sc1611306.292-296

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.A.  Standing Committee Proceedings: 13th June 2006
292

Finance (N, continued

(c)
to settled property if a person is beneficially entitled to an

interest in possession in the settled property and—

(i)
the person became beneficially entitled to the interest

in possession before 22nd March 2006, or

(ii)
the interest in possession is an immediate post-death

interest, or a transitional serial interest, and the person

became beneficially entitled to it on or after 22nd

March 2006.

(6)
Those conditions are—

(a)
that the person mentioned in subsection (1)(a) or (3)(b)(i)

above (“B”), if he has not done so before attaining the age of

25, will on attaining that age become absolutely entitled to—

(i)
the settled property,

(ii)
any income arising from it, and

(iii)
any income that has arisen from the property held on

the trusts for his benefit and been accumulated before

that time,

(b)
that, for so long as B is living and under the age of 25, if any

of the settled property is applied for the benefit of a

beneficiary, it is applied for the benefit of B, and

(c)
that, for so long as B is living and under the age of 25, either—

(i)
B is entitled to all of the income (if there is any)

arising from any of the settled property, or

(ii)
no such income may be applied for the benefit of any

other person.

(7)
For the purposes of this section, trusts are not to be treated as failing

to secure that the conditions in subsection (6) above are met by reason

only of—

(a)
the trustees having the powers conferred by section 32 of the

Trustee Act 1925 (powers of advancement),

(b)
the trustees having those powers but free from, or subject to a

less restrictive limitation than, the limitation imposed by

proviso (a) of subsection (1) of that section,

(c)
the trustees having the powers conferred by section 33 of the

Trustee Act (Northern Ireland) 1958 (corresponding provision

for Northern Ireland),

(d)
the trustees having those powers but free from, or subject to a

less restrictive limitation than, the limitation imposed by

subsection (1)(a) of that section, or

(e)
the trustees having powers to the like effect as the powers

mentioned in any of paragraphs (a) to (d) above.

(8)
In this section “the Criminal Injuries Compensation Scheme”

means—

(a)
the schemes established by arrangements made under the

Criminal Injuries Compensation Act 1995,

(b)
arrangements made by the Secretary of State for

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.

S.C.A.  Standing Committee Proceedings: 13th June 2006
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Finance (N, continued

(9)
The preceding provisions of this section apply in relation to

Scotland—

(a)
as if, in subsection (2) above, before “which” there were

inserted “the purposes of”, and

(b)
as if, in subsections (3)(b)(ii) and (4)(b) above, before “trusts”

there were inserted “purposes of the”.

71E
Charge to tax on property to which section 71D applies

(1)
Subject to subsections (2) to (4) below, there shall be a charge to tax

under this section—

(a)
where settled property ceases to be property to which section

71D above applies, or

(b)
in a case where paragraph (a) above does not apply, where the

trustees make a disposition as a result of which the value of the

settled property to which section 71D 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 71D above applies as a result of—

(a)
B becoming, at or under the age of 18, absolutely entitled as

mentioned in section 71D(6)(a) above,

(b)
the death, under the age of 18, of B,

(c)
becoming, at a time when B is living and under the age of 18,

property to which section 71A above applies, or

(d)
being paid or applied for the advancement or benefit of B—

(i)
at a time when B is living and under the age of 18, or

(ii)
on B’s attaining the age of 18.

(3)
Tax is not charged under this section in respect of—

(a)
a payment of costs or expenses (so far as they are fairly

attributable to property to which section 71D above applies),

or

(b)
a payment which is (or will be) income of any person for any

of the purposes of income tax or would for any of those

purposes be income of a person not resident in the United

Kingdom if he were so resident,


or in respect of a liability to make such a payment.

(4)
Tax is not charged under this section by virtue of subsection (1)(b)

above if the disposition is such that, were the trustees beneficially

entitled to the settled property, section 10 or section 16 above would

prevent the disposition from being a transfer of value.

(5)
For the purposes of this section the trustees shall be treated as making

a disposition if they omit to exercise a right (unless it is shown that the

omission was not deliberate) and the disposition shall be treated as

made at the time or latest time when they could have exercised the

right.

71F
Calculation of tax charged under section 71E in certain cases

(1)
Where—

(a)
tax is charged under section 71E above by reason of the

happening of an event within subsection (2) below, and

(b)
that event happens after B has attained the age of 18,

S.C.A.  Standing Committee Proceedings: 13th June 2006
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Finance (N, continued


the tax is calculated in accordance with this section.

(2)
Those events are—

(a)
B becoming absolutely entitled as mentioned in section

71D(6)(a) above,

(b)
the death of B, and

(c)
property being paid or applied for the advancement or benefit

of B.

(3)
The amount of the tax is given by— $equation: cross[cross[string["Chargeable amount"],string["Relevant fraction"]],string["Settlement rate"]]$

(4)
For the purposes of subsection (3) above, the “Chargeable amount”

is—

(a)
the amount by which the value of property which is comprised

in the settlement and to which section 71D above applies is

less immediately after the event giving rise to the charge than

it would be but for the event, or

(b)
where the tax is payable out of settled property to which

section 71D above applies immediately after the event, the

amount which, after deducting the tax, is equal to the amount

on which tax would be charged by virtue of paragraph (a)

above.

(5)
For the purposes of subsection (3) above, the “Relevant fraction” is

three tenths multiplied by so many fortieths as there are complete

successive quarters in the period—

(a)
beginning with the day on which B attained the age of 18 or,

if later, the day on which the property became property to

which section 71D above applies, and

(b)
ending with the day before the occasion of the charge.

(6)
Where the whole or part of the Chargeable amount is attributable to

property that was excluded property at any time during the period

mentioned in subsection (5) above then, in determining the “Relevant

fraction” in relation to that amount or part, no quarter throughout

which that property was excluded property shall be counted.

(7)
For the purposes of subsection (3) above, the “Settlement rate” is the

effective rate (that is to say, the rate found by expressing the tax

chargeable as a percentage of the amount on which it is charged) at

which tax would be charged on the value transferred by a chargeable

transfer of the description specified in subsection (8) below.

(8)
The chargeable transfer postulated in subsection (7) above is one—

(a)
the value transferred by which is equal to an amount

determined in accordance with subsection (9) below,

(b)
which is made at the time of the charge to tax under section

71E above by a transferor who has in the period of seven years

ending with the day of the occasion of the charge made

chargeable transfers having an aggregate value equal to that of

any chargeable transfers made by the settlor in the period of

seven years ending with the day on which the settlement

commenced, disregarding transfers made on that day, and

S.C.A.  Standing Committee Proceedings: 13th June 2006
295

Finance (N, continued

(c)
on which tax is charged in accordance with section 7(2)

above.

(9)
The amount referred to in subsection (8)(a) above is equal to the

aggregate of—

(a)
the value, immediately after the settlement commenced, of the

property then comprised in it,

(b)
the value immediately afer a related settlement commenced,

of the property then comprised in it, and

(c)
the value, immediately after it became comprised in the

settlement, of any property which became so comprised after

the settlement commenced and before the occasion of the

charge under section 71E above (whether or not it has

remained so comprised).

71G
Calculation of tax charged under section 71E in all other cases

(1)
Where—

(a)
tax is charged under section 71E above, and

(b)
the tax does not fall to be calculated in accordance with

section 71F above,


the tax is calculated in accordance with this section.

(2)
The amount on which the tax is charged is—

(a)
the amount by which the value of property which is comprised

in the settlement and to which section 71D above applies is

less immediately after the event giving rise to the charge than

it would be but for the event, or

(b)
where the tax is payable out of settled property to which

section 71D above applies immediately after the event, the

amount which, after deducting the tax, is equal to the amount

on which tax would be charged by virtue of paragraph (a)

above.

(3)
The rate at which the tax is charged is the rate that would be given by

subsections (6) to (8) of section 70 above—

(a)
if the reference to section 70 above in subsection (8)(a) of that

section were a reference to section 71D above,

(b)
if the other references in those subsections to section 70 above

were references to section 71E above, and

(c)
if, for the purposes of section 70(8) above, property—

(i)
which is property to which section 71D above applies,

(ii)
which, immediately before it became property to

which section 71D above applies, was property to

which section 71 applied, and

(iii)
which ceased on that occasion to be property to which

section 71 above applied without ceasing to be settled

property,


had become property to which section 71D above applies not

on that occasion but on the occasion (or last occasion) before

then when it became property to which section 71 above

applied.”.’.

S.C.A.  Standing Committee Proceedings: 13th June 2006
296

Finance (N, continued

Dawn Primarolo

Agreed to  384

Schedule  20,  page  113,  line  27  [Vol II],  at end insert—

‘71H
Sections 71A to 71G: meaning of “parent”

In sections 71A to 71G above “parent” includes step-parent.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not selected  289

Schedule  20,  page  113,  line  36  [Vol  II],  leave out ‘at any particular time on or’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  290

Schedule  20,  page  113  [Vol  II],  leave out lines 42 to 44.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Negatived on division  291

Schedule  20,  page  114  [Vol  II],  leave out lines 9 to 23.

Further consideration adjourned—(Mr John Heppell)

[Adjourned till Thursday at 9.05 a.m.