Capital Transfer Tax

HC Deb 21 February 1975 vol 886 cc565-78W

Mr. Churchill

asked the Chancellor of the Exchequer what representations he has received from the National Society for the Prevention of Cruelty to Children in regard to the provisions of the capital transfer tax; and if he will make a statement.

Mr. Joel Barnett

I have been made aware of the views of the National Society

NO PREVIOUS GIFTS
Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	Tax payable	Tax payable as proportion of asset transferred
£	£	£	Per cent
20,000	20,270	270	1.35
30,000	31,286	1,286	4.29
40,000	42,794	2,794	6.99
50,000	54,697	4,697	9.39
60,000	67,031	7,031	11.72
70,000	79,531	9,531	13.62
80,000	92,419	12,419	15.52
90,000	105,690	15,690	17.43
100,000	119,483	19,483	19.48
125,000	158,913	33,913	27.13
150,000	202,750	52,750	35.17
175,000	253,056	78,056	44.60
200,000	309,688	109,688	54.84
225,000	372,188	147,188	65.42
250,000	434,688	184,688	73.88
275,000	497,188	222,188	80.80
300,000	568,214	268,214	89.40
350,000	711,071	361,071	103.16
400,000	853,928	453,928	113.48
450,000	996,785	546,785	121.51
500,000	1,162,916	662,916	132.58
550,000	1,329,582	779,582	141.74
600,000	1,496,249	896,249	149.37
650,000	1,662,915	1,012,915	155.83
700,000	1,829,582	1,129,582	161.37
750,000	1,996,248	1,246,248	166.17
800,000	2,195,500	1,395,500	174.44

for the Prevention of Cruelty to Children about the effect of the capital transfer tax. Those views were expressed before the statement I made in the Standing Committee on the Finance Bill—[5th February 1975; c. 914–15]—on the treatment of gifts to charities.

Mr. Lawson

asked the Chancellor of the Exchequer whether he will publish in the Official Report the text of the Financial Secretary's letters to the hon. Member for Blaby which the Financial Secretary promised on 14th February to send to the hon. Member.

Dr. Gilbert

Yes. The text is as followsI promised on 14th February to send you some further information for which you had asked in connection with the rates of capital transfer tax. I now attach this.

Mr. Lawson

asked the Chancellor of the Exchequer whether he will provide revised versions of the tables given in the Financial Secretary's Written Answer of 27th January to the hon. Member for St. Marylebone (Mr. Baker) in the light of Her Majesty's Government's new proposals for a reduced scale of rates of capital transfer tax on lifetime gifts.

Dr. Gilbert,

pursuant to his reply [Official Report, 10th February 1975; Vol. 886, c. 8], gave thte following information:

The revised tables are given below.

NO PREVIOUS GIFTS-continued
Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	Tax payable	Tax payable as proportion of asset transferred
850,000	2,395,500	1,545,500	181.82
900,000	2,595,500	1,695,500	188.39
950,000	2,795,500	1,845,500	194.26
1,000,000	2,995,500	1,995,500	199.55
PREVIOUS GROSS GIFTS TOTALLING £15,000
20,000	22,000	2,000	10.00
30,000	33,676	3,676	12.25
40,000	45,781	5,781	14.45
50,000	58,281	8,281	16.56
60,000	70,968	10,968	18.28
70,000	83,871	13,871	19.82
80,000	97,586	17,586	21.98
90,000	112,115	22,115	24.57
100,000	127,500	27,500	27.50
125,000	170,000	45,000	36.00
150,000	217,750	67,750	45.17
175,000	271,389	96,389	55.08
200,000	332,188	132,188	66.09
225,000	394,688	169,688	75.42
250,000	457,188	207,188	82.88
275,000	524,643	249,643	90.78
300,000	596,071	296,071	98.69
350,000	738,928	388,928	111.12
400,000	881,785	481,785	120.45
450,000	1,031,250	581,250	129.17
500,000	1,197,916	697,916	139.58
550,000	1,364,582	814,582	148.11
600,000	1,531,249	931,249	155.21
650,000	1,697,915	1,047,915	161.22
700,000	1,864,582	1,164,582	166.37
750,000	2,040,500	1,290,500	172.07
800,000	2,240,500	1,440,500	180.06
850,000	2,440,500	1,590,500	187.12
900,000	2,640,500	1,740,500	193.39
950,000	2,840,500	1,890,500	199.00
1,000,000	3,040,500	2,040,500	204.05
PREVIOUS GROSS GIFTS TOTALLING £50,000
£	£	£	Per cent
20,000	24,688	4,688	23.44
30,000	37,419	7,419	24.73
40,000	50,345	10,345	25.86
50,000	64,138	14,138	28.28
60,000	78,846	18,846	31.41
70,000	94,231	24,231	34.62
80,000	110,870	30,870	38.59
90,000	128,261	38,261	42.51
100,000	145,652	45,652	45.65
125,000	195,000	70,000	56.00
150,000	250,000	100,000	66.67
175,000	312,500	137,500	78.57
200,000	375,000	175,000	87.50
225,000	437,500	212,500	94.44
250,000	507,143	257,143	102.86
275,000	578,571	303,571	110.39
300,000	650,000	350,000	116.67
350,000	792,857	442,857	126.53
400,000	935,714	535,714	133.93
450,000	1,099,999	649,999	144.44
500,000	1,266,666	766,666	153.33
550,000	1,433,332	883,332	160.61
600,000	1,599,999	999,999	166.67
650,000	1,766,665	1,116,665	171.79
700,000	1,933,332	1,233,332	176.19
750,000	2,130,000	1,380,000	184.00
800,000	2,330,000	1,530,000	191.25
850,000	2,530,000	1,680,000	197.65
900,000	2,730,000	1,830,000	203.33
950,000	2,930,000	1,980,000	208.42
1,000,000	3,130,000	2,130,000	213.00

PREVIOUS GROSS GIFTS TOTALLING £100,000
value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	Tax payable	Tax payable as proportion of asset transferred
£	£	£	Per cent
20,000	28,462	8,462	42.31
30,000	43,846	13,846	46.15
40,000	60,435	20,435	51.09
50,000	77,826	27,826	55.65
60,000	95,217	35,217	58.69
70,000	114,500	44,500	63.57
80,000	134,500	54,500	68.13
90,000	155,000	65,000	72.22
100,000	177,222	77,222	77.22
125,000	236,875	111,875	89.50
150,000	299,375	149,375	99.58
175,000	361,875	186,875	106.79
200,000	427,857	227,857	113.93
225,000	499,286	274,286	121.90
250,000	570,714	320,714	128.29
275,000	642,143	367,143	133.51
300,000	713,571	413,571	137.86
350,000	856,428	506,428	144.69
400,000	1,015,833	615,833	153.96
450,000	1,182,499	732,499	162.78
500,000	1,349,166	849,166	169.83
550,000	1,515,832	965,832	175.61
600,000	1,682,499	1,082,499	180.42
650,000	1,849,165	1,199,165	184.49
700,000	2,039,000	1,339,000	191.29
750,000	2,239,000	1,489,000	198.53
800,000	2,439,000	1,639,000	204.88
850,000	2,639,000	1,789,000	210.47
900,000	2,839,000	1,939,000	215.44
950,000	3,039,000	2,089,000	219.89
1,000,000	3,239,000	2,239,000	223.90

PREVIOUS GROSS GIFTS TOTALLING £200,000
Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	Tax payable	Tax payable as proportion of asset transferred
£	£	£	Per cent
20,000	40,000	20,000	100.00
30,000	61,111	31,111	103.70
40,000	83,333	43,333	108.33
50,000	106,250	56,250	112.50
60,000	131,250	71,250	118.75
70,000	156,250	86,250	123.21
80,000	181,250	101,250	126.56
90,000	206,250	116,250	129.17
100,000	231,250	131,250	131.25
125,000	293,750	168,750	135.00
150,000	364,286	214,286	142.86
175,000	435,714	260,714	148.98
200,000	507,143	307,143	153.57
225,000	578,571	353,571	157.14
250,000	650,000	400,000	160.00
275,000	721,428	446,428	162.34
300,000	792,857	492,857	164.29
350,000	958,333	608,333	173.81
400,000	1,124,999	724,999	181.25
450,000	1,291,666	841,666	187.04
500,000	1,458,332	958,332	191.67
550,000	1,624,998	1,074,998	195.45
600,000	1,791,665	1,191,665	198.61
650,000	1,990,000	1,340,000	206.15
700,000	2,190,000	1,490,000	212.86
750,000	2,390,000	1,640,000	218.67
800,000	2,590,000	1,790,000	223.75
850,000	2,790,000	1,940,000	228.24

Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	Tax payable	Tax payable as proportion of asset transferred
£	£	£	Per cent.
900,000	2,990,000	2,090,000	232.22
950,000	3,190,000	2,240,000	235.79
1,000,000	3,390,000	2,390,000	239.00
1. The calculations, as before, are based on the assumption that the donor pays the tax and transfers the net amounts as in the left-hand columns.
2. It is assumed that all transfers are chargeable transfers (i.e. there are no exemption for the first £1,000 etc.).

Mr. Lawson

asked the Chancellor of the Exchequer what would be the appropriate figures in columns 2, 3 and 4 of the table in the Written Answer of 6th February to the hon. Member for Blaby, assuming that it was the combined value of the asset and the tax paid by the donor which had appreciated in money value, and assuming the same set of capital transfer tax rates as before; and what would be the comparable figures (a) in the answer given on 6th February and (b) in the answer to the above Question, assuming that, in each instance, the recently announced reduced rates for lifetime gifts were to apply.

Dr. Gilbert,

pursuant to his reply [Official Report, 14th February 1975; Vol. 886, c. 235], gave the following information:

TABLE 1
At CTT rates originally applicable to all transfers.
Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	CCT and CGT payable	Tax payable as proportion of asset transferred
£	£	£	Per cent
20,000	26,194	6,194	30.97
30,000	41,986	11,986	39.95
40,000	59,526	19,526	48.81
50,000	78,988	28,988	57.98
60,000	100,194	40,194	66.99
70,000	123,182	53,182	75.97
80,000	148,224	68,224	85.28
90,000	176,002	86,002	95.56
100,000	205,955	105,955	105.95
125,000	285,474	160,474	128.38
150,000	364,993	214,993	143.33
175,000	444,513	269,513	154.01
200,000	524,032	324,032	162.02
225,000	603,552	378,552	168.25
250,000	689,773	439,773	175.91
275,000	780,652	505,652	183.87
300,000	871,532	571,532	190.51
350,000	1,053,290	703,290	200.94
400,000	1,235,049	835,049	208.76
450,000	1,440,889	990,889	220.20
500,000	1,652,941	1,152,941	230.59
550,000	1,864,992	1,314,992	239.09
600,000	2,077,044	1,477,044	246.17
650,000	2,289,095	1,639,095	252.17
700,000	2,501,147	1,801,147	257.31
750,000	2,746,917	1,996,917	266.26
800,000	3,001,379	2,201,379	275.17
850,000	3,255,841	2,404,841	283.04

The figures required are shown in the following tables.

Table 1 below is based on the assumption that capital gains tax at the full rate of 30 per cent. is chargeable on the gross value of the asset transferred; the rates of tax used are those originally applicable to all transfers but now applicable only to transfers on death.

Table 2 gives the corresponding figures to those given in my reply to the hon. Member of 6th February but using the recently announced lower rates for lifetime transfers.

Table 3 is on the corresponding basis to Table 1 but again using the newly announced lower rates.

Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	CCT and CGT payable	Tax payable as proportion of asset transferred
£	£	£	Per cent.
900,000	3,510,303	2,610,303	290.03
950,000	3,764,765	2,814,765	296.29
1,000,000	4,019,227	3,019,227	301.92

TABLE 2
At new CTT rates applicable to lifetime transfer.
Value of asset transferred (after all tax)	Combined value of asset and taxes paid by donor	CTT and CGT payable	Tax payable as proportion of asset transferred
£	£	£	%
20,000	25,716	5,716	28.58
30,000	39,455	9,455	31.52
40,000	53,686	13,686	34.21
50,000	68,312	18,312	36.62
60,000	83,369	23,369	38.95
70,000	98,592	28,592	40.85
80,000	114,203	34,203	42.75
90,000	130,197	40,197	44.66
100,000	146,713	46,713	46.71
125,000	192,951	67,951	54.36
150,000	243,596	93,596	62.40
175,000	300,710	125,710	71.83
200,000	364,149	164,149	82.07
225,000	433,457	208,457	92.65
250,000	502,765	252,765	101.11
275,000	572,073	297,073	108.03
300,000	649,906	349,906	116.64
350,000	806,379	456,379	130.39
400,000	962,851	562,851	140.71
450,000	1,119,324	669,324	148.74
500,000	1,299,070	799,070	159.81
550,000	1,479,352	929,352	168.97
600,000	1,659,634	1,059,634	176.61
650,000	1,839,916	1,189,916	183.06
700,000	2,020,198	1,320,198	188.60
750,000	2,200,480	1,450,480	193.40
800,000	2,413,347	1,613,347	201.67
850,000	2,626,963	1,776,963	209.05
900,000	2,840,578	1,940,578	215.62
950,000	3,054,194	2,104,194	221.49
1,000,000	3,267,809	2,267,809	226.78

TABLE 3
At new CTT rates applicable to lifetime transfers.
Value of asset transferred (after all tax)	Combined value of asset and taxes paid by donor	CTT and CGT payable	Tax payable as proportion of asset transferred
£	£	£	Per cent
20,000	25,789	5,789	28.94
30,000	39,805	9,805	32.68
40,000	54,447	14,447	36.12
50,000	69,591	19,591	39.18
60,000	85,284	25,284	42.14
70,000	101,188	31,188	44.55
80,000	117,585	37,585	46.98
90,000	134,470	44,470	49.41
100,000	152,019	52,019	52.02
125,000	202,186	77,186	61.75
150,000	257,960	107,960	71.97
175,000	321,965	146,965	83.98
200,000	394,019	194,019	97.01
225,000	473,538	248,538	110.46
250,000	553,057	303,057	121.22
275,000	632,577	357,577	130.03
300,000	722,944	422,944	140.98
350,000	904,702	554,702	158.49
400,000	1,086,461	686,461	171.62

Value of asset transferred (after all tax)	Combined value of asset and tax paid by donor	CCT and CGT payable	Tax payable as proportion of asset transferred
£	£	£	Per cent.
450,000	1,268,219	818,219	181.83
500,000	1,479,589	979,589	195.92
550,000	1,691,640	1,141,640	207.57
600,000	1,903,692	1,303,692	217.28
650,000	2,115,743	1,465,743	225.50
700,000	2,327,795	1,627,795	232.54
750,000	2,539,846	1,789,846	238.65
800,000	2,793,356	1,993,356	249.17
850,000	3,047,818	2,197,818	258.57
900,000	3,302,280	2,402,280	266.92
950,000	3,556,742	2,606,742	274.39
1,000,000	3,811,204	2,811,204	281.12

Mr. Trotter

asked the Chancellor of the Exchequer what is the minimum level of gift below which he intends that details need not be supplied on returns to the Inland Revenue.

Mr. Joel Barnett,

pursuant to his reply [Official Report, 20th February 1975; Vol. 886, c. 472], gave the following information:

The basis for returns of capital transfers will be decided after the Report stage of the Finance Bill is complete.

Mr. Trotter

asked the Chancellor of the Exchequer why lawyers but not professional accountants are to be exempted from disclosing to the Revenue advice given to their clients regarding capital transfer tax.

Mr. Joel Barnett,

pursuant to his reply [Official Report, 20th February 1975; Vol. 886, c. 472], gave the following information:

Certain communications between a client and his legal advisers are protected by the general law from disclosure in legal proceedings. This privilege does not extend to communications between accountants and their clients. The capital transfer tax provisions dealing with the power to obtain information have been drafted in the light of this privilege.

Mr. Trotter

asked the Chancellor of the Exchequer what is the proposed period between the making of a gift and (a) the due date for payment of capital transfer tax and (b) the making of a return to the Revenue in respect of the gift.

Mr. Joel Barnett,

pursuant to his reply [Official Report, 20th February 1975; Vol. 886, c. 472], gave the following information:

The Finance Bill provides that the due date for payment of capital transfer tax on lifetime transfers will be six months after the end of the month in which the transfer was made. Chargeable lifetime transfers are to be reported to the Inland Revenue no later than 12 months from the end of the month in which the transfer was made. These matters are under consideration following the Committee stage of the Finance Bill.

Mr. Trotter

asked the Chancellor of the Exchequer why he has felt it necessary to set lower limits for gifts in consideration of marriage in respect of capital transfer tax than those in force under the estate duty legislation.

Mr. Joel Barnett,

pursuant to his reply [Official Report, 20th February 1975; Vol. 886, c. 473], gave the following information:

I am considering the points raised in the debate about these limits in the Committee stage of the Finance Bill.