§ The Question was as follows:
§ To ask Her Majesty's Government what is the present basis for the valuation for estate duty purposes of a residential house which passes on death from one member of the resident family to another member, or other members, of such family.
THE EARL OF GOWRIEMy Lords, a house is commonly valued for estate duty on the assumption that it can be sold on the open market with vacant possession. It would make no difference whether or not the house passed from one member of a resident family to another. There are circumstances in which a different basis for arriving at the open market value would apply: for example, 2 if account had to be taken of the rights of a tenant, whether or not a member of the deceased's family.
§ LORD HALEBut, my Lords, is it not quite outrageous to value a house with vacant possession merely because a corpse has left the building, if there is no possibility of vacant possession? Is the noble Earl aware that a man who bought a house for £5,000 in 1970 and has mortgaged it for £4,000 may on that basis now have it valued for estate duty purposes at £ 12.500 at least?—which represents an increase not of 150 per cent., as is normal under a Tory Government, but of 750 per cent? That is calculated on the basis that the man's investment was £1,000 only. Is the noble Earl aware, further, that the owner derives no benefit because if he sells the house he has to spend just as much in buying a replacement as he gets in selling his old one, and that in these circumstances under the present rules at the lowest rate of estate duty a man may be called up to pay £2,000 in estate duty on a £1,000 asset?
TIME EARL or GOWRIEMy Lords, I think that from many points of view it is felt that estate duty is not the best form of taxation in the best of all possible worlds. Nevertheless, I would say to the noble Lord that since 1972 the law has given a special relief from estate duty where property passes on death to a surviving spouse. The 1972 Finance Act provides that such property up to a maximum of £15,000 is to be disregarded for estate duty purposes, so I think there has been a significant improvement.
§ LORD HALEMy Lords, is the noble Earl aware that I give him full credit for that improvement and am most happy to find something on which to congratulate him? However, is he also aware that the unfortunate persons who at the same time invested money in Government securities have seen them go down by several thousand million pounds and that they are still going down at this moment?
THE EARL OF GOWRIEMy Lords, we are debating money matters on the 16th of this month. If the noble Lord cares to take up some of these points on that occasion I shall be very happy to accommodate him.