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13 1991

FINANCE ACT, 1991

PART VI

Capital Acquisitions Tax and Death Duties

Interpretation ( Part VI ).

113. —In this Part “the Principal Act” means the Capital Acquisitions Tax Act, 1976 .

Amendment of section 19 (value of agricultural property) of Principal Act.

114. —Subsection (1) of section 19 of the Principal Act shall—

(a) as respects a gift or inheritance taken on or after the 30th day of January, 1991, have effect as if “55 per cent.” were substituted for “50 per cent.” in the definition of “agricultural value”, and

(b) as respects a gift or inheritance taken on or after the passing of this Act, have effect as if “80 per cent.” were substituted for “75 per cent.” in the definition of “farmer”.

Amendment of Second Schedule to the Principal Act.

115. —(1) The Second Schedule to the Principal Act (as amended by section 111 of the Finance Act, 1984 ) is hereby amended by the substitution of the following Part for Part II:

“PART II

TABLE

Portion of Value

Rate of tax

Per cent.

The threshold amount

Nil

The next £10,000

20

The next £40,000

30

The next £50,000

35

The balance

40

”.

(2) This section shall have effect in relation to gifts and inheritances taken on or after the 30th day of January, 1991.

Inheritances taken by parents.

116. —(1) In this section “class threshold of £150,000” means the class threshold of £150,000 in the definition of “class threshold” contained in paragraph 1 (inserted by section 111 of the Finance Act, 1984 ) of the Second Schedule to the Principal Act.

(2) Subject to subsection (3), the class threshold of £150,000 shall apply, and be deemed always to have applied, in relation to a taxable inheritance taken on or after the 2nd day of June, 1982, by a parent of the disponer where—

(a) the interest taken by the successor is not a limited interest, and

(b) the inheritance is taken on the date of death of the disponer.

(3) Notwithstanding the provisions of section 46 of the Principal Act, interest shall not be payable on any repayment of tax which arises by virtue of this section where such tax was paid prior to the date of the passing of this Act.

Reduction in estimated market value of certain dwellings.

117. —(1) In so far as an inheritance consists of a house or the appropriate part of a house—

(a) at the date of the inheritance, and

(b) at the valuation date,

and is taken by a successor who, at the date of the inheritance—

(i) is a brother or sister of the disponer,

(ii) has attained the age of 55 years,

(iii) has resided in the house with the disponer continuously for a period of not less than 5 years ending on the date of the inheritance, and

(iv) is not beneficially entitled in possession to any other house or the appropriate part of any other house,

the estimated market value of the house or the appropriate part of the house shall, notwithstanding anything to the contrary in section 15 of the Principal Act, be reduced by 50 per cent. or £50,000, whichever is the lesser:

Provided that where the house or the appropriate part of the house comprised in the inheritance referred to in subsection (1) is agricultural property within the meaning of subsection (1) of section 19 of the Principal Act and the successor is a farmer within the meaning of that subsection, the provisions of this section shall not apply.

(2) Where a house, or the appropriate part of a house to which subsection (1) relates was not in the beneficial ownership of the disponer for the period of 5 years ending on the date of the inheritance, that period of 5 years shall be deemed to include any period, immediately prior to the date on which the disponer acquired such beneficial ownership, during which the successor was residing continuously with the disponer in any other house, or the appropriate part of any other house, of the disponer.

(3) In this section—

appropriate part”, in relation to a house, has the meaning assigned to it in relation to property by subsection (5) of section 5 of the Principal Act;

house” means a building, or a part of a building, used by the disponer as his main or only dwelling together with its garden or grounds of an ornamental nature.

(4) This section shall have effect in relation to inheritances taken on or after the 30th day of January, 1991.

Application of section 60 (relief in respect of certain policies of insurance) of Finance Act, 1985.

118. —For the purposes of section 60 of the Finance Act, 1985 , “relevant tax” shall be deemed to include inheritance tax payable in respect of an inheritance taken under a disposition made by the spouse of the insured where the inheritance is taken on the date of death of the insured.

Relief in respect of certain policies of insurance relating to tax payable on gifts.

119. —(1) In this section—

appointed date” means—

(a) a date occurring not earlier than 8 years after the date on which a relevant insurance policy is effected, or

(b) a date on which the proceeds of a relevant insurance policy become payable either on the critical illness or the death of the insured, or one of the insured in a case to which paragraph (b) of the definition of “insured” relates, being a date prior to the date to which paragraph (a) of this definition relates;

insured” means—

(a) where the insured is an individual, that individual, or

(b) where the insured is an individual and the spouse of that individual at the date the policy is effected, that individual and the spouse of that individual, jointly or separately, or the survivor of them, as the case may be;

relevant insurance policy” means a policy of insurance—

(a) which is in a form approved by the Commissioners for the purposes of this section,

(b) in respect of which annual premiums are paid by the insured,

(c) the proceeds of which are payable on the appointed date, and

(d) which is expressly effected under this section for the purpose of paying relevant tax;

relevant tax” means gift tax or inheritance tax, payable in connection with an inter vivos disposition made by the insured within one year after the appointed date, excluding gift tax or inheritance tax payable on an appointment out of an inter vivos discretionary trust set up by the insured.

(2) The proceeds of a relevant insurance policy shall, to the extent that such proceeds are used to pay relevant tax, be exempt from tax and shall not be taken into account in computing such tax.

(3) Subject to the provisions of section 54 of the Principal Act and section 127 of the Finance Act, 1990 , where the insured makes an inter vivos disposition of the proceeds, or any part of the proceeds, of a relevant insurance policy other than in paying relevant tax, such proceeds shall not be exempt from tax.

(4) A relevant insurance policy shall be a qualifying insurance policy for the purposes of section 60 of the Finance Act, 1985 , where the proceeds of such relevant insurance policy become payable on the death of the insured or one of the insured in a case to which paragraph (b) of the definition of “insured” relates:

Provided that such relevant insurance policy would have been a qualifying insurance policy if it had been expressly effected under that section.

(5) A qualifying insurance policy for the purposes of section 60 of the Finance Act, 1985 , shall be a relevant insurance policy where the proceeds of such qualifying insurance policy are used to pay relevant tax arising under an inter vivos disposition made by the insured within one year after the appointed date.

(6) Section 143 of the Income Tax Act, 1967 (as amended by section 60 of the Finance Act, 1985 ) is hereby amended by the addition to subsection (5) of the following paragraph after paragraph (c):

“(d) be given for the year 1991-92 and subsequent years of assessment in respect of premiums payable in respect of a relevant insurance policy within the meaning of section 119 of the Finance Act, 1991.”.

Capital acquisitions tax, waiver in respect of certain interest payable, etc.

120. —(1) In this section “donee” includes a successor and a reference to a gift or a taxable gift includes a reference to an inheritance or a taxable inheritance, as the case may be, and a reference to gift tax includes a reference to inheritance tax.

(2) Where in respect of a gift taken on or before the 30th day of January, 1991—

(a) gift tax is due and payable by a donee on any date on or before the 30th day of September, 1991, and

(b) in the period beginning on the 30th day of January, 1991, and ending on the 30th day of September, 1991, a return is delivered and gift tax is assessed in respect of the gift in accordance with the provisions of section 36 (inserted by section 74 of the Finance Act, 1989 ) of the Principal Act or section 104 of the Finance Act, 1986 , and

(c) such gift tax is paid on or before the 30th day of September, 1991,

interest payable on such gift tax up to the 30th day of April, 1991, shall be waived and penalties, if incurred, shall not be collected.

(3) For the purposes of subsection (2) where—

(a) gift tax assessed on a taxable gift is being paid by instalments, or

(b) a payment on account of gift tax has been made,

sums paid in discharge of earlier instalments or as a payment on account of tax shall, notwithstanding the provisions of subsection (4) of section 41 of the Principal Act, be applied or reapplied towards the discharge of tax in the first instance:

Provided that where the sum so paid is in excess of the sum to be so applied or reapplied, the excess shall not be repaid.

(4) This section shall not apply in relation to a gift—

(a) where gift tax is due and payable by the donee concerned in respect of any other gift taken by him, unless such gift tax is paid on or before the 30th day of September, 1991,

(b) where any capital gains tax is due and payable in respect of a disposal of the property comprised in the gift concerned, unless such capital gains tax and penalties (together with all interest due in respect of that tax) is paid at the same time or prior to the date of payment of the gift tax on that gift.

(5) Where additional gift tax becomes due and payable as a result of a revaluation of property included in a self assessed return, which was delivered on or after the 30th day of January, 1991, interest payable on such additional gift tax shall not be waived.

(6) (a) A fine or other penalty imposed by a court in connection with a gift shall not be waived.

(b) Interest on gift tax, which has been ordered to be paid by a court, shall not be waived.

Amendment of section 57 (exemption of certain securities) of Capital Acquisitions Tax Act, 1976.

121. —(1) Section 57 of the Principal Act is hereby amended—

(a) in subsection (1) by the substitution of the following definition for the definition of unit trust scheme:

“‘unit trust scheme’ means an authorised unit trust scheme within the meaning of the Unit Trusts Act, 1990 , whose deed expressing the trusts of the scheme restricts the property subject to those trusts to securities.”,

and

(b) in subsection (2) (as amended by section 40 of the Finance Act, 1978) by the substitution for “Unit Trusts Act, 1972” of “ Unit Trusts Act, 1990 ”.

(2) This section shall have effect in relation to gifts and inheritances taken on or after the 26th day of December, 1990.

Death duties, waiver in respect of certain interest payable, etc.

122. —(1) Where outstanding death duties are paid on or before the 30th day of September, 1991, interest payable on such duties up to the 30th day of April, 1991, shall be waived and penalties, if incurred, shall not be collected.

(2) This section shall not apply to any penalty imposed by a court or to interest on death duties, the payment of which has been ordered by a court.

(3) In this section “death duties” has the meaning assigned to it by section 13 (3) of the Finance Act, 1894.