|
| |
|
(c) | that, for so long as the bereaved minor is living and under the |
| |
| |
(i) | the bereaved minor is entitled to all of the income (if |
| |
there is any) arising from any of the settled property, |
| |
| 5 |
(ii) | no such income may be applied for the benefit of any |
| |
| |
(4) | Trusts such as are mentioned in paragraph (a) or (b) of subsection (2) |
| |
above are not to be treated as failing to secure that the conditions in |
| |
subsection (3) above are met by reason only of the powers conferred |
| 10 |
| |
(a) | section 32 of the Trustee Act 1925 (powers of advancement), |
| |
| |
(b) | section 33 of the Trustee Act (Northern Ireland) 1958 |
| |
(corresponding provision for Northern Ireland). |
| 15 |
(5) | In this section “the Criminal Injuries Compensation Scheme” |
| |
| |
(a) | the schemes established by arrangements made under the |
| |
Criminal Injuries Compensation Act 1995, |
| |
(b) | arrangements made by the Secretary of State for |
| 20 |
compensation for criminal injuries in operation before the |
| |
commencement of those schemes, and |
| |
(c) | the scheme established under the Criminal Injuries |
| |
Compensation (Northern Ireland) Order 2002. |
| |
(6) | The preceding provisions of this section apply in relation to Scotland |
| 25 |
with the following modifications— |
| |
(a) | in subsection (2) above, before “which” insert “the purposes |
| |
| |
(b) | omit subsection (4) above. |
| |
71B | Charge to tax on property to which section 71A applies |
| 30 |
(1) | Subject to subsections (2) and (3) below, there shall be a charge to tax |
| |
| |
(a) | where settled property ceases to be property to which section |
| |
| |
(b) | in a case where paragraph (a) above does not apply, where |
| 35 |
the trustees make a disposition as a result of which the value |
| |
of settled property to which section 71A above applies is less |
| |
than it would be but for the disposition. |
| |
(2) | Tax is not charged under this section where settled property ceases |
| |
to be property to which section 71A applies as a result of— |
| 40 |
(a) | the bereaved minor attaining the age of 18 or becoming, |
| |
under that age, absolutely entitled as mentioned in section |
| |
| |
(b) | the death under that age of the bereaved minor, or |
| |
(c) | being paid or applied for the advancement or benefit of the |
| 45 |
| |
|
| |
|
| |
|
(3) | Subsections (3) to (8) and (10) of section 70 above apply for the |
| |
purposes of this section as they apply for the purposes of that section, |
| |
| |
(a) | with the substitution of a reference to subsection (1)(b) above |
| |
for the reference in subsection (4) of section 70 above to |
| 5 |
subsection (2)(b) of that section, |
| |
(b) | with the substitution of a reference to property to which |
| |
section 71A above applies for each of the references in |
| |
subsections (3), (5) and (8) of section 70 above to property to |
| |
which that section applies, and |
| 10 |
(c) | as if, for the purposes of section 70(8) above as applied by this |
| |
| |
(i) | which is property to which section 71A above applies, |
| |
(ii) | which, immediately before it became property to |
| |
which section 71A above applies, was property to |
| 15 |
which section 71 above applied, and |
| |
(iii) | which, by the operation of section 71(1B) above, |
| |
ceased on that occasion to be property to which |
| |
section 71 above applied, |
| |
| had become property to which section 71A above applies not |
| 20 |
on that occasion but on the occasion (or last occasion) before |
| |
then when it became property to which section 71 above |
| |
| |
71C | Sections 71A and 71B: meaning of “bereaved minor” |
| |
In sections 71A and 71B above “bereaved minor” means a person— |
| 25 |
(a) | who has not yet attained the age of 18, and |
| |
(b) | at least one of whose parents has died.” |
| |
(2) | Sub-paragraph (1) shall be deemed to have come into force on 22nd March |
| |
| |
Section 71 of IHTA 1984 not to apply to property settled on or after 22nd March 2006 |
| 30 |
2 (1) | Section 71 of IHTA 1984 (accumulation and maintenance trusts) is amended |
| |
| |
(2) | In subsection (1) (settled property to which section applies, subject to |
| |
subsection (2)), for “subsection” substitute “subsections (1A) to”. |
| |
(3) | After subsection (1) insert— |
| 35 |
“(1A) | This section does not apply to settled property at any particular time |
| |
on or after 22nd March 2006 unless this section— |
| |
(a) | applied to the settled property immediately before 22nd |
| |
| |
(b) | has applied to the settled property at all subsequent times up |
| 40 |
| |
(1B) | This section does not apply to settled property at any particular time |
| |
on or after 22nd March 2006 if, at that time, section 71A below applies |
| |
to the settled property.” |
| |
(4) | Where a chargeable transfer to which section 54A of IHTA 1984 applies was |
| 45 |
made before 22nd March 2006, that section has effect in relation to that |
| |
|
| |
|
| |
|
transfer as if references in that section to section 71 of IHTA 1984 were to |
| |
section 71 of IHTA 1984 without the amendments made by sub-paragraphs |
| |
| |
(5) | There is no charge to tax under section 71 of IHTA 1984 in a case where |
| |
settled property ceases, by the operation of the subsection (1B) inserted into |
| 5 |
that section by this paragraph, to be property to which that section applies. |
| |
(6) | Sub-paragraphs (1) to (5) shall be deemed to have come into force on 22nd |
| |
| |
Section 71 of IHTA 1984 to cease to apply to certain settled property from 6th April 2008 |
| |
3 (1) | In section 71(1)(a) of IHTA 1984 (section applies to settled property only if |
| 10 |
one or more persons will become beneficially entitled on or before reaching |
| |
a specified age not exceeding 25)— |
| |
(a) | for “twenty-five” substitute “eighteen”, and |
| |
(b) | omit “or to an interest in possession in it”. |
| |
(2) | Sub-paragraph (1) comes into force on 6th April 2008 but only for the |
| 15 |
purpose of determining whether, at a time on or after that day, section 71 of |
| |
IHTA 1984 applies to settled property. |
| |
(3) | There is no charge to tax under section 71 of IHTA 1984 in a case where— |
| |
(a) | settled property ceases, on the coming into force of sub-paragraph |
| |
(1), to be property to which that section applies, but |
| 20 |
(b) | that section would immediately after the coming into force of sub- |
| |
paragraph (1) apply to the settled property but for the amendments |
| |
made by sub-paragraph (1). |
| |
| |
Interests in possession: when settled property is part of beneficiary’s estate |
| 25 |
Aggregation with person’s estate of property in which interest in possession subsists |
| |
4 (1) | In section 49 of IHTA 1984, after subsection (1) insert— |
| |
“(1A) | Where the interest in possession mentioned in subsection (1) above |
| |
is one to which the person becomes beneficially entitled on or after |
| |
22nd March 2006, subsection (1) above applies in relation to that |
| 30 |
interest only if, and for so long as, it is— |
| |
(a) | an immediate post-death interest, |
| |
(b) | a disabled person’s interest, or |
| |
(c) | a transitional serial interest. |
| |
(1B) | Where the interest in possession mentioned in subsection (1) above |
| 35 |
is one to which the person became beneficially entitled before 22nd |
| |
March, subsection (1) above does not apply in relation to that interest |
| |
at any time when section 71A below applies to the property in which |
| |
| |
(2) | Sub-paragraph (1) shall be deemed to have come into force on 22nd March |
| 40 |
| |
|
| |
|
| |
|
“Immediate post-death interests” and “transitional serial interests” |
| |
5 (1) | In IHTA 1984, after section 49 insert— |
| |
“49A | Immediate post-death interest |
| |
(1) | Where a person (“L”) is beneficially entitled to an interest in |
| |
possession in settled property, for the purposes of this Chapter that |
| 5 |
interest is an “immediate post-death interest” only if the following |
| |
conditions are satisfied. |
| |
(2) | Condition 1 is that the settlement was effected by will or under the |
| |
law relating to intestacy. |
| |
(3) | Condition 2 is that L became beneficially entitled to the interest in |
| 10 |
possession on the death of the testator or intestate. |
| |
(4) | Condition 3 is that if the interest can be brought to an end by the |
| |
exercise of a power (whether a power to bring the interest to an end |
| |
in its entirety, to bring it to an end so far as relating to part only of the |
| |
property in which it subsists or to bring it to an end in either of those |
| 15 |
ways), section 49B below applies in relation to the power. |
| |
(5) | Condition 4 is that on the interest’s coming to an end (whether in its |
| |
entirety or so far as relating to part only of the property in which it |
| |
| |
(a) | a person (whether or not L) will become absolutely entitled to |
| 20 |
the property in which the interest ceases to subsist, or |
| |
(b) | section 71A below will apply to that property, or |
| |
(c) | section 89 below will apply to that property, or |
| |
(d) | that property will be held on trust for charitable purposes |
| |
| 25 |
| |
(a) | section 71A below does not apply to the property in which |
| |
the interest subsists, and |
| |
(b) | the interest is not a disabled person’s interest. |
| |
(7) | Condition 6 is that Conditions 3 to 5 have been satisfied at all times |
| 30 |
since L became beneficially entitled to the interest in possession. |
| |
(8) | For the purposes of Conditions 3 and 4, and of Condition 6 so far as |
| |
relating to those Conditions, ignore— |
| |
(a) | power to give directions as to the settled property that is |
| |
exercisable jointly by the persons who between them are |
| 35 |
entitled to the entire beneficial interest in that property, and |
| |
(b) | anything that could occur as a result of exercise of any such |
| |
| |
(9) | Where L is the principal beneficiary under trusts to the like effect as |
| |
those specified under section 33(1)(i) of the Trustee Act 1925— |
| 40 |
(a) | for the purposes of Condition 3, and Condition 6 so far as |
| |
relating to Condition 3, ignore anything that could cause |
| |
those trusts to fail or determine, and |
| |
(b) | Condition 4, and Condition 6 so far as relating to Condition |
| |
4, do not apply for the purpose of determining whether L’s |
| 45 |
|
| |
|
| |
|
interest under those trusts is an immediate post-death |
| |
| |
49B | Immediate post-death interest: powers to end interest |
| |
(1) | This section has effect for the purposes of section 49A(4) above. |
| |
(2) | This section applies in relation to a power if— |
| 5 |
(a) | each non-beneficial exercise of the power requires L’s prior |
| |
| |
(b) | the power is exercisable by L (whether alone or jointly). |
| |
(3) | For the purposes of this section, an exercise of a power is “non- |
| |
beneficial” if the exercise— |
| 10 |
(a) | results in the interest being brought to an end, whether in its |
| |
entirety or so far as relating to part only of the property in |
| |
| |
(b) | does not at the same time result in— |
| |
(i) | L becoming absolutely entitled to the property in |
| 15 |
which the interest ceases to subsist, or |
| |
(ii) | that property being otherwise paid or applied for the |
| |
advancement or benefit of L. |
| |
49C | Transitional serial interest |
| |
(1) | Where a person (“B”) is beneficially entitled to an interest in |
| 20 |
possession in settled property (“the current interest”), for the |
| |
purposes of this Chapter that interest is a “transitional serial interest” |
| |
only if the following conditions are met. |
| |
| |
(a) | the settlement commenced before 22nd March 2006, and |
| 25 |
(b) | immediately before 22nd March 2006, the property then |
| |
comprised in the settlement was property in which B, or |
| |
some other person, was beneficially entitled to an interest in |
| |
possession (“the prior interest”). |
| |
(3) | Condition 2 is that the prior interest came to an end at a time on or |
| 30 |
after 22nd March 2006 but before 6th April 2008. |
| |
(4) | Condition 3 is that B became beneficially entitled to the current |
| |
| |
| |
(a) | section 71A below does not apply to the property in which |
| 35 |
the interest subsists, and |
| |
(b) | the interest is not a disabled person’s interest.” |
| |
(2) | Sub-paragraph (1) shall be deemed to have come into force on 22nd March |
| |
| |
Disabled persons’ trusts: meaning of “disabled person’s interest” and “disabled person” |
| 40 |
6 (1) | Section 89 (trusts for disabled persons) is amended as follows. |
| |
|
| |
|
| |
|
(2) | After subsection (2) insert— |
| |
“(2A) | In this Act “disabled person’s interest” means an interest in |
| |
possession to which a person is under subsection (2) above treated as |
| |
| |
(3) | After subsection (4) insert— |
| 5 |
“(5) | The reference in subsection (1) above to a disabled person includes, |
| |
in relation to any settled property, a reference to a person who, when |
| |
the property was transferred into settlement,— |
| |
(a) | would have been in receipt of attendance allowance under |
| |
section 64 of either of the Acts mentioned in subsection (4)(b) |
| 10 |
above had provision made by regulations under section 67(1) |
| |
or (2) of that Act (non-satisfaction of conditions for |
| |
attendance allowance where person is undergoing treatment |
| |
for renal failure in a hospital or is provided with certain |
| |
accommodation) been ignored, or |
| 15 |
(b) | would have been in receipt of disability living allowance by |
| |
virtue of entitlement to the care component at the highest or |
| |
middle rate had provision made by regulations under section |
| |
72(8) of either of the Acts mentioned in subsection (4)(c) |
| |
above (no payment of disability living allowance for persons |
| 20 |
for whom certain accommodation is provided) been ignored. |
| |
(6) | The reference in subsection (1) above to a disabled person also |
| |
includes, in relation to any settled property, a reference to a person |
| |
who satisfies the Commissioners for Her Majesty’s Revenue and |
| |
| 25 |
(a) | that he would, when the property was transferred into |
| |
settlement, have been in receipt of attendance allowance |
| |
under section 64 of either of the Acts mentioned in subsection |
| |
| |
(i) | had he met the conditions as to residence under |
| 30 |
section 64(1) of that Act, and |
| |
(ii) | had provision made by regulations under section |
| |
67(1) or (2) of that Act been ignored, or |
| |
(b) | that he would, when the property was transferred into |
| |
settlement, have been in receipt of a disability living |
| 35 |
allowance by virtue of entitlement to the care component at |
| |
the highest or middle rate— |
| |
(i) | had he met the prescribed conditions as to residence |
| |
under section 71(6) of either of the Acts mentioned in |
| |
subsection (4)(c) above, and |
| 40 |
(ii) | had provision made by regulations under section |
| |
72(8) of that Act been ignored.” |
| |
(4) | Sub-paragraph (2) shall be deemed to have come into force on 22nd March |
| |
| |
(5) | Sub-paragraph (3) shall be deemed to have come into force on 22nd March |
| 45 |
2006, but only in respect of property transferred into settlement on or after |
| |
| |
|
| |
|
| |
|
| |
Related amendments in IHTA 1984 |
| |
| |
7 | The following paragraphs of this Part of this Schedule shall be deemed to |
| |
have come into force on 22nd March 2006. |
| 5 |
Deemed disposition where omission to exercise a right increases value of another person’s estate |
| |
or of settled property not aggregated with a person’s estate |
| |
8 | In section 3(3) of IHTA 1984 (failure to exercise a right treated as disposition |
| |
if the omission increases the value of another person’s estate or the value of |
| |
settled property in which no interest in possession subsists), for the words |
| 10 |
from the beginning to “increased” substitute— |
| |
| “Where the value of a person’s estate is diminished, and the value— |
| |
(a) | of another person’s estate, or |
| |
(b) | of any settled property, other than settled property treated by |
| |
section 49(1) below as property to which a person is |
| 15 |
| |
| |
Potentially exempt transfers: provision in consequence of section 71 of IHTA 1984 not |
| |
applying to property settled on or after 22nd March 2006 |
| |
9 (1) | Section 3A of IHTA 1984 (potentially exempt transfers) is amended as |
| 20 |
| |
(2) | In subsection (1)(a) (transfer must be one made on or after 18th March 1986), |
| |
after “1986” insert “but before 22nd March 2006”. |
| |
(3) | After subsection (1) insert— |
| |
“(1A) | Any reference in this Act to a potentially exempt transfer is also a |
| 25 |
reference to a transfer of value— |
| |
(a) | which is made by an individual on or after 22nd March 2006, |
| |
(b) | which, apart from this section, would be a chargeable transfer |
| |
(or to the extent to which, apart from this section, it would be |
| |
| 30 |
(c) | to the extent that it constitutes— |
| |
(i) | a gift to another individual, or |
| |
(ii) | a gift into a disabled trust. |
| |
(1B) | Subsections (1) and (1A) above have effect subject to any provision |
| |
of this Act which provides that a disposition (or transfer of value) of |
| 35 |
a particular description is not a potentially exempt transfer.” |
| |
(4) | In subsection (2) (extent to which transfer is a gift to another individual), |
| |
after “subsection (1)(c)” insert “or (1A)(c)(i)”. |
| |
(5) | After subsection (3) insert— |
| |
“(3A) | Subject to subsection (6) below, a transfer of value falls within |
| 40 |
subsection (1A)(c)(ii) above to the extent that the value transferred is |
| |
|
| |
|