Clause 52.—(GIFTS IN CONSIDERATION OF MARRIAGE.) (Hansard, 26 June 1963)

§ Mr. Barber
I beg to move, in page 52, line 19, after "issue", insert or the wife or husband of any issue". Subsection (l,b) of Clause 52 lists the persons who may be included in a marriage settlement without loss of the Estate Duty exemption. This list includes in paragraph (b,i) the parties to the marriage, their issue and the spouses of the issue. Paragraph (b,iii), which provides for a second marriage of one of the parties to the marriage, includes spouses and issue of any such second marriage. As it stands, the paragraph does not include any spouses of the issue of the second marriage, because it was not thought that such persons would be included in marriage settlements. It has been suggested, however, that it is reasonable for a marriage settlement to allow provision to be made for the family of the second marriage in precisely the same way as for the family of the first marriage. This Amendment accordingly adds the spouses of the issue of this second marriage to the list of possible beneficiaries.

§ Mr. Barber
I beg to move, in page 52, line 21, to leave out "the trusts" and to insert: such trusts, subsisting under the law of England or of Northern Ireland, as are". The Trustee Act, 1925, which is referred to in the sub-paragraph which is sought to be amended by this Amendment, does not apply to Northern Ireland and the Northern Irish authorities have questioned whether British assets in Northern Irish marriage settlements containing protective trusts would be exempt under the Clause. This Amendment puts their position beyond doubt.
Its effect is that the inclusion of a protective trust in a marriage settlement will not disqualify it from exemption provided the protective trust is within the specified conditions and is governed by the law of some part of the United Kingdom.

§ Mr. Barber
I beg to move, in page 52, line 36, to leave out subsection (2) and to insert: (2) A disposition made by either of the parties to a marriage shall not be prevented from being treated as a gift for the purposes of section 2(1,c) of the Finance Act 1894 (description of property deemed to pass on death) by reason only that it is in any way made in consideration of marriage, and references to a gift in the other enactments relating to estate duty (including the foregoing subsection) shall be construed accordingly. This Amendment is a redraft of subsection (2) of Clause 52 which in its original form caused some perplexity to hon. Members when we discussed it in Committee. My hon. Friend the Member for Crosby (Mr. Graham Page) in particular raised the matter. I am grateful to him and other hon. Members who suggested that we might improve it, and I hope that the redraft is easier to follow.

§ Mr. Barber
I beg to move, in page 52, line 40, after "marriage", to insert: or adopted by the husband and wife jointly". This Amendment adds children adopted by the husband and wife jointly to the list of those who may be included as beneficiaries of a marriage settlement without loss of the Estate Duty exemption. My right hon. Friend the Chancellor of the Exchequer put down this Amendment as a direct result of the initiative taken by my hon. Friends the Members for Manchester, Blackley (Mr. E. Johnson) and Portsmouth, Langstone (Mr. Stevens).

§ Mr. Graham Page
I see in my hon. Friend's Amendment that he restricts this provision to children adopted by the husband and wife jointly. There are cases in which children are adopted by one or other of the spouses, and I wonder why it has been restricted to the joint spouses.

§ Mr. Barber
The House will remember that when we originally discussed this Clause I explained that what we were trying to do was to place the law in the same position as we had thought it was before the Courtauld decision in the House of Lords. What we are doing now, as a result of decisions made in Committee, is to make a slight extension in favour of adopted children. But the present legal provisions as we thought 1556 they were before the Courtauld decision provide in the case of marriage settlements for legitimate children of the two spouses with extensions at some time to the natural children, the illegitimate children, of the two spouses, and therefore we thought it was right to make the same extension in this Clause when dealing with adopted children.
I made inquiries and I understand that it is quite common form and normal for children to be adopted by the two parties jointly. Certainly in any normal case I should have thought that this was the reasonable way to deal with the matter. We were simply trying to extend the provisions to adopted children on the same lines as they exist for legitimate children and natural children.

§ Mr. Eric Johnson (Manchester, Blackley)
It is not often the good fortune of anyone sitting on the back benches to find that a suggestion he advances at one stage is later taken up by the Government. This occasion is all the more remarkable, perhaps, because the suggestion came from someone like myself whose knowledge of taxation matters is, to put it politely, not exactly profound. I am very grateful to my right hon. Friend for putting down the Amendment. It goes a very long way to meet the point I had in mind.
The Amendment which I put down at an earlier stage was not selected, but, Mr. Deputy-Speaker, you allowed me to refer to it, and my hon. Friend the Financial Secretary said that he would look into the matter to see whether he could meet my point. This he has done, and I am very glad that I stayed until this early hour in the morning to say "Thank you" to him for it.
I notice that my right hon. and learned Friend the Member for Huntingdonshire (Mr. Renton) had a somewhat similar Amendment down which was not selected. He asked me to say that he had hoped to be here but he had an engagement which prevented him from staying on. [Interruption.] In defence of my right hon. and learned Friend, I should say that he told me that at about 4 o'clock this afternoon. I wonder whether what he had in mind is covered by my right hon. Friend's Amendment.

§ Mr. Barber
With the leave of the House, may I explain that matter? I 1557 think that there were two points in the Amendment put down by my right hon. and learned Friend the Member for Huntingdonshire (Mr. Renton). One related to the question whether the adoption should be limited to an adoption by both parties to the marriage or by one spouse only. I think that I have already covered that point.
The other I can best answer, I think, by saying that the Amendment which I have moved will cover not only children adopted by the immediate marriage but also children adopted at a later stage, for example, by the issue of the marriage or by a subsequent marriage. As I understand my right hon. and learned Friend's Amendment, which, of course, he has not had the opportunity to explain as he is so busy elsewhere, this would cover the point he might have put had he been here.