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23 1961

FINANCE ACT, 1961

PART III.

Death Duties.

Disposition.

21. —In this part of this Act “disposition” includes any trust, covenant, agreement or arrangement, whether made by a single transaction or a series of transactions.

Alteration of rates of estate duty.

22. —In the case of persons dying after the passing of this Act, the scale set out in the Second Schedule to this Act shall be, and shall have effect as, the scale of rates of estate duty in lieu of the scale set out in the Second Schedule to the Finance Act, 1960 .

Exemption for gifts to the State.

23. —(1) For the purposes of estate duty and subject to the provisions of this section—

(a) property the subject matter of a gift to the State taking effect in possession in the donor's lifetime or on his death shall not be included in the property passing or deemed to pass on his death where the death occurs after the passing of this Act,

(b) property the subject matter of a gift to the State which is limited to take effect in possession on a death other than the death of the donor shall not be included in the property passing or deemed to pass on the death on which the gift takes effect in possession where that death occurs after the passing of this Act.

(2) An exemption granted by subsection (1) of this section shall apply so long (and only so long) as the property comprised in the gift continues under the terms of the gift to be held exclusively for the use and enjoyment or benefit of the public, but if it has remained operative for at least ten years, the said property shall not be aggregated for the purpose of determining the rate of estate duty payable on the death and shall, unless exempt under some other Act, be chargeable at the rate appropriate to the principal value of the property with which it would have been aggregated had it not been property to which subsection (1) of this section applies.

(3) Any duty which becomes payable in respect of property comprised in a gift to the State by reason of the termination of an exemption under subsection (1) of this section shall be a charge on the property and shall be accounted for and paid by the trustees in whom the property is vested at the date when the exemption ceases to have effect and by the person or persons thenceforward beneficially entitled to the property, and interest on the duty shall be payable from that date.

(4) In the foregoing subsections of this section “gift to the State” means a gift (other than a bequest of a residuary estate or a share thereof) which is for the public use or benefit and which the Minister for Finance certifies to be a gift to the State for the purposes of this section.

Gifts inter vivos and property passing by reason of disposal or determination of life interest.

24. —(1) In relation to property taken under a disposition purporting to operate as an immediate gift inter vivos made after the passing of this Act by a person within three years of his death and which is deemed to be included in the property passing on his death for the purposes of estate duty, subsections (5) and (6) of section 7 of the Finance Act, 1894, and subsection (2) of section 60 of the Finance (1909-10) Act, 1910, shall have effect subject to the substitution of “at the date of the gift” for “at the time of the death of the deceased” or “at the date of the death of the deceased” (as the case may be).

(2) Where, by virtue of subsection (1) of section 30 of the Finance Act, 1941 , property is deemed to pass either wholly or to a particular or limited extent on a death by reason of the fact that an interest limited to cease on the death has, after the passing of this Act, been disposed of or has determined, the property so deemed to pass shall be the property in which the interest so limited to cease subsisted at the date of the disposition or determination and, in relation to such property, subsections (5) and (6) of section 7 of the Finance Act, 1894, and subsection (2) of section 60 of the Finance (1909-10) Act, 1910, shall have effect subject to the substitution of “at the date of the disposition or determination” for “at the time of the death of the deceased” or “at the date of the death of the deceased” (as the case may be).

(3) Where—

(a) a person has, after the passing of this Act, made a disposition of property purporting to operate as an immediate gift inter vivos,

(b) the disposition was made within three years of his death but was not a gift for public or charitable purposes made twelve months or more before his death,

(c) the disposition was not made in consideration of marriage,

(d) subsequent to the date of the disposition, such person has, by reason of a transaction or series of transactions effected for valuable consideration in money or money's worth, acquired an interest in or a power of appointment over such property or caused it to be the subject of a further disposition, and

(e) in consequence of the transaction or transactions, the property passes or is deemed to pass on his death,

then, a sum of money equivalent to the consideration or considerations given in the transaction or transactions by the deceased or provided out of or by means of any property of which he was competent to dispose shall be deemed for the purposes of estate duty to be property taken under a disposition made by the deceased within three years of his death purporting to operate as a gift inter vivos to the person or for the purposes in whose favour the disposition referred to in paragraph (a) of this subsection was made, and, as respects any such sum, it shall be deemed, for purposes of aggregation, to be property in which the deceased had an interest and section 3 of the Finance Act, 1894, and subsection (10) of section 7 of that Act shall have no application to it.

(4) Where, by virtue of this section, property is to be valued for estate duty purposes at a date other than the date of the death of the deceased, the proviso to subsection (2) of section 60 of the Finance (1909-10) Act, 1910, shall not apply to the property.

Collection of duty from trustees after disposition or determination of life interest.

25. —(1) Where an interest limited to cease on a death (within the meaning of section 30 of the Finance Act, 1941 ) has, after it has become an interest in possession, been disposed of or has determined either wholly or partly, then, whatever the nature of the property in which the interest subsisted, the following persons shall be accountable for any estate duty payable on the death by virtue of that section (in addition to any persons accountable therefor apart from this subsection):

(a) if the settlement under which the interest subsisted is in existence at the death, the trustees for the time being of that settlement, and

(b) if it is not, the persons who were the last trustees of that settlement.

(2) Subsection (1) of this section shall have effect only in relation to deaths occurring after the passing of this Act, whether or not the relevant interest is disposed of or determines after such passing, so however that no person shall by virtue of that subsection be accountable as trustee of any settlement for any duty except to the extent of the property comprised in the settlement after such passing.

Exemption where net value does not exceed £5,000.

26. —(1) Where the net value of the property, real and personal, passing on the death of the deceased, exclusive of property settled otherwise than by the will of the deceased, does not exceed five thousand pounds, legacy and succession duties shall not be payable under the will or intestacy of the deceased in respect of that property.

(2) Subsection (1) of this section shall have effect only in relation to persons dying after the passing of this Act.

Provisions to apply where seotion 33 of Wills Act, 1837 has effect.

27. —(1) Property shall not be deemed for purposes of estate duty to pass, or to have passed, on a person's death because, on a later death occurring after the passing of this Act, a testamentary disposition of that property takes effect, under section 33 of the Wills Act, 1837, or otherwise, as if that person, or any other person, had survived the testator.

(2) Where—

(a) a person has predeceased a testator, and

(b) the death of the testator occurs after the passing of this Act,

such person shall not be treated for purposes of legacy duty or succession duty as having acquired a legacy or become entitled to a succession in property devised or bequeathed by the will of the testator.

(3) Where—

(a) a person survives a testator,

(b) the death of the testator occurs after the passing of this Act,

(c) such person becomes beneficially entitled, by devolution from, or under a disposition made by, a person who predeceased the testator, to any interest in, or to the income from, property devised or bequeathed by the testator, and

(d) section 33 of the Wills Act, 1837, has effect in relation to the devise or bequest,

such person shall be treated for the purposes of legacy duty and succession duty as deriving the interest or income from the testator, but the amount of any legacy duty or succession duty which may become payable by virtue of this subsection shall not exceed the amount which would have been payable if this section had not been enacted.

Exception of certain property from passing on death.

28. —(1) Property taken under a gift, whether by way of settlement or otherwise, made by any person dying after the passing of this Act shall not be included in the property deemed to pass on his death under the provisions of paragraph (c) or paragraph (e) of subsection (1) of section 2 of the Finance Act, 1894, by reason only of the fact that an interest in the property for life or any other period determinable by reference to death was reserved to the donor or that bona fide possession and enjoyment of the property had not been assumed by the donee immediately on the gift and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise.

(2) Any interest or benefit reserved by or secured to the donor in connection with a disposition to which subsection (1) of this section applies shall be subject to the following provisions:

(a) if it was not charged upon or did not issue out of the property comprised in the disposition it shall nevertheless be deemed for the purposes of estate duty to have been an interest in that property,

(b) if it was subject as to its amount, payment or provision to a discretion vested in any person or persons, it shall nevertheless be deemed for the purposes of estate duty to be an interest in that property equivalent in annual value to one-third of the aggregate of all such interests or benefits actually received, enjoyed or disposed of by the donor during the three years immediately preceding his death,

and, in relation to property in which any such interest or benefit subsisted or is deemed by this subsection to have subsisted, paragraph (b) of subsection (1) of section 2 of the Finance Act, 1894, shall have effect subject to the deletion of “holder of an office, or”.

(3) Property shall not be deemed to be included in the property passing on a death occurring after the passing of this Act by virtue of subsection (1) of section 30 of the Finance Act, 1941 , by reason only of the fact that bona fide possession and enjoyment of the property has not been assumed, immediately after the disposition or determination of the interest limited to cease on the death, by the person becoming entitled by virtue of or upon the disposition or determination and has not thenceforward been retained to the entire exclusion of the person who had the interest and of any benefit to him by contract or otherwise.

(4) Where, in connection with any such disposition or determination as is mentioned in subsection (1) of section 30 of the Finance Act, 1941 , any interest or benefit was reserved by or secured to the person whose interest was disposed of or determined, being a person whose death occurs after the passing of this Act, the interest or benefit shall be subject to the following provisions:

(a) if it was not charged upon or did not issue out of the property in which the interest which was disposed of or determined subsisted, it shall nevertheless be deemed for the purposes of estate duty to have been an interest in that property,

(b) if it was subject as to its amount, payment or provision to a discretion vested in any person or persons, it shall nevertheless be deemed for the purposes of estate duty to be an interest in that property equivalent in annual value to one-third of the aggregate of all such interests or benefits actually received, enjoyed or disposed of by the person whose interest was disposed of or determined during the three years immediately preceding the death on which the interest which was disposed of or determined had been limited to cease,

and, in relation to property in which any such interest or benefit subsisted or is deemed by this subsection to have subsisted, paragraph (b) of subsection (1) of section 2 of the Finance Act, 1894, shall have effect subject to the deletion of “holder of an office, or”.