HC Deb 19 March 1968 vol 761 c288

First, I propose to alter the law relating to the period before a death during which gifts are liable to Estate Duty. The full period is, and has for many years been, five years. In 1960, when the Government of the day introduced proposals for tapering the liability in the third, fourth and fifth years, the Opposition welcomed the principle of tapering, but argued strongly for tapering outward from the five-year limit, not inwards. The force of the views then expressed seems to me to have lost nothing with the passage of time. I therefore propose to retain the principle of tapering, but to extend the full period by two years, from five to seven years. Gifts made within four years of a death will be liable to duty in full; the liability will be progressively tapered, on the present scale, in respect of gifts made during the fifth, sixth and seventh years before a death.

Second, I propose to put an end to the device, which has been widely exploited, of making gifts of insurance policies in such a form that they rank as a separate estate for Estate Duty purposes. I propose that, in future, these policies, and other property charged as gifts, shall be aggregated with the rest of the deceased's estate for the purposes of determining the rate of duty.

Third, I propose to close a loophole concerned with discretionary trusts which has been opened by a recent decision of the Courts.

These changes will take effect in the case of deaths occurring after today, but the new seven-year rule for gifts will not apply to gifts made more than five years before today. It is estimated that together they will bring in £5½ million in 1968–69 and £11 million for a full year.