Session 2010 - 12
Internet Publications
Other Bills before Parliament

Finance (No. 4) Bill


Finance (No. 4) Bill
Schedule 32 — Inheritance tax: gifts to charities etc

608

 

baseline amount as for the purpose of calculating the tax to be

charged on the value transferred by the chargeable transfer.

Election to merge parts of the estate

7     (1)  

An election may be made under this paragraph if, for a component

of the estate, the donated amount is at least 10% of the baseline

5

amount.

      (2)  

That component is referred to as “the qualifying component”.

      (3)  

The effect of the election is that the qualifying component and one

or more eligible parts of the estate (as specified in the election) are

to be treated for the purposes of this Schedule as if they were a

10

single component.

      (4)  

Accordingly, if the donated amount for that deemed single

component is at least 10% of the baseline amount for it, the

property in that component is to be included in the part of TP that

qualifies for the lower rate of tax.

15

      (5)  

In relation to the qualifying component—

(a)   

each one of the other two components of the estate is an

“eligible part” of the estate, and

(b)   

all the property that forms part of the estate by virtue of

section 102(3) of the Finance Act 1986 (gifts with

20

reservation) is also an “eligible part” of the estate.

      (6)  

The election must be made by all those who are appropriate

persons with respect to the qualifying component and each of the

eligible parts to be treated as a single component.

      (7)  

“Appropriate persons” means—

25

(a)   

with respect to the survivorship component, all those to

whom the property in that component passes on D’s death

(or, if they have subsequently died, their personal

representatives),

(b)   

with respect to the settled property component, the

30

trustees of all the settled property in that component,

(c)   

with respect to the general component, all the personal

representatives of D or, if there are none, all those who are

liable for the tax attributable to the property in that

component, and

35

(d)   

with respect to property within paragraph (b) of sub-

paragraph (5), all those in whom the property within that

paragraph is vested when the election is to be made.

Opting out

8     (1)  

If an election is made under this paragraph in relation to a

40

component of the estate, this Schedule is to apply as if the donated

amount for that component were less than 10% of the baseline

amount for it (whether or not it actually is).

 
 

Finance (No. 4) Bill
Schedule 32 — Inheritance tax: gifts to charities etc

609

 

      (2)  

The election must be made by all those who are appropriate

persons (as defined in paragraph 7(7)) with respect to the

component.

Elections: procedure

9     (1)  

An election under this Schedule must be made by notice in writing

5

to HMRC within two years after D’s death.

      (2)  

An election under this Schedule may be withdrawn by notice in

writing to HMRC given—

(a)   

by all those who would be entitled to make such an

election, and

10

(b)   

no later than the end of the period of two years and one

month after D’s death.

      (3)  

An officer of Revenue and Customs may agree in a particular case

to extend the time limit in sub-paragraph (1) or (2)(b) by such

period as the officer may allow.

15

General interpretation

10         

In this Schedule, in relation to D—

“the chargeable transfer” means the chargeable transfer

mentioned in paragraph 1(1);

“the estate” means D’s estate immediately before death;

20

“the relevant transfer” means the transfer of value that D is

treated (under section 4) as having made immediately

before death.”

Consequential amendments

2          

IHTA 1984 is amended as follows in consequence of paragraph 1.

25

3          

In section 7 (rates), in subsection (1), after “(4) and (5) below” insert “and to

Schedule 1A”.

4          

In section 33 (amount of charge under section 32), after subsection (2)

insert—

“(2ZA)   

In determining for the purposes of subsection (1)(b)(ii) the rate or

30

rates that would have applied in accordance with subsection (1) of

section 7, the effect of Schedule 1A (if it would have applied) is to be

disregarded.”

5          

In section 78 (conditionally exempt occasion), in subsection (3), for “33(3)”

substitute “33(2ZA)”.

35

6          

In section 128 (rate of charge: woodlands)—

(a)   

the existing provisions become subsection (1) of that section, and

(b)   

after that subsection insert—

“(2)   

In determining for the purposes of subsection (1) the rate or

rates at which tax would have been charged on the amount

40

determined under section 127, the effect of Schedule 1A (if it

would have applied) is to be disregarded.”

 
 

Finance (No. 4) Bill
Schedule 32 — Inheritance tax: gifts to charities etc

610

 

7          

After section 141 insert—

“141A   

Apportionment of relief under section 141

(1)   

This section applies if any part of the value transferred by the later

transfer qualifies for the lower rate of tax in accordance with

Schedule 1A.

5

(2)   

The amount of the reduction made under section 141(1) is to be

apportioned in accordance with this section.

(3)   

For each qualifying component, the tax chargeable on so much of the

value transferred by the later transfer as is attributable to property in

that component (“the relevant part of the tax”) is to be reduced by the

10

appropriate proportion of the amount calculated in accordance with

section 141(3).

(4)   

“The appropriate proportion” is a proportion equal to the proportion

that—

(a)   

the relevant part of the tax, bears to

15

(b)   

the tax chargeable on the value transferred by the later

transfer as a whole.

(5)   

If parts of an estate are treated under Schedule 1A as a single

component, subsection (3) applies to the single component (and not

to individual components forming part of the deemed single

20

component).

(6)   

If, after making the reductions required by subsection (3), there

remains any part of the tax chargeable on the value transferred by the

later transfer that has not been reduced, the remaining part of the tax

is to be reduced by so much of the amount calculated in accordance

25

with section 141(3) as has not been used up for the purposes of

making the reductions required by subsection (3).

(7)   

In this section—

“component” means a component of the estate, as defined in

paragraph 3 of Schedule 1A;

30

“the later transfer” has the meaning given in section 141(1);

“qualifying component” means a component (or deemed single

component) for which the donated amount is at least 10% of

the baseline amount, as determined in accordance with

Schedule 1A.”

35

8          

In Schedule 4 (maintenance funds for historic buildings etc), in paragraph

14, after sub-paragraph (2) insert—

   “(2A)  

In determining for the purposes of sub-paragraph (2) the effective

rate or rates at which tax would have been charged on the amount

in accordance with section 7(1), the effect of Schedule 1A (if it

40

would have applied) is to be disregarded.”

Instruments of variation to be notified to charities etc

9          

In section 142 of IHTA 1984 (alteration of dispositions taking effect on

 
 

Finance (No. 4) Bill
Schedule 33 — Bank levy

611

 

death), after subsection (3) insert—

“(3A)   

Subsection (1) does not apply to a variation by virtue of which any

property comprised in the estate immediately before the person’s

death becomes property in relation to which section 23(1) applies

unless it is shown that the appropriate person has been notified of

5

the existence of the instrument of variation.

(3B)   

For the purposes of subsection (3A) “the appropriate person” is—

(a)   

the charity or registered club to which the property is given,

or

(b)   

if the property is to be held on trust for charitable purposes or

10

for the purposes of registered clubs, the trustees in question.”

Commencement

10    (1)  

The Schedule inserted by paragraph 1 has effect in cases where D’s death

occurs on or after 6 April 2012 (and the amendments made by paragraphs 3

to 8 are to be read accordingly).

15

      (2)  

The amendment made by paragraph 9 has effect in cases where the person’s

death occurs on or after 6 April 2012.

Schedule 33

Section 209

 

Bank levy

Introductory

20

1          

Schedule 19 to FA 2011 (bank levy) is amended as follows.

Rates 2012

2          

In paragraph 6 (steps for determining the amount of the bank levy), in sub-

paragraph (2)—

(a)   

for “0.039%” substitute “0.044%”, and

25

(b)   

for “0.078%” substitute “0.088%”.

3          

In paragraph 7 (special provision for chargeable periods falling wholly or

partly before 1 January 2012), in sub-paragraph (2)—

(a)   

for “0.039%” substitute “0.044%”, and

(b)   

for “0.078%” substitute “0.088%”.

30

4          

The amendments made by paragraphs 2 and 3 are treated as having come

into force on 1 January 2012.

Rates from 2013

5          

In paragraph 6 (steps for determining the amount of the bank levy), in sub-

paragraph (2)—

35

(a)   

for “0.044%” substitute “0.0525%”, and

(b)   

for “0.088%” substitute “0.105%”.

6     (1)  

In paragraph 7 (special provision for chargeable periods falling wholly or

 
 

Finance (No. 4) Bill
Schedule 33 — Bank levy

612

 

partly before 1 January 2012) for sub-paragraphs (1) and (2) substitute—

    “(1)  

Paragraph 6(2) applies subject to this paragraph if some or all of

the chargeable period falls before 1 January 2013.

      (2)  

For Step 7 there is substituted—

           

Step 7

5

           

Determine the proportion (“P%”) (if any) of the chargeable period

which falls within each of the periods (“rate periods”) specified in

column 1 of the following table.

           

In relation to each rate period—

(a)        

charge P% of the amount of the long term chargeable

10

equity and liabilities at the rate specified, in relation to the

rate period concerned, in the second column of the table,

and

(b)        

charge P% of the amount of the short term chargeable

liabilities at the rate specified, in relation to the rate period

15

concerned, in the third column of the table.

           

Add together the results for each rate period in which some or all

of the chargeable period falls to give the amount of the bank levy.

 

Rate period

Rate for long

Rate for short

 
  

term chargeable

term chargeable

 

20

  

equity and

liabilities

 
  

liabilities

  
 

1 January 2011

0.025%

0.05%

 
 

to 28 February

   
 

2011

   

25

 

1 March 2011

0.05%

0.1%

 
 

to 30 April

   
 

2011

   
 

1 May 2011 to

0.0375%

0.075%

 
 

31 December

   

30

 

2011

   
 

1 January 2012

0.044%

0.088%

 
 

to 31

   
 

December

   
 

2012

   

35

 

Any time on

0.0525%

0.105%”

 
 

or after 1

   
 

January 2013

   

      (2)  

Accordingly, in the italic heading immediately before that paragraph for

“2012” substitute “2013”.

40

7          

The amendments made by paragraphs 5 and 6 come into force on 1 January

2013.

 
 

Finance (No. 4) Bill
Schedule 33 — Bank levy

613

 

Joint ventures

8     (1)  

Paragraph 43 (calculation of chargeable equity and liabilities where relevant

group has an interest in a joint venture) is amended as follows.

      (2)  

In sub-paragraph (1), for paragraphs (d) and (e) substitute “, and

(d)   

in the absence of this paragraph, none of the liabilities

5

taken into account in determining the amount of the

chargeable equity and liabilities of the relevant group

would include the JV liabilities.”

      (3)  

For sub-paragraph (2) substitute—

    “(2)  

For the purposes of determining the chargeable equity and

10

liabilities of the relevant group under paragraph 17 or 19 (as the

case may be) the joint venture is to be treated as if—

(a)   

it were a member of the group in relation to—

(i)   

the liabilities of the joint venture which consist of

the JV liabilities, and

15

(ii)   

the assets of the joint venture so far as determined

by the relevant interest, and

(b)   

it were not a member of the group in relation to the

remaining liabilities and assets of the joint venture.”

9          

In paragraph 44 (chargeable equity and liabilities of joint venture:

20

prevention of double charge), in sub-paragraph (7)(b), for the words from

“liabilities for” to “27(2)(a)” substitute “taken into account in calculating the

chargeable equity and liabilities of V (or where sub-paragraph (6) applies,

A)”.”

10         

The amendments made by paragraphs 8 and 9 have effect in relation to

25

chargeable periods ending on or after 1 January 2012.

Double taxation relief

11    (1)  

In paragraph 66 (double taxation arrangements), after sub-paragraph (9)

insert—

   “(9A)  

If arrangements specified in an order under this paragraph

30

provide for relief from the bank levy for periods before the order

is made, regulations under this paragraph which are made on the

same day as the order, and come into force on the same day as the

order, may make provision in relation to those periods.”

      (2)  

After paragraph 67 insert—

35

“Disclosure of information to foreign tax authorities etc

67A   (1)  

If the Treasury by order declares that—

(a)   

international tax enforcement arrangements which are

specified in the order have been made in relation to any

territory or territories outside the United Kingdom in

40

association with double taxation arrangements specified

under paragraph 66 in the same or a previous order, and

(b)   

it is expedient that those international tax enforcement

arrangements have effect,

 
 

Finance (No. 4) Bill
Schedule 33 — Bank levy

614

 

           

those arrangements have effect, and do so in spite of anything in

any enactment or instrument.

      (2)  

“International tax enforcement arrangements” means

arrangements which relate to one or both of the following—

(a)   

the exchange of information foreseeably relevant to the

5

administration, enforcement or recovery of the bank levy

or any equivalent foreign levy to which the double

taxation arrangements relate;

(b)   

the service of documents relating to the bank levy or any

such equivalent foreign levy.

10

      (3)  

An order under this paragraph revoking an earlier order may

contain transitional provisions that appear to the Treasury to be

necessary or expedient.

      (4)  

Subsections (4) and (5) of section 173 of FA 2006 (international tax

enforcement arrangements: disclosure of information) apply to

15

arrangements which have effect under this paragraph as they

apply to arrangements which have effect under that section.

      (5)  

Orders under this paragraph are to be made by statutory

instrument.

      (6)  

A statutory instrument containing an order under this paragraph

20

is subject to annulment in pursuance of a resolution of the House

of Commons.”

      (3)  

Accordingly, the italic heading before paragraph 68 is omitted.

Transitional provision

12    (1)  

This paragraph applies where—

25

(a)   

an amount of the bank levy is treated as if it were an amount of

corporation tax chargeable on an entity (“E”) for an accounting

period of E,

(b)   

the chargeable period in respect of which the amount of the bank

levy is charged falls (or partly falls) on or after 1 January 2012, and

30

(c)   

under the Instalment Payment Regulations, one or more instalment

payments, in respect of the total liability of E for the accounting

period, were treated as becoming due and payable before the

commencement date (“pre-commencement instalment payments”).

      (2)  

Paragraphs 2 to 10 are to be ignored for the purpose of determining the

35

amount of any pre-commencement instalment payment.

      (3)  

If there is at least one instalment payment, in respect of the total liability of

E for the accounting period, which under the Instalment Payment

Regulations is treated as becoming due and payable on or after the

commencement date (“post-commencement instalment payments”), the

40

amount of that instalment payment, or the first of them, is to be increased by

the adjustment amount.

      (4)  

If there are no post-commencement instalment payments, a further

instalment payment, in respect of the total liability of E for the accounting

period, of an amount equal to the adjustment amount is to be treated as

45

 
 

 
previous section contents continue
 

© Parliamentary copyright
Revised 28 March 2012