sc1611506.304-310

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.A.  Standing Committee Proceedings: 15th June 2006
304

Finance (N, continued

‘49D
Alternative condition to be transitional serial interest

(1)
Where a person (“B”) is beneficially entitled to an interest in possession in settled

property (“the current interest”) for the purposes of this Chapter that interest is “a

transitional serial interest” if the following conditions are met.

(2)
Condition 1 is that—

(a)
the settlement commenced before 22nd March 2006, and

(b)
immediately before 22nd March 2006, the property then comprised in the

settlement was settled property to which section 71 applied.

(3)
Condition 2 is that B became beneficially entitled to the current interest in that

property after 22nd March 2006 but before 6th April 2008.

(4)
Condition 3 is that until B became entitled to the current interest the property

remained property to which section 71 applied.

(5)
To determine whether section 71 applied for the purposes of Condition 3 above,

the amendments to section 71 made by pararagraph 3 of Schedule 20 to the

Finance Act 2006 are to have effect.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  301

Schedule  20,  page  116,  line  37  [Vol  II],  at end insert—

‘49D
Immediate self-settled interest

(1)
Where a person “S” is beneficially entitled to an interest in possession in settled

property, for the purposes of this Chapter that interest is an “immediate self-

settled interest” only if the following conditions are satisfied.

(2)
Condition 1 is that S is the settlor in relation to the settled property.

(3)
Condition 2 is that S became beneficially entitled to the interest in possession on

the creation of the settlement.

(4)
Condition 3 is that—

(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.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  320

Schedule  20,  page  116,  line  37  [Vol  II],  at end insert—

‘49D
Relationship breakdown settlement interest

(1)
Where a person (“L”) is beneficially entitled to an interest in possession in settled

property, for the purposes of this Chapter that interest is a “relationship

breakdown settlement interest” only if the following conditions are satisfied.

(2)
Condition 1 is that the settlement was effected, or if there was a prior settlement

it was confirmed or varied by a court order in proceedings for the following types

of provision—

S.C.A.  Standing Committee Proceedings: 15th June 2006
305

Finance (N, continued

(a)
financial relief for the parties to a marriage and any children of the family

in connection with proceedings for divorce, nullity of marriage or judicial

separation including, but not limited to, property adjustment orders or

variation of settlement orders under section 24 of the Matrimonial Causes

Act 1973; or

(b)
financial relief for the parties of a civil partnership in connection with

proceedings for dissolution of the civil partnership including, but not

limited to, property adjustment orders or variation of settlement orders

under Schedule 5 of the Civil Partnership Act 2004; or

(c)
where a marriage has been dissolved or annulled or the parties to a

marriage have been legally separated, by means of judicial or other

proceedings in an overseas country and the divorce, annulment or legal

separation is entitled to be recognised as valid in England and Wales,

financial relief for the parties to the marriage and any children of the

family including, but not limited to, property adjustment orders or

variation of settlement orders under section 17 of the Matrimonial and

Family Proceedings Act 1984; or

(d)
financial relief for the benefit of a child including, but not limited to, a

transfer or settlement of property under paragraph 1 of Schedule 1 of the

Children Act 1989.

(3)
Condition 2 is that L became beneficially entitled to the interest in possession on

the court order coming into effect.

(4)
Condition 3 is that—

(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.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  236

Schedule  20,  page  116,  line  38  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Dawn Primarolo

Agreed to  388

Schedule  20,  page  116,  line  41  [Vol II],  leave out from beginning to ‘After’ in

line 4 on page 117 and insert—

‘6  (1)
After section 89 (trusts for disabled persons) there is inserted—

“89A
Self-settlement by person with condition expected to lead to disability

(1)
This section applies to property transferred by a person (“A”) into

settlement on or after 22nd March 2006 if—

(a)
A was beneficially entitled to the property immediately before

transferring it into settlement,

(b)
A satisfies the Commissioners for Her Majesty’s Revenue and

Customs that, when the property was transferred into

settlement, A had a condition that it was at that time

reasonable to expect would have such effects on A as to lead

to A becoming—

(i)
a person falling within section 89(4)(a) above,

S.C.A.  Standing Committee Proceedings: 15th June 2006
306

Finance (N, continued

(ii)
in receipt of an attendance allowance mentioned in

section 89(4)(b) above, or

(iii)
in receipt of a disability living allowance mentioned

in section 89(4)(c) above by virtue of entitlement to

the care component at the highest or middle rate, and

(c)
the property is held on trusts—

(i)
under which, during the life of A, no interest in

possession in the settled property subsists, and

(ii)
which secure that Conditions 1 and 2 are met.

(2)
Condition 1 is that if any of the settled property is applied during A’s

life for the benefit of a beneficiary, it is applied for the benefit of A.

(3)
Condition 2 is that any power to bring the trusts mentioned in

subsection (1)(c) above to an end during A’s life is such that, in the

event of the power being exercised during A’s life, either—

(a)
A or another person will, on the trusts being brought to an end,

be absolutely entitled to the settled property, or

(b)
on the trusts being brought to an end, a disabled person’s

interest within section 89B(1)(a) or (c) will subsist in the

settled property.

(4)
If this section applies to settled property transferred into settlement by

a person, the person shall be treated as beneficially entitled to an

interest in possession in the settled property.

(5)
For the purposes of subsection (1)(b)(ii) above, assume—

(a)
that A will meet the conditions as to residence under section

64(1) of whichever of the 1992 Acts is applicable, and

(b)
that there will be no provision made by regulations under

section 67(1) and (2) of that Act.

(6)
For the purposes of subsection (1)(b)(iii) above, assume—

(a)
that A will meet the prescribed conditions as to residence

under section 71(6) of whichever of the 1992 Acts is

applicable, and

(b)
that there will be no provision made by regulations under

section 72(8) of that Act.

(7)
For the purposes of subsection (3) above, ignore—

(a)
power to give directions as to the settled property that is

exercisable jointly by the persons who between them are

entitled to the entire beneficial interest in the property, and

(b)
anything that could occur as a result of exercise of any such

power.

(8)
In this section “the 1992 Acts” means—

the Social Security Contributions and Benefits Act 1992, and

the Social Security Contributions and Benefits (Northern Ireland) Act

1992.

89B
Meaning of “disabled person’s interest”

(1)
In this Act “disabled person’s interest” means—

(a)
an interest in possession to which a person is under section

89(2) above treated as beneficially entitled,

S.C.A.  Standing Committee Proceedings: 15th June 2006
307

Finance (N, continued

(b)
an interest in possession to which a person is under section

89A(4) above treated as beneficially entitled,

(c)
an interest in possession in settled property (other than an

interest within paragraph (a) or (b) above) to which a disabled

person is beneficially entitled if the settled property was

transferred into settlement on or after 22nd March 2006, or

(d)
an interest in possession in settled property (other than an

interest within paragraph (a) or (b) above) to which a person

(“A”) is beneficially entitled if—

(i)
A is the settlor,

(ii)
A was beneficially entitled to the property

immediately before transferring it into settlement,

(iii)
A satisfies Her Majesty’s Commissioners for

Revenue and Customs as mentioned in section

89A(1)(b) above,

(iv)
the settled property was transferred into settlement on

or after 22nd March 2006, and

(v)
the trusts on which the settled property is held secure

that, if any of the settled property is applied during

A’s life for the benefit of a beneficiary, it is applied

for the benefit of A.

(2)
Subsections (4) to (6) of section 89 above (meaning of “disabled

person” in subsection (1) of that section) have effect for the purposes

of subsection (1)(c) above as they have effect for the purposes of

subsection (1) of that section.

(3)
Section 71D above does not apply to property in which there subsists

a disabled person’s interest within subsection (1)(c) above (but see

also section 71D(5) above).”

      (3)
In section 89,’.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Mrs Theresa Villiers

Mr Mark Francois

Not called  199

Schedule  20,  page  116,  line  41 [Vol II],  at end insert—

  ‘(1A)
After subsection (1) insert—

“(1A)
This section also applies to settled property, whenever transferred into

settlement, which is held on trusts in which an interest in possession

subsists, and in which the person beneficially entitled to the interest in

possession is a disabled person.” ’.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Mrs Theresa Villiers

Mr Mark Francois

Not called  200

Schedule  20,  page  117,  line  1 [Vol II],  after ‘means’ insert ‘—

S.C.A.  Standing Committee Proceedings: 15th June 2006
308

Finance (N, continued


(a)’.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Not called  201

Schedule  20,  page  117,  line  3 [Vol II],  at end insert—

‘(b)
an interest in possession in settled property to which a disabled person is

beneficially entitled.

(2A)
For subsection (4)(a) substitute—

“(a)
a person who lacked capacity, within the meaning of the Mental

Capacity Act 2005, or was expected to lack capacity at some

time in the future;”.

(2B)
In subsection (4)(c), omit the words “by virtue of” to the end.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  344

Schedule  20,  page  117,  line  3  [Vol  II],  at end insert—

‘(b)
an interest in possession in settled property to which a disabled person is

beneficially entitled.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  345

Schedule  20,  page  117,  line  3  [Vol  II],  at end insert—

‘(2A)
For subsection (4)(a) substitute—

“(a)
a person who lacked capacity, within the meaning of the Mental

Capacity Act 2005, or was expected to lack capacity at some

time within the following five years;”

(2B)
In subsection (4)(c), omit the words “by virtue of” to end.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  346

Schedule  20,  page  117,  line  5  [Vol  II],  leave out from ‘the’ to ‘a’ in line 6 and

insert ‘references in subsections (1) and (1A) above to a disabled person include, in

relation to any settled property, references to’.

S.C.A.  Standing Committee Proceedings: 15th June 2006
309

Finance (N, continued

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Not called  202

Schedule  20,  page  117,  line  5 [Vol II],  leave out from ‘in’ to second ‘to’ in line 6

and insert ‘subsections (1) and (1A) above to a disabled person include, in relation to any

settled property, references’.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Mrs Theresa Villiers

Mr Mark Francois

Not called  203

Schedule  20,  page  117,  line  15 [Vol II],  leave out from ‘allowance’ to ‘had’ in line

17.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  348

Schedule  20,  page  117,  line  21  [Vol  II],  leave out from ‘the’ to second ‘to’ in

line 22 and insert ‘references in subsections (1) and (1A) above to a disabled person

include, in relation to any settled property, references’.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Not selected  204

Schedule  20,  page  117,  line  21   [Vol II],  leave out from ‘in’ to second ‘to’ in line 22

and insert ‘subsections (1) and (1A) above to a disabled person include, in relation to any

settled property, references’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  349

Schedule  20,  page  117,  line  35  [Vol  II],  leave out from ‘by’ to ‘rate’ in line 36.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Mrs Theresa Villiers

Mr Mark Francois

Not called  205

Schedule  20,  page  117,  line  41  [Vol II],  at end insert—

S.C.A.  Standing Committee Proceedings: 15th June 2006
310

Finance (N, continued

‘(7)
The references in sections (1) and (1A) above to a disabled person include, in

relation to any settled property, references to a person who satisfies Her Majesty’s

Revenue and Customs that he would, when the property was transferred into

settlement, have been entitled to an attendance allowance or a disability living

allowance had he claimed it.’.

Julia Goldsworthy

Mr Colin Breed

John Thurso

John Hemming

Not called  206

Schedule  20,  page  117,  line  41  [Vol II],  at end insert—

‘(3A)
Sub-paragraph (2A) shall come into force immediately after section 2 of the

Mental Capacity Act 2005 comes into force.’.

Dawn Primarolo

Agreed to  389

Schedule  20,  page  117,  line  42  [Vol II],  leave out ‘(2)’ and insert ‘(1)’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  237

Schedule  20,  page  118,  line  5  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  267

Schedule  20,  page  118,  line  5  [Vol II],  at end insert—

‘Policies of insurance

7A  (1)
In section 6 of the Inheritance Tax Act 1984, after subsection (3) insert—

“(3A)
Any policy of insurance comprised in a settlement shall be treated as

excluded property for all purposes of this Act.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  268

Schedule  20,  page  118,  line  5  [Vol II],  at end insert—

‘Policies of insurance

7A  (1)
Any policy of insurance which was comprised in a settlement at 22nd March

2006 shall be treated as excluded property for the purposes of the Inheritance

Tax Act 1984.’.