§ I turn now to taxation, and first to estate duty. Last year I made major changes which provided substantial relief from estate duty for bequests to widows and charities. They were widely welcomed.
§ The House will also recall that at the time of the last Budget we published a Green Paper on a possible inheritance tax, and comments were invited. I am grateful to the numerous bodies and associations, as well as individuals, who have made their views known. The change to an inheritance tax obviously have very important and far-reaching implications concerning the disposition and devolution of property, and it is therefore right that the Government should take time to consider these important questions.
§ There is, however, one reform, not too costly, which will be made this year. This concerns a rule which has been a constant source of complaint.
§ Ever since the introduction of estate duty nearly 80 years ago, it has been the general rule that assets must be valued as at the date of death. This rule has been considered on a number of occasions, but the conclusion hitherto has always been that it could not be changed. This has been so despite the fact that it can cause real hardship if executors are compelled to sell quoted shares or securities some time after the date of death when the Stock Exchange quotation has fallen. The result is that estate duty is paid on a valuation which is higher than the actual sale value of the shares. In certain circumstances this can actually mean that the duty exceeds the realised value of the shares. This is clearly inequitable.
§ New rules will therefore be introduced. These will apply to shares and securities quoted on a recognised Stock Exchange and to holdings in authorised unit trusts. Where such investments have been charged to estate duty, executors, or other persons accounting for duty, who realise them within 12 months of the 261 death, will, subject to certain safeguards, be able to claim that the total of the sale prices should be substituted for the total of the date of death values of the investments realised. The cost of the relief will depend on the movement of Stock Exchange prices, but it is likely to be about £2 million in 1973–74. The new rules will apply in relation to deaths occurring after today.