MAINTENANCE FUNDS FOR HISTORIC BUILDINGS ETC. (Hansard, 12 May 1987)

§ Mr. Norman Lamont

I beg to move amendment No. 44, in page 151, line 6, at end add— '( ) If the value of the property when it becomes held on the trusts referred to in subsection (1)(b) above is lower than so much of the value transferred on the death of the person referred to in subsection (1)(a) as is attributable to the property, subsection (2) above shall apply to the property only to the extent of the lower value.'. The amendment proposes to insert a new subsection into new section 57A which provides an exemption from inheritance tax in respect of the charge arising from the death of a person who has an interest in possession in settled property if within a specified period of that death, the property is put into a heritage maintenance fund. Subsection (4) specifies a number of situations in which the new exemption is to be denied to prevent exploitation of the exemption. The new subsection covers a further situation where manipulation could otherwise occur.

I want to explain the provision that is amended. Clause 50 and schedule 15 make two changes to the rules that provide exemption from inheritance tax from endowment property put into a trust known as a maintenance fund to support qualifying heritage property, commonly historic houses.

First, there is an exemption from inheritance tax in respect of the charge arising on the death of a person who 188 has an interest in the possession in settled property if within a specified period of that death—generally two, but in some cases three years—the property is placed in a heritage maintenance fund.

Secondly, consequential changes have been made to the rules governing tax changes when property entering a maintenance fund from an interest in possession trust leaves the maintenance fund for non-heritage purposes. The revised rules will apply irrespective of whether the property entered the maintenance fund from an interest in possession trust under the new facility or under the existing exemption facility. Changes are to take effect from Budget day. The purpose is to encourage more people to put heritage property into maintenance funds. That has been difficult to encourage in the past. I am sure that everyone will agree that that is a worthwhile objective.