HC Deb 09 April 1962 vol 657 cc974-5

I have four changes to propose in Estate Duty. In the first place, I propose to raise the Estate Duty exemption limit from the present figure of £3,000 to £4,000 with an appropriate adjustment in the rates of duty up to £6,000. The figure of £3,000 was fixed in 1954 and I think that the time has come to give this further relief to small estates. The raising of the starting point to £4,000 will exempt from duty about 18,000 estates each year. The new scale up to £6,000 will afford some relief to another 20,000 small estates. This change will take effect in the case of deaths occurring after today. The cost will be £1¾ million in a full year and about £1 million this year.

Secondly, I propose to introduce legislation to deal with a method of avoidance which has received a good deal of publicity in the Press recently. Our Estate Duty charge, in the case of a person domiciled in this country, does not extend to land or other immovable property abroad, although it does extend to movable property abroad. It is, therefore, possible for a person domiciled here to avoid duty by buying land overseas or by investing in mortgages in countries where mortgages are regarded as immovable property.

This gap in the Estate Duty charge is now being exploited on quite a large scale. I propose, therefore, to bring immovable property abroad within the scope of our Estate Duty. This change will take effect as regards deaths occurring after the Finance Bill becomes law. The yield is estimated at £1 million this year and £2 million in a full year.

I want, however, to avoid any possible hardship arising from a double charge of death duties on the same property. Accordingly, I propose that death duties payable in the country where the property is situated shall be credited against the Estate Duty payable in this country. The law already provides for this to be done in many cases under arrangements applying both to Commonwealth countries and to foreign countries with which we have double taxation agreements. There are, however, other cases and I propose that this relief shall now be given in all cases where we charge duty on property abroad which is also charged with duty in the country where it is situated. This new and important relief will apply to property of all kinds, both immovable and movable property. The cost will be ££½ million this year and £1 million in a full year.

The Bill will also include a provision enabling us to enter into comprehensive agreements for the avoidance of double death duties with countries with which, for rather technical reasons, we cannot make such agreements at present. One of the countries is France, with whom we have recently agreed the terms of a draft convention, and this legislation will enable us to ratify that convention.