HC Deb 18 April 1978 vol 948 cc127-8W
Lord James Douglas-Hamilton

asked the Chancellor of the Exchequer (1) in view of the fact that the Chancellor of the Exchequer has admitted that doubts have been expressed about the incidence of capital transfer tax on heritage under Scots law, if he will consider taking steps to identify this point, either by legislation or by directive.

(2) in view of the fact that he is aware of the doubts expressed about the incidence of capital transfer tax on heritage under Scots law, if he will consider taking action, so that the administration of certain estates need not be held up by the executors who do not know on whom the burden of tax will fall.

Mr. Denzil Davies

, pursuant to his reply [Official Report, 10th April 1978], gave the following information:

The Inland Revenue has been advised by Scottish counsel that where there is a specific bequest of an item of heritable property and the will is silent as to the incidence of the tax, the burden of capital transfer tax attributable to the value transferred by the bequest falls to be

with two and four children under 11 years of age, assuming average male manual earnings in each case in 1960–61, 1964–65, 1973–74, 1977–78 and 1978–79.

Mr. Robert Sheldon

, pursuant to his reply [Official Report, 12th April 1978], gave the following reply:

The figures are as follows:

borne by the legatee; the amount of the tax is a debt to be paid out of the heritable property; and the executor is entitled to recover it from the person or persons in whom the property has vested. Capital transfer tax attributable to the value transferred by a specific bequest of an item of movable property is a testamentary expense, the burden of which falls to be borne by the residuary estate unless there is a direction in the will to the contrary.

As foreshadowed in my answer of 7th March to the hon. Member, the position is therefore the same as for estate duty, but to assist executors the Inland Revenue will be publishing this advice. In the circumstances, legislation does not appear to be necessary.

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