HC Deb 07 July 1971 vol 820 cc1443-4
Mr. Patrick Jenkin

I beg to move Amendment No. 75, in page 48, line 22, after 'occurring', insert 'or interest terminating'.

Mr. Deputy Speaker

With this Amendment it will be for the convenience of the Committee to take the following Amendments:

No. 76, in page 48, line 27, after 'individual', insert: and on the termination of certain interests'.

No. 65, in page 48, line 22, leave out 'death' and insert 'disposal'.

No. 66, in line 27, after 'individual', insert 'or on settled property'.

Mr. Jenkin

The fact that Amendments Nos. 65 and 66 have been selected for discussion with this Amendment, Mr. Deputy Speaker, enables me to start by paying a very sincere tribute to my hon. Friend the Member for St. Ives (Mr. Nott), who put down those two Amendments, which deal, though in a slightly different way, with exactly the same point that we are attempting—I hope successfully—to deal with in our Amendments Nos. 75 and 76.

We are dealing here with the abolition of the capital gains tax on deemed disposals, because as I have explained to the House, and to the Committee, we consider it inequitable that where assets are already charged to estate duty, often at very high rates, they should equally be charged concurrently to capital gains tax as well. The point was made that this should cover any question of a deemed disposal where a concurrent estate duty attaches. It should therefore cover assets which are given before death but which, because of the seven-year rule, come in to charge to estate duty and equally—and this is the point of the Amendments—it should cover the case where a life interest is terminated less than seven years before the death of the life tenant. This is an occasion when estate duty is charged on the assets of a trust to the extent of the life interest. We accept that it is wrong that the capital gains tax charge should apply concurrently.

This was really always intended to take effect, but the Bill was defective as drawn. It did not give a proper effective starting date for the termination of the life tenancy and its exemption from capital gains tax. It is necessary to ensure that the provisions of the Schedule are well founded for terminations other than on death, as in the circumstances I have described, and our Amendments are apt to cover the case. I commend them to the House.

Mr. Nott

I naturally welcome the Government Amendments. The Financial Secretary's kind tribute to me is no greater than that which I pay to him in accepting the point. It is much easier for a back bencher to put down Amendments than it is for Government to accept them. I am not sure that this should necessarily be the case, but it is so historically, and I am glad to see that in this instance there has been some shift from that position.

The point is technical, but quite worth while. If the owner of a family business dies and the wife, say, is life tenant of the business, the Finance Bill as previously drafted would have prevented her from disposing of the shares in the company to, say, her sons who might be managing it. That clearly could not have been advantageous to the proper management of that business.

I am delighted that my hon. Friend has taken the point. The Amendments are a major improvement, and I thank him for accepting the principle.

Amendment agreed to.

Amendment made: No. 76, in page 48, line 27, after 'individual', insert: 'and on the termination of certain interests'.—[Mr. Patrick Jenkin.]

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