- (1) In subsection (2) of section thirty-two of the Finance Act, 1954 (which relates to the exemption from estate duty of property passing on the death of a surviving spouse, when duty has been paid on the death of the other spouse or would have been if the duty were payable on estates of however small a principal value), for the words "but would have been if the duty were payable on estates of however small a principal value" there shall be substituted the words "by reason only of the property being or forming part of an estate of too small a principal value or of no principal value".
- (2) This section shall apply where the second death occurs after the commencement of this Act, whether or not the first death occurred after that commencement.—[Sir E. Boyle.]
§ Brought up, and read the First time.
§ Sir E. Boyle
I beg to move, That the Clause be read a Second time.
This new Clause is in fulfilment of an undertaking given by the Solicitor-General during the discussion of a new Clause proposed in Committee by my hon. Friend the Member for Dover (Mr. Arbuthnot). During the discussion then the hon. and learned Member for Kettering (Mr. Mitchison) raised a matter which the Solicitor-General promised to look at before the next stage of the Bill.
Briefly, the point was this. The hon. and learned Member for Kettering asked how at any stage duty could be charged on an estate which appears to be a minus quantity. There is, of course, no duty payable on any insolvent estate. The new Clause is concerned with the case in which the estate of the first of two spouses to die is insolvent, but the estate of the surviving spouse is not insolvent.
To take a concrete example, let us suppose that a man has left debts of £20,000, his only estate being shares of £15,000 which he settles on his widow by his will. The estate is insolvent and, therefore, no duty is payable, but we will suppose that, subsequently, the shares appreciate to a value of £25,000. The debts are paid off and at the widow's 300 death the settled property consists of shares worth £5,000.
Under the law as it stands, the insolvency of the husband's estate involves a charge to duty on £5,000 on the widow's death, even though by reason of Section 32 (2) of the Finance Act, 1954, there would have been no such charge if the husband's estate had been not insolvent but below the exemption limit. All that the new Clause does is to assimilate the case in which the husband's estate is insolvent to the case in which it is solvent but too small to pay any duty.
§ Mr. Mitchison
I should like to congratulate the Economic Secretary on such a singlarly lucid exposition. I suppose that he is professionally so alive to the possibilities of inflation and share appreciation that he was able to understand and explain a point to which my imagination had not risen. The Clause as originally proposed and as now drafted meets an obvious omission or error in previous legislation and, on this side of the House, we have no objection whatsoever to it.
§ Clause read a Second time and added to the Bill.