§ 8.45 p.m.
§ Mr. Patrick JenkinI beg to move Amendment No. 77, in page 110, line 47, leave out 'sub-paragraph (iii) or (iv) of'.
I think it would be convenient to discuss at the same time Government Amendment No. 78.
These Amendments provide that where a life tenant of a trust has released his 1445 interest and dies within seven years, so that estate duty is chargeable by reference to the value of the trust property at the date of his death, any unrealised capital appreciation on the trust assets at the date of his death is excluded from the charge to capital gains tax on a subsequent disposal by the trustees. This is closely related to the Amendments we have discussed.
§ Amendment agreed to.
§
Amendment made: No. 78, in page 111, line 1, after 'property' insert:
'in a case where neither subsection (3) nor subsection (4) above applies'.—[Mr. Patrick Jenkin.]
§ Mr. Patrick JenkinI beg to move Amendment No. 79, in page 111, line 14, at end insert:
§ Gifts
13A.—(1) After section 25 of the Finance Act 1965 there shall be inserted the following section:—
'25A.—(1) Where, on the death of a person, estate duty falls to be charged, by virtue of section 2(1)(c) of the Finance Act 1894, on an asset comprised in a gift inter vivos, and at the time of the death the asset—then, subject to subsection (2) below, the asset shall for the purposes of this Part of this Act be deemed to be disposed of and immediately re-acquired at that time by the donee or trustee for a consideration equal to its market value; but no chargeable gain shall accrue on the disposal.
- (a) is owned by the donee; or
- (b) is property settled by the gift or property which for the purposes of section 38 of the Finance Act 1957 or section I of the Finance Act (Northern Ireland) 1957 is by virtue of subsection (9) thereof treated as property settled by the gift,
§ (2) Where the value on which estate duty is so chargeable is reduced under section 35 of the Finance Act 1968 or section I of the Finance Act (Northern Ireland) 1968 the appropriate portion only of the asset shall be deemed to be so disposed of and reacquired and the consideration shall be deemed to be equal to the appropriate portion of the market value of the asset.
§ For the purposes of this subsection the appropriate portion is the value on which estate duty is chargeable divided by the market value of the asset at the time of the death'.
§ (2) Section 42(3) of the Finance Act 1966 shall cease to have effect.
§ I think that it would be convenient to discuss at the same time Government Amendment No. 80.
§ These Amendments provide that where a gift is chargeable to estate duty because the donor has died within seven years of 1446 making it, any gain which has accrued up to the date of death is excluded from capital gains tax. This removes what would otherwise have been an anomaly between the treatment of gifts and that of assets owned by the deceased at his death.
§ Amendment agreed to.
§ Mr. Patrick JenkinI beg to move Amendment No. 82, in page 111, line 25, at end insert:
(2) Where the principal value has been reduced under section 35 of the Finance Act 1968 or section 1 of the Finance Act (Northern Ireland) 1968 the reference in subsection (1) above to the principal value as ascertained for the purposes of estate duty is a reference to that value as so ascertained before the reduction.This Amendment is consequential on the Amendments we have just dealt with and deals with gifts inter vivos. It ensures that the value of an asset for estate duty, which is to be binding as the market value of the asset for capital gains tax, is the value before the estate duty paper provisions are applied.
§ Amendment agreed to.
§ Amendment made: No. 80, in page 111, line 40, after '12', insert '13A'—[Mr. Patrick Jenkin.]