HC Deb 13 July 1982 vol 27 cc1001-3

5.—(1) This paragraph applies where tax is chargeable under paragraph 2 above and—

  1. (a) the property in respect of which the tax is chargeable was relevant property before it became (or last became) property to which that paragraph applies, and
  2. (b) by virtue of paragraph 1(1) or (5) above tax was not chargeable (or, but for paragraph 1(2) or (8), would not have been chargeable) under section 102 of this Act in respect of it ceasing to be relevant property on or before becoming (or last becoming, property to which paragraph 2 above applies.

(2) Where this paragraph applies, the rate at which the tax is charged shall be the aggregate of the following percentages—

  1. (a) 0.25 per cent. for each of the first forty complete successive quarters in the relevant period,
  2. (b) 0.20 per cent. for each of the next forty,
  3. (c) 0.15 per cent. for each of the next forty,
  4. (d) 0.10 per cent. for each of the next forty, and
  5. (e) 0.05 per cent. for each of the next forty.

(3) In sub-paragraph (2) above "the relevant period" means the period beginning with the latest of—

  1. (a) the date of the last ten-year aniversary of the settlement in which the property was comprised before it ceased (or last ceased) to be relevant property,
  2. (b) the day on which the property became (or last became) relevant property before it ceased (or last ceased) to be such property, and
  3. (c) 13th March 1975,
and ending with the day before the event giving rise to the charge.

(4) Where the property in respect of which the tax is chargeable has at any time ceased to be and again become property to which paragraph 2 above applies in circumstances such that by virtue of paragraph 3(1) above there was no charge to tax in respect of it (or, but for paragraph 3(4) there would have been no charge), it shall for the purposes of this paragraph be treated as having been property to which paragraph 2 above applies throughout the period mentioned in paragraph 3(1).

6.—(1) This paragraph applies where tax is chargeable under paragraph 2 above and paragraph 5 above does not apply.

(2) Where this paragraph applies, the rate at which the tax is charged shall be the higher of—

  1. (a) the first rate (as determined in accordance with paragraph 7 below), and
  2. (b) the second rate (as determined in accordance with paragraph 8 below).

7.—(1) The first rate is the aggregate of the following percentages—

  1. (a) 0.25 per cent. for each of the first forty complete successive quarters in the relevant period,
  2. (b) 0.20 per cent. for each of the next forty,
  3. (c) 0.15 per cent. for each of the next forty,
  4. (d) 0. .10 per cent. for each of the next forty, and
  5. (e) 0.05 per cent. for each of the next forty.

(2) In sub-paragraph (1) above "the relevant period" means the period beginning with the day on which the property in respect of which the tax is chargeable became (or first become) property to which paragraph 2 above applies, and ending with the day before the event giving rise to the charge.

(3) For the purposes of sub-paragraph (2) above, any occasion on which property became property to which paragraph 2 above applies, and which occurred before an occasion of charge to tax under that paragraph in respect of the property, shall be disregarded.

(4) The reference in sub-paragraph (3) above to an occasion of charge to tax under paragraph 2 does not include a reference to—

  1. (a) the occasion by reference to which the rate is being determined in accordance with this Schedule, or
  2. (b) an occasion which would not be an occasion of charge but for paragraph 3(4) above.

8.—(1) If the senior is alive, the second rate is the effective rate at which tax would be charged, on the amount on which it is chargeable, under the appropriate Table if the amount were the value transferred by a chargeable transfer made by him on the occasion on which the tax becomes chargeable.

(2) If the senior is dead, the second rate is (subject to subparagraph (3) below) the effective rate at which tax would have been charged, on the amount on which it is chargeable, under the appropriate Table if the amount had been added to the value transferred on his death and had formed the highest part of it.

(3) If the settlor died before 13th March 1975, the second rate is the effective rate at which tax would have been charged, on the amount on which it is chargeable ("the chargeable amount"), under the appropriate Table if the settlor had died when the event occasioning the charge under paragraph 2 above occurred, the value transferred on his death had been equal to the amount on which estate duty was chargeable when he in fact died, and the chargeable amount had been, added to that value and had formed the highest part of it.

(4) Where, in the case of a settlement ("the current settlement"), tax is chargeable under paragraph 2 above in respect of property which—

  1. (a) was previously comprised in another settlement, and
  2. (b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of paragraph 3(1) above there was no charge (or, but for paragraph 3(4), there would have been no charge) to tax in respect of it,
then, subject to sub-paragraph (5) below, references in subparagraphs (1) to (3) above to the senior shall be construed as references to the person who was the settlor in relation to the settlement mentioned in paragraph (a) above (or, if the Board so determine, the person who was the settlor in relation to the current settlement).

(5) Where, in the case of a settlement ("the current settlement"), tax is chargeable under paragraph 2 above in respect of property which—

  1. (a) was previously comprised at different times in other settlements ("the previous settlements"), and
  2. (b) ceased to be comprised in each of them, and became comprised in another of them or in the current settlement, in circumstances such that by virtue of paragraph 3(1) above there was no charge (or, but for paragraph 3(4), there would have been no charge) to tax in respect of it,
references in sub-paragraphs (1) to (3) above to the settlor shall be construed as references to the person who was the senior in relation to the previous settlement in which the property was first comprised (or, if the Board so determine, any person selected by them who was the settlor in relation to any of the other previous settlements or the current settlement).

(6) Sub-paragraph (7) below shall apply if—

  1. (a) in the period of ten years preceding a charge under paragraph 2 above (the "current charge"), there has been another charge under that paragraph where tax was charged at the second rate, and
  2. (b) the person who is the settlor for the purposes of the current charge is the settlor for the purposes of the other charge (whether or not the settlements are the same and, if the settlor is dead, whether or not he has died since the other charge);
and in sub-paragraph (7) below the other charge is refened to as the "previous charge".

(7) Where this sub-paragraph applies, the amount on which tax was charged on the previous charge (or, if there have been more than one, the aggregate of the amounts on which tax was charged on each)—

  1. (a) shall, for the purposes of calculating the rate of the current charge under sub-paragraph (1) above, be taken to be the value transferred by a chargeable transfer made by the settlor immediately before the occasion of the current charge, and
  2. (b) shall, for the purposes of calculating the rate of the current charge under sub-paragraph (2) or (3) above, be taken to increase the value there mentioned by an amount equal to that amount (or aggregate).

(8) References in sub-paragraphs (1) to (3) above to the effective rate are to the rate found by expressing the tax chargeable as a percentage of the amount on which it is charged.

(9) For the purposes of sub-paragraph (1) above the appropriate Table is t he second Table in section 37 of the Finance Act 1975, and for the purposes of sub-paragraphs (2) and (3) above it is (if the settlement was made on death) the first Table in that section and (if not) the second.

9. Where property is, by virtue of section 88(5) of this Act, treated as property in respect of which a direction has been given under section 87 of this Act, it shall for the purposes of paragraphs 5 to 8 above be treated as having become property to which paragraph 2 above applies when the transfer of value mentioned in section 88(5) was made.—[Mr. Brittan.]

Brought up, read the First and Second time, and added to the Bill.

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