|
| |
|
any other currency; and, in relation to a non-exempt sale, “the appropriate |
| |
proportion” is— |
| |
| |
| MV is the value of the interest in the chattel at the time of the sale; |
| |
| 5 |
(4) | Regulations may, in relation to any valuation date, provide for a valuation |
| |
of the chattel or any interest in the chattel by reference to an earlier valuation |
| |
date to apply subject to any prescribed adjustments. |
| |
| |
| “the taxable period” means the year of assessment, or part of a year of |
| 10 |
assessment, during which paragraph 6 applies to the chargeable |
| |
| |
| “the valuation date”, in relation to a taxable period, means such date |
| |
| |
Intangible property comprised in settlement where settlor retains an interest |
| 15 |
8 (1) | This paragraph applies where— |
| |
(a) | the terms of a settlement, as they affect any property comprised in |
| |
the settlement, are such that any income arising from the property |
| |
would be treated by virtue of section 660A of the Taxes Act 1988 |
| |
(income arising under settlement where settlor retains an interest) as |
| 20 |
income of a person (“the chargeable person”) who is for the purposes |
| |
of Part 15 of that Act the settlor, |
| |
(b) | any such income would be so treated even if subsection (2) of that |
| |
section did not include any reference to the spouse of the settlor, and |
| |
(c) | that property includes any property as respects which the condition |
| 25 |
in sub-paragraph (2) is met (“the relevant property”). |
| |
(2) | The condition mentioned in sub-paragraph (1)(c) is that the property is |
| |
intangible property which is or represents property which the chargeable |
| |
person settled, or added to the settlement, after 17th March 1986. |
| |
(3) | Where this paragraph applies in respect of the whole or part of a year of |
| 30 |
assessment, an amount equal to the chargeable amount determined under |
| |
paragraph 9 is to be treated as income of the chargeable person chargeable |
| |
| |
9 (1) | For any taxable period the chargeable amount in relation to the relevant |
| |
property is N minus T where— |
| 35 |
| N is the amount of the interest that would be payable for the taxable |
| |
period if interest were payable at the prescribed rate on an amount |
| |
equal to the value of the relevant property at the valuation date, and |
| |
| T is the amount of any income tax or capital gains tax payable by the |
| |
chargeable person in respect of the taxable period by virtue of any |
| 40 |
of the following provisions— |
| |
(a) | section 547 of the Taxes Act 1988, |
| |
(b) | section 660A of that Act, |
| |
|
| |
|
| |
|
(c) | section 739 of that Act, |
| |
(d) | section 77 of the Taxation of Chargeable Gains Act 1992 |
| |
| |
(e) | section 86 of that Act, |
| |
| so far as the tax is attributable to the relevant property. |
| 5 |
(2) | Regulations may, in relation to any valuation date, provide for a valuation |
| |
of the relevant property by reference to an earlier valuation date to apply |
| |
subject to any prescribed adjustments. |
| |
| |
| “the taxable period” means the year of assessment, or part of a year of |
| 10 |
assessment, during which paragraph 8 applies to the chargeable |
| |
| |
| “the valuation date”, in relation to a year of assessment, means such |
| |
date as may be prescribed. |
| |
| 15 |
10 (1) | For the purposes of paragraphs 3(2) and 6(2) (the disposal condition), the |
| |
disposal of any property is an “excluded transaction” in relation to any |
| |
person (“the chargeable person”) if— |
| |
(a) | it was a disposal of his whole interest in the property, except for any |
| |
right expressly reserved by him over the property, either— |
| 20 |
(i) | by a transaction made at arm’s length with a person not |
| |
| |
(ii) | by a transaction such as might be expected to be made at |
| |
arm’s length between persons not connected with each other, |
| |
(b) | the property was transferred to his spouse (or where the transfer has |
| 25 |
been ordered by a court, to his former spouse), |
| |
(c) | it was a disposal by way of gift (or, where the transfer is for the |
| |
benefit of his former spouse, in accordance with a court order), by |
| |
virtue of which the property became settled property in which his |
| |
spouse or former spouse is beneficially entitled to an interest in |
| 30 |
| |
(d) | the disposal was a disposition falling within section 11 of IHTA 1984 |
| |
(dispositions for maintenance of family), or |
| |
(e) | the disposal is an outright gift to an individual and is for the |
| |
purposes of IHTA 1984 a transfer of value that is wholly exempt by |
| 35 |
virtue of section 19 (annual exemption) or section 20 (small gifts). |
| |
(2) | For the purposes of paragraphs 3(3) and 6(3) (the contribution condition) the |
| |
provision by a person (“the chargeable person”) of consideration for |
| |
another’s acquisition of any property is an “excluded transaction” in relation |
| |
to the chargeable person if— |
| 40 |
(a) | the other person was his spouse (or, where the transfer has been |
| |
ordered by the court, his former spouse), |
| |
(b) | on its acquisition the property became settled property in which his |
| |
spouse or former spouse is beneficially entitled to an interest in |
| |
| 45 |
(c) | the provision of the consideration constituted an outright gift of |
| |
money (in sterling or any other currency) by the chargeable person |
| |
to the other person and was made at least seven years before the |
| |
|
| |
|
| |
|
earliest date on which the chargeable person met the condition in |
| |
paragraph 3(1)(a) or, as the case may be, 6(1)(a), |
| |
(d) | the provision of the consideration is a disposition falling within |
| |
section 11 of IHTA 1984 (dispositions for maintenance of family), or |
| |
(e) | the provision of the consideration is an outright gift to an individual |
| 5 |
and is for the purposes of IHTA 1984 a transfer of value that is wholly |
| |
exempt by virtue of section 19 (annual exemption) or section 20 |
| |
| |
(3) | A disposal is not an excluded transaction by virtue of sub-paragraph (1)(c) |
| |
or (2)(b), if the interest in possession of the spouse or former spouse has |
| 10 |
come to an end otherwise than on the death of the spouse or former spouse. |
| |
| |
11 (1) | Paragraph 3 (land), paragraph 6 (chattels) and paragraph 8 (intangible |
| |
property) do not apply to a person at a time when his estate for the purposes |
| |
| 15 |
(a) | the relevant property, or |
| |
| |
(i) | which derives its value from the relevant property, and |
| |
(ii) | whose value, so far as attributable to the relevant property, is |
| |
not substantially less than the value of the relevant property. |
| 20 |
(2) | Where the estate for the purposes of IHTA 1984 of a person to whom |
| |
paragraph 3, 6 or 8 applies includes property— |
| |
(a) | which derives its value from the relevant property, and |
| |
(b) | whose value, so far as attributable to the relevant property, is |
| |
substantially less than the value of the relevant property, |
| 25 |
| the appropriate rental value in paragraph 4, the appropriate amount in |
| |
paragraph 7 or the chargeable amount in paragraph 9 (as the case may be) is |
| |
to be reduced by such proportion as is reasonable to take account of the |
| |
inclusion of the property in his estate. |
| |
(3) | Paragraphs 3, 6 and 8 do not apply to a person at a time when the relevant |
| 30 |
| |
(a) | would fall to be treated by virtue of any provision of Part 5 of the |
| |
1986 Act (inheritance tax) as property which in relation to him is |
| |
property subject to a reservation, |
| |
(b) | would fall to be so treated but for any of paragraphs (d) to (i) of |
| 35 |
subsection (5) of section 102 of the 1986 Act (certain cases where |
| |
disposal by way of gift is an exempt transfer for purposes of |
| |
| |
(c) | would fall to be so treated but for subsection (4) of section 102B of the |
| |
1986 Act (gifts with reservation: share of interest in land), or would |
| 40 |
have fallen to be so treated but for that subsection if the disposal by |
| |
way of gift of an undivided share of an interest in land had been |
| |
made on or after 9th March 1999, or |
| |
(d) | would fall to be so treated but for section 102C(3) of, and paragraph |
| |
6 of Schedule 20 to, the 1986 Act (exclusion of benefit). |
| 45 |
(4) | Where at any time the value of a person’s estate for the purposes of IHTA |
| |
1984 is reduced by an excluded liability affecting any property, that property |
| |
is not to be treated for the purposes of sub-paragraph (1) or (2) as comprised |
| |
|
| |
|
| |
|
in his estate except to the extent that the value of the property exceeds the |
| |
amount of the excluded liability. |
| |
(5) | For the purposes of sub-paragraph (4) a liability is an excluded liability if— |
| |
(a) | the creation of the liability, and |
| |
(b) | any transaction by virtue of which the person’s estate came to |
| 5 |
include the relevant property or property which derives its value |
| |
from the relevant property or by virtue of which the value of |
| |
property in his estate came to be derived from the relevant property, |
| |
| were associated operations, as defined by section 268 of IHTA 1984. |
| |
(6) | In determining whether the relevant property falls within sub-paragraph |
| 10 |
(3)(b), (c) or (d) in a case where the contribution condition in paragraph 3(3) |
| |
or 6(3) is met, paragraph 2(2)(b) of Schedule 20 (exclusion of gifts of money) |
| |
| |
(7) | In sub-paragraphs (1) to (6) “the relevant property” means— |
| |
(a) | in relation to paragraphs 3 and 6— |
| 15 |
(i) | where the disposal condition in paragraph 3(2) or 6(2) is met, |
| |
the property disposed of, |
| |
(ii) | where the contribution condition in paragraph 3(3) or 6(3) is |
| |
met, the property representing the consideration directly or |
| |
| 20 |
(b) | in relation to paragraph 8, the relevant property within the meaning |
| |
| |
(8) | Sub-paragraph (3)(b) does not exclude the application of paragraph 3, 6 or 8 |
| |
in a case falling within section 102(5)(h) of the 1986 Act unless the property |
| |
remains subject to trusts which comply with the requirements of paragraph |
| 25 |
3(1) of Schedule 4 to IHTA 1984. |
| |
Chargeable person resident or domiciled outside the United Kingdom |
| |
12 (1) | This Schedule does not apply in relation to any person for any year of |
| |
assessment during which he is not resident in the United Kingdom. |
| |
(2) | Where in any year of assessment a person is resident in the United Kingdom |
| 30 |
but is domiciled outside the United Kingdom, this Schedule does not apply |
| |
to him unless the property falling within paragraph 3(1)(a), 6(1)(a) or 8(1)(c) |
| |
is situated in the United Kingdom. |
| |
(3) | In the application of this Schedule to a person who was at any time |
| |
domiciled outside the United Kingdom, no regard is to be had to any |
| 35 |
property which is for the purposes of IHTA 1984 excluded property in |
| |
relation to him by virtue of section 48(3)(a) of that Act. |
| |
(4) | For the purposes of this paragraph, a person is to be treated as domiciled in |
| |
the United Kingdom at any time only if he would be so treated for the |
| |
| 40 |
Exemption in cases where aggregate notional annual values do not exceed £5,000 |
| |
13 (1) | This paragraph applies where, in relation to any person who would (apart |
| |
from this paragraph) be chargeable under this Schedule for any year of |
| |
assessment, the aggregate of the amounts specified in sub-paragraph (2) in |
| |
respect of that year does not exceed £5,000. |
| 45 |
| |
|
| |
|
| |
|
(a) | in relation to any land to which paragraph 3 applies in respect of |
| |
him, the appropriate rental value as determined under paragraph |
| |
| |
(b) | in relation to any chattel to which paragraph 6 applies in respect of |
| |
him, the appropriate amount as determined under paragraph 7(2), |
| 5 |
| |
(c) | in relation to any intangible property to which paragraph 8 applies |
| |
in respect of him, the chargeable amount determined under |
| |
| |
(3) | Where this paragraph applies, the person is not chargeable for that year of |
| 10 |
assessment under any of the following provisions— |
| |
(a) | paragraph 3(5) (land), |
| |
(b) | paragraph 6(5) (chattels), or |
| |
(c) | paragraph 8(2) (intangible property). |
| |
Power of Treasury to confer further exemptions by regulations |
| 15 |
14 | Regulations may confer further exemptions from the charges to income tax |
| |
imposed by paragraphs 3, 6 and 8. |
| |
| |
15 | Except as otherwise provided by this Schedule, the value of any property |
| |
shall for the purposes of this Schedule be the price which the property might |
| 20 |
reasonably be expected to fetch if sold in the open market at that time; but |
| |
that price shall not be assumed to be reduced on the ground that the whole |
| |
property is to be placed on the market at one and the same time. |
| |
Changes in distribution of deceased’s estate |
| |
16 | Any disposition made by a person (“the chargeable person”) in relation to an |
| 25 |
interest in the estate of a deceased person is to be disregarded for the |
| |
purposes of this Schedule if by virtue of section 17 of IHTA 1984 (changes in |
| |
distribution of deceased’s estate, etc.) the disposition is not treated for the |
| |
purposes of inheritance tax as a transfer of value by the chargeable person. |
| |
| 30 |
17 | Where a person (“A”) acts as guarantor in respect of a loan made to another |
| |
person (“B”) by a third party in connection with B’s acquisition of any |
| |
property, the mere giving of the guarantee is not to be regarded as the |
| |
provision by A of consideration for B’s acquisition of the property. |
| |
Persons chargeable under different provisions by reference to same property |
| 35 |
18 (1) | Where, in any year of assessment, a person (“the chargeable person”) is |
| |
(apart from this paragraph) chargeable to income tax both— |
| |
(a) | under paragraph 3 (land) or paragraph 6 (chattels) by reason of his |
| |
occupation of any land or his possession or use of any chattel, and |
| |
(b) | under paragraph 8 (intangible property) by reference to any |
| 40 |
intangible property which derives its value (whether in whole or |
| |
part) from the land or the chattel, |
| |
|
| |
|
| |
|
| he is to be charged to income tax under whichever provision produces the |
| |
higher chargeable amount in relation to him. |
| |
(2) | Where sub-paragraph (1) applies, only the amount under the paragraph |
| |
under which he is chargeable is to be taken into account in relation to the |
| |
chargeable person for the purposes of paragraph 13(2). |
| 5 |
Relationship with Part 3 of Income Tax (Earnings and Pensions) Act 2003 |
| |
19 | Where, in any year of assessment, a person is (apart from this paragraph) |
| |
chargeable, in respect of his occupation of any land or his possession or use |
| |
of any chattel, to income tax both— |
| |
(a) | under this Schedule, and |
| 10 |
(b) | under Part 3 of the Income Tax (Earnings and Pensions) Act 2003 |
| |
| |
| the provisions of that Part shall have priority and he shall not be chargeable |
| |
to income tax under this Schedule, except to the extent that the amount |
| |
chargeable under this Schedule exceeds the amount to be treated as earnings |
| 15 |
| |
| |
20 (1) | Regulations under this Schedule may— |
| |
(a) | make different provision for different cases, and |
| |
(b) | include transitional provisions and savings. |
| 20 |
(2) | Any power conferred by this Schedule to prescribe a rate of interest includes |
| |
| |
(a) | to prescribe different rates in relation to property of different |
| |
| |
(b) | to prescribe a rate by reference to a rate specified in the regulations. |
| 25 |
Election for application of inheritance tax provisions |
| |
21 (1) | This paragraph applies where— |
| |
(a) | a person (“the chargeable person”) would (apart from this |
| |
paragraph) be chargeable under paragraph 3 (land) or paragraph 6 |
| |
(chattels) for any year of assessment (“the initial year”) by reference |
| 30 |
to any property (“the relevant property”), and |
| |
(b) | he has not been chargeable under the paragraph in question by |
| |
reference to the relevant property in respect of any previous year of |
| |
| |
(2) | The chargeable person may elect in accordance with paragraph 23 that— |
| 35 |
(a) | the preceding provisions of this Schedule shall not apply to him by |
| |
reference to the relevant property during the initial year and |
| |
subsequent years of assessment, but |
| |
(b) | so long as the chargeable person continues to enjoy the relevant |
| |
property or any property which is substituted for the relevant |
| 40 |
| |
(i) | the property is to be treated for the purposes of Part 5 of the |
| |
1986 Act (in relation to the chargeable person) as property |
| |
subject to a reservation, and |
| |
(ii) | section 102(3) and (4) of that Act shall apply. |
| 45 |
|
| |
|
| |
|
(3) | For the purposes of this paragraph a person “enjoys” property if— |
| |
(a) | in the case of an interest in land, he occupies the land, and |
| |
(b) | in the case of an interest in a chattel, he is in possession of, or has the |
| |
| |
22 (1) | This paragraph applies where— |
| 5 |
(a) | a person (“the chargeable person”) would (apart from this |
| |
paragraph) be chargeable under paragraph 8 (intangible property) |
| |
for any year of assessment (“the initial year”) by reference to any |
| |
property (“the relevant property”), and |
| |
(b) | he has not been chargeable under that paragraph by reference to the |
| 10 |
relevant property in respect of any previous year of assessment. |
| |
(2) | The chargeable person may elect in accordance with paragraph 23 that— |
| |
(a) | the preceding provisions of this Schedule shall not apply to him by |
| |
reference to the relevant property during the initial year and |
| |
subsequent years of assessment, but |
| 15 |
(b) | so long as the conditions in sub-paragraph (3) are satisfied— |
| |
(i) | the property shall be treated for the purposes of Part 5 of the |
| |
1986 Act (in relation to the chargeable person) as property |
| |
subject to a reservation, and |
| |
(ii) | section 102(3) and (4) of the 1986 Act shall apply. |
| 20 |
(3) | The conditions referred to in sub-paragraph (2)(b) are— |
| |
(a) | that the relevant property (or, in any case where there has been a |
| |
disposal of the relevant property, any property which is substituted |
| |
for the relevant property) remains comprised in the settlement, and |
| |
(b) | that any income arising under the settlement would be treated by |
| 25 |
virtue of section 660A of the Taxes Act 1988 as income of the |
| |
| |
23 (1) | In this paragraph— |
| |
| “election” means an election under paragraph 21 or 22; |
| |
| “the relevant filing date” means 31st January in the year of assessment |
| 30 |
that immediately follows the initial year within the meaning of |
| |
paragraph 21 or (as the case requires) paragraph 22. |
| |
(2) | The election must be made in the prescribed manner. |
| |
(3) | The election must be made on or before the relevant filing date, unless the |
| |
chargeable person can show a reasonable excuse for the failure to make the |
| 35 |
| |
(4) | Where the chargeable person can show reasonable excuse for the failure to |
| |
make the election on or before the relevant filing date, the election must be |
| |
made on or before such later date as may be prescribed. |
| |
(5) | The election may be withdrawn or amended, during the life of the |
| 40 |
chargeable person, at any time on or before the relevant filing date. |
| |
|
| |
|