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3.48 pm

Mrs. Theresa Villiers (Chipping Barnet) (Con): I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss the following:

Amendment No. 58, in schedule 20, page 377, line 21, after ‘minor’, insert ‘(whether by exercise of trustees’ powers under such a will or otherwise).’.

Amendment No. 56, page 380, line 30, at end insert—

‘(4A) Where—

(a) section 71 above applied to settled property immediately before 22nd March 2006,

(b) on or after that date a beneficiary (within the meaning of section 71 above) (“B”) became entitled to an interest in possession in that settled property, and

(c) before that interest in possession had come to an end and while B was under the age of 25 and before [6th April 2008] that settled property became held for the benefit of B on trusts such as are mentioned in subsection (3)(b)(i) above,

subsections (3) and (4) above shall apply as though the settled property had become held on the trusts referred to in paragraph (c) above immediately at the time B in fact became entitled to the interest in possession referred to in paragraph (b) above.’.


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Government amendment No. 70.

Amendment No. 34, page 386, line 3, after ‘interest’, insert ‘, or

(d) a relationship breakdown settlement interest.’.

Government amendments Nos. 71 to 74.

Amendment No. 59, page 386, line 42, after ‘but’, insert ‘(unless B was the spouse or civil partner of the person entitled to the prior interest)’.

Government amendments Nos. 75 to 77.

Amendment No. 5, page 388, line 18, at beginning insert—

‘6 (1) In section 89 (trusts for disabled persons)—

(a) in subsection (4)(a) at end insert—

“(aa) a person who lacked capacity within the meaning of section 272 below, or”;

(b) in subsection (4)(c), leave out “or middle” and insert “middle or lower”; and

(c) after subsection (4)(c) at end insert—

“(d) a person who satisfies the Commissioners for Her Majesty’s Revenue and Customs that he had a condition that it was at that time reasonable to expect would have such effects on him as to lead to him becoming a person—

(i) falling within subsection (4)(a) or (aa) above, or

(ii) in receipt of an attendance allowance mentioned in subsection (4)(b) above, or

(iii) in receipt of a disability living allowance mentioned in subsection (4)(c) above.”.’.

Amendment No. 6, page 388, line 29, after ‘89(4)(a)’, insert ‘or (aa)’.

Amendment No. 7, page 388, line 34 , leave out ‘or middle’ and insert ‘, middle or lower’.

Government amendment No. 78.

Amendment No. 8, page 390, line 26, leave out ‘or middle’ and insert ‘, middle or lower’.

Amendment No. 9, page 390, line 46, leave out ‘or middle’ and insert ‘, middle or lower’.

Amendment No. 10, page 391, line 2, at end insert—

‘(7) The reference in subsection (1) above to a disabled person includes, in relation to any settled property, a reference to a person who satisfied Her Majesty’s Revenue and Customs that he would, when the property was transferred into settlement, have been entitled to an attendance allowance or disability living allowance, by virtue of entitlement to the care component at the highest, middle or lower rate, whether or not such an allowance was actually claimed.’.

Government amendment No. 79.

Amendment No. 35, page 393, line 9, at end insert ‘, and

(iv) not a relationship breakdown settlement interest.”’.

Amendment No. 32, page 393, line 9, after ‘interest’, insert—

‘10A (1) Section 10 of IHTA 1984 is amended as follows.

(2) In subsection (1)(b) after “with each other”, insert “, or

(c) it is made in accordance with or pursuant to a court order in proceedings for the following types of provision—

(i) 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 orders under
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section 8 of the Family Law (Scotland) Act 1985 and any successive legislation; or

(ii) 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 and any successive legislation; or

(iii) 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, in Scotland or in Northern Ireland, 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 orders under section 8 of the Family Law (Scotland) Act 1985 and any successive legislation; or

(iv) 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 and any successive legislation.”.’.

Government amendment No. 80.

Amendment No. 36, page 396, line 15, at end insert ‘, or

(c) a relationship breakdown settlement interest.”’.

Amendment No. 37, page 396, line 30, at end insert ‘, or

(d) a relationship breakdown settlement interest.”’.

Amendment No. 38, page 396, line 39, at end insert ‘, or

(d) a relationship breakdown settlement interest.”’.

Amendment No. 39, page 397, line 24, at end insert ‘, or

(c) a relationship breakdown settlement interest.”’.

Amendment No. 40, page 398, line 10, at end insert ‘, or

(c) a relationship breakdown settlement interest.”’.

Amendment No. 41, page 398, line 28, at end insert ‘, or

(d) a relationship breakdown settlement interest.”’.

Amendment No. 3, page 398, line 39, at end insert—

‘(2A) After sub-paragraph 1(f) insert—

“(g) a life protection policy as defined in subsection 4 below;

(h) property representing directly or indirectly any sum paid under a life protection policy, within two years following the death of any person giving rise to that sum.”.’.

Amendment No. 42, page 399, line 11, at end insert ‘, and

(iv) not a relationship breakdown settlement interest.’.

Amendment No. 4, page 399, line 25, at end insert—

‘(4) After section 58(3) insert—

“58(4) In subsections 1(g) and 1(h) above a “life protection policy” is a policy of insurance where the sum payable on the death or disability of any person is at all times no less than a number of equal to ten multiplied by the highest total sum of premiums paid in any period of twelve months.”.’.
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Amendment No. 43, page 399, line 37, after first ‘interest’, insert ‘, or a relationship breakdown settlement interest’.

Government amendment No. 81.

Amendment No. 33, page 400, line 6, at end insert—

‘20A In IHTA 1984 after section 59 IHTA 1984 insert—

“59A 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 of the type mentioned in section 10(1)(c).

(3) Condition 2 is that L became beneficially entitled to the interest in possession on or before the date on which the court order came into effect.’.

Government amendment No. 82.

Amendment No. 57, page 400, line 44, at end insert ‘or a disabled person’s interest’.

Government amendment No. 83.

Amendment No. 44, page 401, line 21 , after ‘interest’, insert ‘, or

(iii) a relationship breakdown settlement interest.’.

Government amendment No. 84.

Amendment No. 45, page 401, line 27, after second ‘interest’, insert ‘or a relationship breakdown settlement interest’.

Government amendment No. 85.

Amendment No. 46, page 401, line 30 , after ‘interest’, insert ‘or a relationship breakdown settlement interest’.

Government amendment No. 86.

Amendment No. 47, page 401, line 37 , leave out ‘neither’ and insert ‘not’.

Government amendment No. 87.

Amendment No. 48, page 401, line 37, leave out ‘nor’ and insert ‘or’.

Amendment No. 49, page 401, line 38 , after ‘interest’, insert ‘or a relationship breakdown settlement interest.’.

Amendment No. 50, page 402, line 2, at end insert ‘, or

(d) a relationship breakdown settlement interest.”’.

Amendment No. 54, page 403, leave out line 1.

Amendment No. 55, page 403, line 2 , leave out ‘the’ and insert ‘a’.

Government amendments Nos. 88 and 89.

Amendment No. 11, page 403, line 26, at end insert—

‘“lacked capacity” means lacked capacity, within the meaning of the Mental Capacity Act 2005, in relation to any financial matter;’.

Amendment No. 51, page 403, line 26, at end insert—

‘“relationship breakdown settlement interest” means a relationship breakdown settlement interest for the purposes of Chapter 3 of Part 3 (see section 59A above);”’.

Government amendments Nos. 90 to 92.


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Amendment No. 12, page 404, line 6, at end insert—

‘(iii) a disabled person’s interest, within the meaning given by section 89B of that Act; or’.

Amendment No. 52, page 404, line 6, at end insert—

‘(iii) a relationship breakdown settlement interest within the meaning given by section 59A of that Act, or’.

Government amendments Nos. 93 to 96.

Amendment No. 53, page 405, line 5, after ‘interest’, insert ‘or

(iii) a relationship breakdown settlement interest.’.

Mrs. Villiers: From the day the Chancellor slipped out these proposals contained in schedule 20 of the Finance Bill in Budget note 25 on 22 March this year, they were greeted with dismay and viewed as a matter of grave concern. Protests came from thousands of professionals across the country who were deeply worried that the Government had failed to carry out any consultation on the proposals and that those proposals would have a retrospective impact on thousands of trusts. Above all, Richard Platt, of Brewin Dolphin Securities, spoke for many of similar mind when he said that the proposals would

The Society of Trust and Estate Practitioners, which has campaigned hard on the issue, estimated that at least 1 million wills would have to be reviewed or rewritten. The VAT on the £250 million or so of professional fees incurred in reviewing all those wills would have outstripped the mere £15 million that the Government expected to raise from what must have been one of the least cost-effective tax proposals ever made.

The Paymaster General dismissed the measured concerns that I expressed about these matters on the Floor of the House by saying that I did not know what I was talking about. Despite that robust defence, in Committee the Government then proceeded to table no fewer than 33 amendments to schedule 20 in an attempt to mitigate the serious problems about which I and so many others had protested.

The key changes were to reduce the new tax penalty imposed on trusts where property does not vest until the age of 25, and to restore the spouse exemption for trusts set up in wills. The Chancellor’s retreat continues today, with another 27 Government amendments to schedule 20. I welcome Government amendment No. 75 in particular, which more or less completes the Government’s U-turn on the spouse exemption and covers the point made in our amendment No. 59. The Government dismissed my arguments on the point in Committee, but they seem now to have conceded that successive life interest for spouses should not always fall under the new regime set out in schedule 20.

John Bercow (Buckingham) (Con): Will my hon. Friend give way?

Mrs. Villiers: Certainly.


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