to be a chargeable transfer would (apart from this section) be reduced in accordance with the preceding provisions of this Chapter, it shall be is reduced unless the conditions in subsection (3) below are satisfied.
(2) Where—
(a) any part of the value transfered by any chargeable transfer, other than a potentially exempt transfer, is reduced in accordance with the preceding provisions of this Chapter, and
(b) the transfer is made within seven years of the death of the transferor,
then, unless the conditions in subsection (3) below are satisfied, the additional tax chargeable by reason of the death shall be calculated as if the value transferred had not been so reduced.
(3) The conditions referred to in subsections (1) and (2) are—
(a) that the original property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (in this subsection referred to as “the relevant period”) and it is not at the time of the death subject to a binding contract for sale; and
(b) except in a case falling within paragraph (c) below, that the original property is agricultural property immediately before the death and has been occupied (by the transferee or another) for the purpsoes of agriculture throughout the relevant period; and
(c) where the original property consists of shares in or securities of a company, that throughout the relevant period the agricultural property to which section 116 above applies by virtue of section 122(1) above on the chargeable transfer was owned by the company and occupied (by the company or another) for the purposes of agriculture.
(4) If the transferee has died before the transferor, the reference in subsection (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) If the conditions in subsection (3) above are satisfied only with respect to part of the orginal property, then,—
(a) in a case falling within subsection (1) abvoe, only a proportionate part of so much of the value transferred as is attributable to the original property shall be reduced in accordance with the preceding provisions of this Chapter, and
(b) in a case falling within subsection (2) above, the additional tax shall be calculated as if only a proprtionate part of so much of the value transferred as was attributable to the orginal property had been so reduced.
(6) Where any shares owned by the transferee immediately before the death in question—
(a) would under any of the provisions of section 77 to 86 of the Capital Gains Tax Act 1979 be identified with the original property (or part of it), or
(b) were issued to him in consideration of the transfer of agricultural property consisting of the orginal property or (part of it),
they shall be treated for the purposes of this section as if they were the orginal property (or part of it).
(7) This section has effect subject to section 124B below.
(8) In this section—
“the prginal property” means the property which, in relation to the chargeable transfer referred to in subsection (1) or subsection (2) above, was either agricultural property to which section 116 above applied or shares or securities of a company owning agricultural property to which that section applies by virtue of section 122(1) above; and
“the transferee” means the person whose property the original property became on that chargeable transfer or, where on the transfer the original property became or remained settled property in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.
Application of section 124A to replacement property.
124B (1) Subject to subsection (2) below, this section applies where—
(a) the transferee has disposed of all or part of the original property before the death of the transferor; and
(b) the whole of the consideration received by him for the disposal has been applied by him in acquiring other property (in this section referred to as “the replacement property”).
(2) This section does not apply unless—
(a) the replacement property is acquired, or binding contract for its acquisition is entered into, within twelve months after the disposal of the original property (or, as the case may be, the part concerned); and
(b) the disposal and acquisition are both made in transactions at arm’s length or on terms such as might be expected to be included in a transaction at arm’s length.
(3) Where this section applies, the conditions in section 124A(3) above shall be taken to be satisfied in relation to the original property (or, as the case may be, the part concerned) if—
(a) the replacement property is owned by the transferee immediately before the death of the transferor and is not at that time subject to a binding contract for sale; and
(b) throughout the period beginning with the date of the chargeable transfer and ending with the disposal, the original property was owned by the transferee and occupied (by the transferee or another) for the purposes of agriculture; and
(c) throughout the period beginning with the date when the transferee acquired the replacement property and ending with the death, the replacement property was owned by the transferee and occupied (by the transferee or another) for the purposes of agriculture; and
(d) the replacement property is agricultural property immediately before the death.
(4) If the transferee has dies before the transferor, any reference in subsections (1) to (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) In any case where—
(a) all or part of the original property has been disposed of before the death of the transferor or is subject to a binding contract for sale at the time of the death, and
(b) the replacement property is acquired, or a binding contract for its acquisition is entered into, after the death of the transferor but within twelve months after the disposal of the original property or part, and
(c) the transferor dies before the transferee,
subsection (3) above shall have effect with the omission of paragraphs (a) and (c), and as if any reference to a time immediately before the death of the transferor were a reference to the time when the replacement property is acquired.
(6) Section 124A(6) above shall have effect in relation to the replacement property as it has effect in relation to the original property.
(7) Where a binding contract for the disposal of any property is entered into at any time before the disposal of the property, the disposal shall be regarded for the purposes of subsections (2)(a) and (5)(b) above as taking place at that time.
(8) In this section “the original property” and “the transferee” have the same meaning as in section 124A above.
23 (1) In section 131 (relief in respect of additional tax payable on transfers within three years of death), in subsection (1) for the words from “(by virtue” to “transfer and” there shall be substituted “ because of the transferor’s death within seven years of the transfer, tax becomes chargeable in respect of the value transferred by a potentially exempt transfer or (by virtue of section 7(4) above) additional tax becomes chargeable in respect of the value transferred by any other chargeable transfer and (in either case) ”.
(2) In subsection (2) of that section for the words “additional tax” in each place where they occur, there shall be substituted “ the tax or, as the case may be, additional tax ”.
(3) After that subsection there shall be inserted the following subsection—
(2A) Where so much of the value transferred as is attributable to the value, or agricultural value, of the transferred property is reduced by any percentage (in this subsection referred to as “the appropriate percentage”), in accordance with Chapter I of thi Part of this Act, references in subsection (2) above to the market value of the transferred property at any time shall have effect—
(a) in a case within chapter I, as references to that market value reduced by the appropriate percentage; and
(b) in a case within Chapter II, as references to that market value less the appropriate percentage of the agricultural value of the transferred property at that time.
24 In section 142 (alteration of dispositions taking effect on death) at the end of subsection (5) there shall be added “ or section 102 of the Finance Act 1986 ”.
25 Sections 148 and 149 (exemptions for mutual transfers) shall not apply if the donee’s transfer (as defined in section 148) is made on or after 18th March 1986.
26 In section 199 (liability for tax etc. on dispositions by transferor) for subsection (2) there shall be substituted the following subsection—
(2) Subsection (1)(a) above shall apply in relation to—
(a) the tax on the value transferred by a potentially exempt transfer; and
(b) so much of the tax on the value transferred by any other chargeable transfer made within seven years of the transferor’s death as exceeds what it would have been had the transferor died more than seven years after the transfer,
with the substitution for the reference to the transferor of a reference to his personal representatives.
27 In section 201 (liability for tax in respect of settled property), in subsection (2) for the words “three years”, in each place where they occur, there shall be substituted “ seven years ”.
28 (1) In section 204 (limitation of liability), subsection (4) shall be omitted.
(2) In subsection (6)(a) of that section, after the word “transferor” there shall be inserted “ or personal representative of the transferor ”.
(3) For subsection (7) of that section there shall be substituted the following subsections—
(7> Where the tax exceeds what it would have been had the transferor dies more than seven years after the transfer, subsection (6) above shall not apply in relation to the excess.
(8) A person liable by virtue of section 199(2) above for any tax as personal representative of the transferor shall be liable only to the extent that either—
(a) in consequence of subsections (2), (3) and (5) above, no person falling within paragraphs (b) to (d) of section 199(1) above is liable for the tax, or
(b) the tax remains unpaid twelve months after the end of the month in which the death of the transferor occurs,
and, subject to that, shall be liable to the extent of the assets mentioned in subsection (1) above.
(9) Where by virtue of subsection (3) of section 102 of the Finance Act 1986 the estate of a deceased person is treated as including property which would not apart from that subsection form part of his estate, a person shall be liable under section 200(1)(a) above as personal representatice for tax attributable to the value of the property only if the tax remains unpaid twelve months after the end of the month in which the death occurs and, subject to that, only to the extent of the assets mentioned in subsection (1) above.
29 (1) In section 216 (delivery of accounts) in subsection (1) after paragraph (b) there shall be inserted the following paragraphs—
(bb) is liable under section 199(1)(b) above for tax on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, or would be so liable if tax were chargeable on that value, or
(bc) is liable under section 200(1)(c) above for tax on the value transferred by a chargeable transfer made on death, so far as the tax is attributable to the value of the property which, apart from section 102(3) of the Finance Act 1986, would not form part of the deceased’s estate, or would be so liable if tax were chargeable on the value transferred on the death, or
(2) In subsection (3) of that section after the words “his death” there shall be inserted “ other than property which would not, apart from section 102(3) of the Finance Act 1986, form part of his estate ”.
(3) In subsection (6) of that section after paragraph (a) there shall be inserted the following paragraphs—
(aa) in the case of an account to be delivered by a person within subsection (1)(bb) above, before the expiration ot the period of twelve months from the end of the month in which the death occurs;
(ab) in the case of an account to be delivered by a person within subsection (1)(bc) above, before the expiration of the period of twelve months from the end of the month in which the death occurs
.
30 (1) In section 226 (payment: general rules), in subsection (3) for the words “three years”, in each place where they occur, there shall be substituted “ seven years ”.
(2) After subsection (3) of that subsection there shall be inserted the following subsections—
(3A) Without prejudice to subsection (3) above, the tax chargeable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer shall be due six months after the end of the month in which the transferor’s death occurs.
(3B) So much (if any) of the tax chargeable on the value transferred by a chargeable transfer made under Chapter III of Part III of this Act within the period of seven years ending with the settlor’s death as exceeds what it would have been had the settllor died more than seven years after the date of the transfer shall be due six months after the end of the month in which the death occurs.
31 (1) In section 227 (payment by instalments) after subsection (1) there shall be inserted the following subsections—
(1A) Subsection (1) above does not apply to tax payable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, except to the extent that the tax is attributable to qualifying property which is owned by the transferee immediately before the death of the transferor (or, if earlier, his own death).
(1B) In subsection (1A) above “the transferee” means the person whose property the qualifying property became on the transfer or, where on the transfer the qualifying property became comprised in a settlement in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.
(2) In subsection (5) of that section after the words “subsection (1)(b) above” there shall be inserted “ other than a case within subsection (1A) above where the transferee dies before the transferor ”.
32 In section 233 (interest on unpaid tax) in subsection (2) for paragraphs (a) and (b) there shall be substituted— For substitution see IHTA 1985 s. 233(2)(a) and (b)
33 (1) In section 236 (application of section 233 in special cases etc.), in subsection (1)(a), for the words “three years”, in each place where they occur, there shall be substituted “ seven years ”.
(2) After subsection (1) of that section there shall be inserted the following subsection—
(1A) Section 233 above shall apply in relation to the amount (if any) by which—
(a) the tax chargeable on the value transferred by a chargeable transfer made under Chapter III of Part III of this Act within the period of seven years ending with the settlor’s death,
exceeds
(b) what that tax would have been had the settlor dies more than seven years after the date of the transfer,
as if the chargeable transfer had been made on the death of the settlor.
34 In section 237 (imposition of charge) after subsection (3) there shall be inserted the following subsection—
(3A) In the case of a potentially exempt transfer which proves to be a chargeable transfer—
(a) property concerned, or an interest in property concerned, which has been disposed of to a purchaser before the transferor’s death is not subject to the Inland Revenue charge, but
(b) property concerned which has been otherwise disposed of before the death and property which at the death represents any property or interest falling within paragraph (a) above shall be subject to the charge;
and in this subsection “property concerned” means property to the value of which the value transferred by the transfer is wholly or partly attributable.
35 In section 239 (certificates of discharge) after subsection (2) there shallbe inserted the following subsection—
(2A) An application under subsection (1) or (2) above with respect to tax which is or may become chargeable on the value trnaferred by a potentially exempt transfer may not be made before the expiration of two years from the death of the transferor (except where the Board think fit to entertain the application an earlier time after the death).
36 For Schedule 1 (rates of tax) there shall be substituted—
SCHEDULE 1
TABLE OF RATES OF TAX
Portion | of value | Rate of tax
Lower limit | Upper limit | Per cent
£ | £
0 | 71,000 | Nil
71,000 | 95,000 | 30
95,000 | 129,000 | 35
129,000 | 164,000 | 40
164,000 | 206,000 | 45
206,000 | 257,000 | 50
257,000 | 317,000 | 55
317,000 | – | 60
37 (1) In Schedule 2 (provisions applying on reduction of tax),—
(a) for the words “new Tables”, wherever occurring, there shall be substituted “ a new Table ”; and
(b) for the words “the Tables”, wherver occurring, there shall be substituted “ the Table ”.
(2) In paragraph (1)(b) of that Schedule for the word “come” there shall be substituted “ comes ”.
(3) After paragraph 1 of that Schedule there shall be inserted the following paragraph—
Death within seven years of potentially exempt transfer
1A Where a person who has made a potentially exempt transfer before a reduction dies after that reduction (or after that and one or more subsequent reductions) and within the period of seven years beginning with the date of the transfer, tax shall be chargeable by reason of the transfer proving to be a chargeable transfer only if, and to the extent that, it would have been so chargeable if the Table in Schedule 1 as substituted by that reduction (or by the most recent of those reductions) had applies to that transfer.
(4) In paragraph 2 of that Schedule,—
(a) for the words “three years”, wherever occurring, there shall be substituted “ seven years ”; and
(b) after the words “chargeable transfer” there shall be inserted “ (other than a potentially exempt transfer) ”; and
(c) the words “the first of” shall be omitted.
(5) In paragraph 3 of that Schedule, the words “the second of” shall be omitted.
(6) In paragraph 4 of that Schedule, the words “the first of” shall be omitted.
38 (1) In Schedule 4 (maintenance funds for historic buildings etc.) in paragraph 14 (rates of charge) in sub-paragraphs (1) to (3), for the words “under the appropriate Table”, wherever occurring, there shall be substituted “ in accordance with the appropriate provision of section 7 of this Act ”.
(2) After sub-paragraph (1) of that paragraph there shall be inserted the following sub-paragraph—
(1A) The rate of tax determined under sub-paragraph (1) above in respect of any occasion shall not be affected by the death of the settlor after that occasion.
(3) In sub-paragraph (6) of that paragraph for the words “ten years” there shall be substituted “ seven years ”.
(4) For sub-paragraph (9) of that paragraph there shall be substituted the following sub-paragraph—
(9) For the purposes of sub-paragraph (1) above the appropriate provision of section 7 of this Act is subsection (2), and for the purposes of sub-paragraphs (2) and (3) above it is (if the settlement was made on death) subsection (1) and (if not) subsection (2).
39 In Schedule 6 (transition from estate duty) in paragraph 4(3) after the words “sections 33(7)” there shall be inserted the words “ and (8). ”
PART II TRANSITIONAL PROVISIONS
40 (1) Notwithstanding that Part of this Schedule has effect with respect to events occurring on or after 18th March 1986, where a death or other event occurs on or after that date, nothing in that Part shall affect the tax chargeable on a transfer of value occurring before that date.
(2) Sub-paragraph (1) above does not authorise the making of a claim under section 149 of the 1984 Act where the donee’s transfer, as defined in section 148 of that Act, occurs on or after 18th March 1986.
41 Where tax is chargeable under section 32 or section 32A of the 1984 Act by reason of a chargeable event occurring on or after 18th March 1986 and the rate or rates at which it is charged fall to be determined under the provisions of section 33(1)(b)(ii) of the 1984 Act by reference to a death which occurred before that date, those provisions shall apply (subject to paragraph 5 of Schedule 2 to that Act) as if the amendments of section 7 of, and Schedule 1 to, that Act contained in Part I of this Schedule had been in force at the time of the death.
42 Where tax is chargeable under paragraph 8 of Schedule 4 to the 1984 Act on any occasion on or after 18th March 1986 and the rate at which it is charged falls to be determined under paragraph 14 of that Schedule by reference to a death which occurred before that date, that paragraph shall apply (subject to paragraph 6 of Schedule 2 to the 1984 Act) as if the amendments of section 7 of, and Schedule 2 to, the 1984 Act contained in Part I of this Schedule had been in force at the time of the death.
43 (1) This paragraph applies if, in the case of a settlement,—
(a) tax is charged under section 65 of the 1984 Act on an occasion falling on or after 18th March 1986; and
(b) the rate at which tax is so charged falls to be determined under section 69 of that Act (rate between ten-year anniversaries) by reference to the rate (in this paragraph referred to as “the last ten-year rate”) at which tax was last charged under section 64 of that Act (or would have been charged apart from section 66(2) there of); and
(c) the most recent ten-year anniversary fell before 18th March 1986.
(2) For the purpose of determining the rate at which tax is charged on the occasion referred to in sub-paragraph (1)(a) above, it shall be assumed that the last ten-year rate was what that rate would have been if, immediately before the ten-year anniversary referred to in sub-paragraph (1)(c) above, the amendments of sections 66 and 67 of the 1984 Act contained in Part I of this Schedule had been in force.
(3) Where this paragraph applies, paragraph 3 of Schedule 2 to the 1984 Act shall have effect as if—
(a) references to a reduction included reference to a reduction by the substitution of a new Table in Schedule 1 to the 1984 Act; and
(b) in relation to a reduction resulting from the subsitution of such a new Table, the reference to the second of the Tbles in Schedule 1 to the 1984 Act were a reference to a Table in which the rates of tax were one-half of those specified in the new Table.
(4) In this paragraph “ten-year anniversary” has the same meannig as in Chapter III of Part III of the 1984 Act.
44 In relation to a death on or after 18th March 1986, paragraph 2 of Schedule 2 to the 1984 Act (provisions applying on reduction of tax) shall have effect, in a case where the chargeable transfer in question was made before 18th March 1986, as if—
(a) references to a reduction included references to a reduction by the substitution of a new Table in Schedule 1 to the 1984 Act; and
(b) the Tble in Schedule 1 to the Act was the first Table in that Schedule.
45 In relation to a disposal of trees or underwood on or after 18th March 1986, paragraph 4 of Schedule 2 to the 1984 Act shall have effect, in a case where the death in question occurred before 18th March 1986, as mentioned in paragraphs (a) and (b) of paragraph 44 above.
46 Notwithstanding anything in section 3A of the 1984 Act, a transfer of value which is made on or after 1st July 1986 and which, by virtue of subsection (4) of section 49 of the Finance Act 1975 (transitional provision relating to estate duty deferment in respect of timber etc.), brings to an end of the period during which estate duty is payable on the net moneys received from the sale of timber etc. is not a potentially exempt transfer to the extent that the value transferred is attributable to the land concerned.