HC Deb 14 July 1976 vol 915 cc837-41
Mr. Esmond Bulmer (Kidderminster)

I beg to move Amendment No. 207, in page 32, line 15, after 'transfer', insert 'and to disposals by trustees of property comprised in settlements on which the Treasury have given directions under subsection (1) of section 78 below.'.

Mr. Deputy Speaker

With this we may take the following amendments: No. 208, in page 32, line 22, at end insert— '(3) Any disposal by the trustees of a settlement on which the Treasury have given a direction under subsection (1) of section 78 below shall be deemed to be a disposal made for such a consideration as will secure that on the disposal neither a gain or a loss accrues to them but the person acquiring an asset from them shall be treated as having acquired it at the open market value as defined under section 44 of the Finance Act 1965 at the time of acquisition.'. No. 249, in page 32, line 22, at end insert— '(A) A capital distribution of any property which is, within one month, made the subject of a transfer of value to a settlement which, by virtue of section 78 below, is an exempt transfer shall be deemed to have been a disposal made direct to the settlement for the purposes of the tax'.

Mr. Bulmer

Amendments Nos. 207 and 208 seek to exempt maintenance funds from capital gains tax both on the rearrangements of investments and on the realisation of any gain that may have arisen since the inception of the fund. We believe that without these provisions capital gains tax, especially in a period of inflation such as we suffer at present, would much reduce the value of a fund.

Amendment No. 249 deals with a different problem—namely, the assets, and very often the fund associated with the maintenance of the assets where they are heritage assets, particularly in a discretionary trust. The amendment would allow the transfer to an individual, which is a necessary step on the road to transfer to a maintenance fund.

It is almost always the case that a discretionary trust does not permit the transfer of assets to a maintenance fund direct. The proposal in the amendment is that it should be done within one month. We believe that this is an essential further measure to protect the heritage.

In Committee the arguments for the maintenance fund and the defence of the heritage were fully debated. I am a member of the Executive Council of the National Trust but I emphasise that I do not speak for the trust, only for my hon. Friends and myself.

In the past five years there has been a two-way squeeze. Inflation has meant that the value of an asset that has kept pace in money terms is theoretically forfeit to the extent of one-third. Similarly, building costs have risen by up to 100 per cent. At a time when the resources that might be put to the maintenance of buildings have come under pressure, so the demand on them has doubled. It has not been possible to provide income to match the increase in costs.

Therefore, we believe that it is essential to provide incentive for the creation of maintenance funds. Under the pressures that now exist, the majority of owners cannot see their way to divert sufficient of the family resources to the maintenance of the house, or whatever other heritage asset it may be. If the amendments were accepted by the Treasury Bench, they would powerfully reinforce the incentive to establish a maintenance fund.

The Treasury already accepts that in terms of tourism it is desirable that the family of the historic house should be kept together. The amendments would make that more likely. I hope, too, that in considering these problems the Treasury will look at the whole problem that was exemplified, perhaps, by the sale of Battle Abbey the other day, where we had to rely upon outside funds.

The funds that are available in this country seem to come in a most haphazard fashion. If we could have contingency planning to protect all our historic assets, assets that must be preserved for posterity, we could all feel more confident for the future. The National Trust and other bodies have warned what will happen if no further action is taken. The Treasury already experiences the cost of maintaining seven properties at an annual cost of £300,000 a year. If the necessary steps were taken now, we could do much to forestall the increases that will otherwise inevitably occur.

There is no doubt that taxation is the dry rot in the fabric of the heritage. Further steps must be taken to reduce its impact. If the Treasury works together with all the other bodies to maintain the heritage, we could all feel a great deal more confident for the future. I hope that the amendments will have the sympathetic attention of the Minister.

12.45 a.m.

Mr. Denzil Davies

Amendments Nos. 207 and 208 seek to extend the relief which is given in respect of the disposal of qualifying assets into a maintenance fund. There is at present under Clause 50 relief from capital gains tax when assets are put into the fund. The amendment seeks relief when assets of the fund are disposed of by the trustees, so that there is no capital gains tax at that point. The hon. Member for Kidderminster (Mr. Bulmer) is asking for a considerable extension of already substantial reliefs.

When the assets are disposed of by trustees, the trustees have money to pay tax, and I do not see why they should not pay tax. When they put assets into the fund, relief is given under Clause 50 because at that point of time there are no assets to pay the tax. Clause 50 already gives substantial relief, and I cannot recommend the House to go further.

Amendment No. 249 is slightly different. It deals with assets by way of capital distribution coming out of a fund which are settled within a month. Again, the hon. Gentleman wants no tax to be charged when the assets come out of the fund. When the assets come out of the fund, tax is charged at 121 per cent. of the total charges which would otherwise apply. The transitional provisions go up to 1980—we have gone a considerable way by giving tapering relief going up to 20 per cent. in 1980. We have been generous. I take some of the hon. Gentleman's general points about the need to preserve historic buildings, but we have been very generous. I cannot accept Amendment No. 249.

Mr. Graham Page

Amendment No. 249 seems to be merely machinery for building up the maintenance fund. It applies to a settlement, and no gain is being made out of the transaction. It is just machinery to get the money into the right fund. Even l2½ per cent. is an unnecessary imposition.

My hon. Friend the Member for Kidderminster (Mr. Bulmer) put forward strong arguments on Amendments Nos. 207 and 208, which I shall not repeat. I am sorry that his arguments cannot be accepted.

Mr. Denzil Davies

The hon. Member for Kidderminster, and the right hon. Member for Crosby (Mr. Page) have made points which require further consideration. The charge is only 12½ per cent. I accept that the amendment is machinery, and if the property is settled within one month, it goes back into an exempt fund. Without giving any undertaking or commitment, I am prepared to look at this again within the next nine months or so to see whether problems are created. It is not an immediate, pressing matter, but I shall look at it.

Mr. Graham Page

I suggest that it is an admirable subject on which to make an extra-statutory concession.

Amendment negatived.

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