|
| |
|
charge under section 71E above (whether or not it has |
| |
| |
71G | Calculation of tax charged under section 71E in all other cases |
| |
| |
(a) | tax is charged under section 71E above, and |
| 5 |
(b) | the tax does not fall to be calculated in accordance with |
| |
| |
| 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 |
| 10 |
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 |
| 15 |
amount which, after deducting the tax, is equal to the amount |
| |
on which tax would be charged by virtue of paragraph (a) |
| |
| |
(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— |
| 20 |
(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— |
| 25 |
(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 |
| 30 |
section 71 above applied without ceasing to be settled |
| |
| |
| 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 |
| 35 |
| |
71H | Sections 71A to 71G: meaning of “parent” |
| |
In sections 71A to 71G above “parent” includes step-parent.” |
| |
(2) | Sub-paragraph (1) shall be deemed to have come into force on 22nd March |
| |
| 40 |
Section 71 of IHTA 1984 not to apply to property settled on or after 22nd March 2006 |
| |
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”. |
| 45 |
|
| |
|
| |
|
(3) | After subsection (1) insert— |
| |
“(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 |
| |
| 5 |
(b) | has applied to the settled property at all subsequent times up |
| |
| |
(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.” |
| 10 |
(4) | Where a chargeable transfer to which section 54A of IHTA 1984 applies was |
| |
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 |
| |
| 15 |
(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 |
| |
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 |
| |
| 20 |
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 |
| |
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 |
| 25 |
(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 |
| |
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— |
| 30 |
(a) | settled property ceases, on the coming into force of sub-paragraph |
| |
(1), to be property to which that section applies, but |
| |
(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). |
| 35 |
| |
Interests in possession: when settled property is part of beneficiary’s estate |
| |
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 |
| 40 |
is one to which the person becomes beneficially entitled on or after |
| |
22nd March 2006, subsection (1) above applies in relation to that |
| |
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 |
| |
is one to which the person became beneficially entitled before 22nd |
| 5 |
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 |
| |
| 10 |
“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 |
| 15 |
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 |
| 20 |
possession on the death of the testator or intestate. |
| |
| |
(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. |
| 25 |
(5) | Condition 4 is that Condition 3 has been satisfied at all times since L |
| |
became beneficially entitled to the interest in possession. |
| |
49B | Transitional serial interest |
| |
(1) | Where a person (“B”) is beneficially entitled to an interest in |
| |
possession in settled property (“the current interest”), for the |
| 30 |
purposes of this Chapter that interest is a “transitional serial interest” |
| |
| |
(a) | if the following conditions are met, or |
| |
(b) | if, and to the extent that, section 49C below so provides. |
| |
| 35 |
(a) | the settlement commenced before 22nd March 2006, and |
| |
(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”). |
| 40 |
(3) | Condition 2 is that the prior interest came to an end at a time on or |
| |
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 |
| |
the interest subsists, and |
| 5 |
(b) | the interest is not a disabled person’s interest. |
| |
49C | Transitional serial interest: contracts of life insurance |
| |
| |
(a) | a person (“C”) is beneficially entitled to an interest in |
| |
possession in settled property (“the present interest”), and |
| 10 |
(b) | on C’s becoming beneficially entitled to the present interest, |
| |
the settled property consisted of, or included, rights under a |
| |
contract of life insurance entered into before 22nd March |
| |
| |
| the present interest so far as subsisting in rights under the contract, |
| 15 |
or in property comprised in the settlement that directly or indirectly |
| |
represents rights under the contract, is a “transitional serial interest” |
| |
for the purposes of this Chapter if the following conditions are met. |
| |
| |
(a) | the settlement commenced before 22nd March 2006, and |
| 20 |
(b) | immediately before 22nd March 2006— |
| |
(i) | the property then comprised in the settlement |
| |
consisted of, or included, rights under the contract, |
| |
| |
(ii) | those rights were property in which C, or some other |
| 25 |
person, was beneficially entitled to an interest in |
| |
possession (“the earlier interest”). |
| |
| |
(a) | the earlier interest came to an end at a time on or after 6th |
| |
April 2008 (“the earlier-interest end-time”) on the death of the |
| 30 |
person beneficially entitled to it and C became beneficially |
| |
entitled to the present interest— |
| |
(i) | at the earlier-interest end-time, or |
| |
(ii) | on the coming to an end, on the death of the person |
| |
beneficially entitled to it, of an interest in possession |
| 35 |
to which that person became beneficially entitled at |
| |
the earlier-interest end-time, or |
| |
(iii) | on the coming to an end of the second or last in an |
| |
unbroken sequence of two or more consecutive |
| |
interests in possession to the first of which a person |
| 40 |
became beneficially entitled at the earlier-interest |
| |
end-time and each of which ended on the death of the |
| |
person beneficially entitled to it, or |
| |
(b) | C became beneficially entitled to the present interest— |
| |
(i) | on the coming to an end, on the death of the person |
| 45 |
entitled to it, of an interest in possession that is a |
| |
transitional serial interest under section 49B(1)(a) |
| |
| |
|
| |
|
| |
|
(ii) | on the coming to an end of the second or last in an |
| |
unbroken sequence of two or more consecutive |
| |
interests in possession the first of which was a |
| |
transitional serial interest under section 49B(1)(a) |
| |
above and each of which ended on the death of the |
| 5 |
person beneficially entitled to it. |
| |
(4) | Condition 3 is that rights under the contract were comprised in the |
| |
settlement throughout the period beginning with 22nd March 2006 |
| |
and ending with C’s becoming beneficially entitled to the present |
| |
| 10 |
| |
(a) | section 71A below does not apply to the property in which |
| |
the present interest subsists, and |
| |
(b) | the present interest is not a disabled person’s interest.” |
| |
(2) | Sub-paragraph (1) shall be deemed to have come into force on 22nd March |
| 15 |
| |
Disabled persons’ trusts: meaning of “disabled person’s interest” and “disabled person” |
| |
6 (1) | After section 89 (trusts for disabled persons) insert— |
| |
“89A | Self-settlement by person with condition expected to lead to disability |
| |
(1) | This section applies to property transferred by a person (“A”) into |
| 20 |
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 |
| 25 |
settlement, A had a condition that it was at that time |
| |
reasonable to expect would have such effects on A as to lead |
| |
| |
(i) | a person falling within section 89(4)(a) above, |
| |
(ii) | in receipt of an attendance allowance mentioned in |
| 30 |
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— |
| 35 |
(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. |
| 40 |
(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 |
| 45 |
|
| |
|
| |
|
(b) | on the trusts being brought to an end, a disabled person’s |
| |
interest within section 89B(1)(a) or (c) below will subsist in |
| |
| |
(4) | If this section applies to settled property transferred into settlement |
| |
by a person, the person shall be treated as beneficially entitled to an |
| 5 |
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 |
| 10 |
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 |
| |
| 15 |
(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 |
| 20 |
entitled to the entire beneficial interest in the property, and |
| |
(b) | anything that could occur as a result of exercise of any such |
| |
| |
(8) | In this section “the 1992 Acts” means— |
| |
the Social Security Contributions and Benefits Act 1992, and |
| 25 |
the Social Security Contributions and Benefits (Northern |
| |
| |
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 |
| 30 |
89(2) above treated as beneficially entitled, |
| |
(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 |
| 35 |
disabled person is beneficially entitled if the settled property |
| |
was transferred into settlement on or after 22nd March 2006, |
| |
| |
(d) | an interest in possession in settled property (other than an |
| |
interest within paragraph (a) or (b) above) to which a person |
| 40 |
(“A”) is beneficially entitled if— |
| |
| |
(ii) | A was beneficially entitled to the property |
| |
immediately before transferring it into settlement, |
| |
(iii) | A satisfies Her Majesty’s Commissioners for Revenue |
| 45 |
and Customs as mentioned in section 89A(1)(b) |
| |
| |
|
| |
|
| |
|
(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 |
| 5 |
| |
(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. |
| 10 |
(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).” |
| |
(2) | In section 89, after subsection (4) insert— |
| |
“(5) | The reference in subsection (1) above to a disabled person includes, |
| 15 |
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) |
| |
above had provision made by regulations under section 67(1) |
| 20 |
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 |
| |
(b) | would have been in receipt of disability living allowance by |
| 25 |
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 |
| |
for whom certain accommodation is provided) been ignored. |
| 30 |
(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 |
| |
| |
(a) | that he would, when the property was transferred into |
| 35 |
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 |
| |
section 64(1) of that Act, and |
| 40 |
(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 |
| |
allowance by virtue of entitlement to the care component at |
| 45 |
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 |
| |
|
| |
|