Finance Act 1975

Payment of tax by instalments

13 (1) Subject to the following provisions of this paragraph, where any of the tax payable on the value transferred by a chargeable transfer made on death is attributable to the value of.—

(a) land of any description, wherever situated ; or

(b) shares or securities of a company which gave the deceased control of the company immediately before his death ; or

(c) shares or securities of a company not falling under paragraph (b) above and not quoted on a recognised stock exchange, if either the condition stated in sub-paragraph (2) below is fulfilled or the Board are satisfied that the tax attributable to their value cannot be paid in one sum without undue hardship ; or

(d) shares of a company not falling under paragraph (b) above and not quoted on a recognised stock exchange, if the conditions stated in sub-paragraph (3) below are fulfilled;

the tax so attributable may, if the person paying it by notice in writing to the Board so elects, be paid at his option either by eight equal yearly instalments or by sixteen equal half-yearly instalments, of which the first shall be payable six months after the end of the month in which the death occurred ; and interest under paragraph 19 below on the unpaid portion of the tax shall be added to each instalment and paid accordingly, except as otherwise provided in paragraph 16 below.

(2) The condition mentioned in sub-paragraph (1)(c) above is that not less than 20 per cent, of so much of the tax chargeable on the value transferred by the chargeable transfer as is tax for which the person paying the tax attributable as mentioned in sub-paragraph (1) above is liable (in the same capacity) consists of tax attributable to the value of those shares or securities or such other tax (if any) as may by virtue of this paragraph or paragraph 14 below be paid by instalments.

(3) The conditions mentioned in sub-paragraph (1)(d) above are that so much of the value transferred as is attributable to the shares exceeds £5,000 and that either—

(a) the nominal value of the shares is not less than 10 percent, of the nominal value of all the shares of the company at the time of the death ; or

(b) the shares are ordinary shares and their nominal value is not less than 10 per cent, of the nominal value of all ordinary shares of the company at the time of the death.

(4) Notwithstanding the making of an election under this paragraph, the tax for the time being unpaid, with interest to the time of payment, may be paid at any time, and if at any time (whether before or after the expiration of the six months mentioned in sub-paragraph (1) above) the whole or any part of the land, shares or securities is sold, the tax unpaid (or in the case of a sale of part, the proportionate part of that tax) shall become payable forthwith (or, if the said six months have not expired, on their expiration), together with any interest accrued under paragraph 19 below.

(5) Sub-paragraphs (1) and (4) above shall apply also in relation to a chargeable transfer made otherwise than on death, if either—

(a) the tax attributable as mentioned in sub-paragraph (1) above is borne by the person benefiting from the transfer ; or

(b) the transfer is made under paragraph 4, 6(2), 12 or 15 of Schedule 5 to this Act and the land, shares or securities to the value of which the tax is attributable continue to be comprised in the settlement;

and shall then apply subject to the modifications mentioned in sub-paragraph (6) below.

(6) Where sub-paragraphs (1) and (4) above apply by virtue of sub-paragraph (5) above, they shall apply as if—

(a) references to the date on which the death occurred were references to the date of the chargeable transfer;

(b) references to the time six months after the end of the month in which that date falls were references to the time when the tax would be due if it were not payable by instalments ;

(c) references to the deceased were references to the transferor or, if the transfer is made under paragraph 6, 12 or 15 of Schedule 5 to this Act, to the trustees of the settlement;

(d) the reference to the land, shares or securities being sold—

(i) in a case within sub-paragraph (5)(a), included a reference to any chargeable transfer in which the value transferred is wholly or partly attributable to the value of the land, shares or securities, other than a transfer made on death ; and

(ii) in a case within sub-paragraph (5)(b), were a reference to the land, shares or securities ceasing to be comprised in the settlement; and

(e) the reference to the condition stated in sub-paragraph (2) were omitted ; and

(f) the reference in sub-paragraph (3) to the value transferred were a reference to that value calculated as if no tax were chargeable on it;

and the question whether tax could be paid in one sum without undue hardship shall be determined on the assumption that the shares or securities concerned would be retained by the persons liable to pay the tax.

(7) For the purposes of this paragraph a person has control of a company at any time if he then has the control of powers of voting on all questions, or on any particular question, affecting the company as a whole which if exercised would yield a majority of the votes capable of being exercised thereon ; and—

(a) shares or securities shall be deemed to give a person control of a company if, together with any shares or securities which are related property within the meaning of paragraph 7 of Schedule 10 to this Act, they would be sufficient to give him control of the company (as defined in the preceding provisions of this sub-paragraph); and

(b) where shares or securities are comprised in a settlement, any powers of voting which they give to the trustees of the settlement shall be deemed to be given to the person beneficially entitled in possession to the shares or securities (except in a case where no individual is so entitled).

(8) In this paragraph " ordinary shares" means shares which carry either—

(a) a right to dividends not restricted to dividends at a fixed rate; or

(b) a right to conversion into shares carrying such a right as is mentioned in paragraph (a) above.

14 (1) Where any of the tax payable on the value transferred by a chargeable transfer made on death is attributable to the net value of a business or of an interest in a business, the tax so attributable may, if the person paying the tax by notice in writing to the Board so elects, be paid at his option either by eight equal yearly instalments or by sixteen equal half-yearly instalments, of which the first shall be payable six months after the end of the month in which the death occurred ; and interest under paragraph 19 below on the unpaid portion of the tax shall be added to each instalment and paid accordingly, except as otherwise provided in paragraph 16 below.

(2) For the purposes of this paragraph the net value of a business is the value of the assets used in the business (including goodwill) reduced by the aggregate amount of any liabilities incurred for the purposes of the business ; and in ascertaining for the purposes of this paragraph the value of an interest in a business, no regard shall be had to assets or liabilities other than those by reference to which the net value of the business would have fallen to be ascertained under this paragraph if the tax had been attributable to the entire business.

(3) Sub-paragraph (4) of paragraph 13 above applies in relation to this paragraph and any business or interest in a business as it applies in relation to that paragraph and the land, shares or securities mentioned therein ; and—

(a) in the application of that sub-paragraph to a business, the sale of an interest or part of an interest in the business shall be treated as a sale of part of the business; and

(b) in its application to an interest in a business, the payment, under a partnership agreement or otherwise, of any sum in satisfaction of the whole or any part of the interest otherwise than on a sale shall be treated as a sale of that interest or part at the time of payment.

(4) The preceding provisions of this paragraph shall apply also in relation to a chargeable transfer made otherwise than on death, if either—

(a) the tax attributable as mentioned in sub-paragraph (1) above is borne by the person benefiting from the transfer, or

(b) the transfer is made under paragraph 4, 6(2), 12 or 15 of Schedule 5 to this Act and the business or interest to the value of which the tax is attributable continues to be comprised in the settlement;

and shall then apply subject to the modifications mentioned in sub-paragraph (5) below.

(5) Where sub-paragraphs (1) to (3) above apply by virtue of sub-paragraph (4) above they shall apply as if—

(a) references to the time six months after the end of the month in which the death occurred were references to the time when the tax would be due if it were not payable by instalments ; and

(b) references to the business or an interest in the business being sold—

(i) in a case within sub-paragraph (4)(a), included a reference to any chargeable transfer in which the value transferred is wholly or partly attributable to the value of the business or interest other than a transfer made on death ; and

(ii) in a case within sub-paragraph (4)(b), were a reference to the business or interest ceasing to be comprised in the settlement.

(6) In this paragraph " business " includes a business carried on in the exercise of a profession or vocation, but does not include a business carried on otherwise than for gain.

15 Tax chargeable on such a chargeable transfer as is mentioned in paragraph 4 of Schedule 9 to this Act may, if the person paying the tax by notice in writing to the Board so elects, be paid at his option either by eight equal yearly instalments or by sixteen equal half-yearly instalments, of which the first shall be payable six months after the end of the month in which the transfer is made.

16 (1) Subject to the following provisions of this paragraph, where tax payable on the value transferred by a chargeable transfer—

(a) is payable by instalments under paragraph 13 or 14 above and the tax is attributable to the value of any shares, securities, business or interest in a business ; or

(b) is payable by instalments under paragraph 15 above ;

it shall, for the purpose of any interest to be added to each instalment, be treated as carrying interest from the date at which the instalment is payable.

(2) Sub-paragraph (1) above does not apply to tax attributable to the value of shares or securities of a company falling within paragraph (a) of sub-paragraph (3) below unless it also falls within paragraph (b) or (c) of that sub-paragraph.

(3) The companies referred to in sub-paragraph (2) above are—

(a) any company whose business consists wholly or mainly of one or more of the following, that is to say, dealing in securities, stocks or shares, land or buildings, or making or holding investments;

(b) any company whose business consists wholly or mainly in being a holding company (within the meaning of section 154 of the [1948 c. 38.] Companies Act 1948) of one or more companies not falling within paragraph (a) above ; and

(c) any company whose business is that of a jobber (as defined in section 477 of the Taxes Act) or discount house and is carried on in the United Kingdom.

(4) Sub-paragraph (1) above does not apply to tax attributable to the value included under section 22(5) of this Act in the value of a person's estate immediately before his death.

(5) Sub-paragraph (1)(a) above applies only to the extent that the value on which the tax concerned is payable, when added to so much of the value transferred by any previous transfer of value made by the same transferor as is value the tax on which also fell within that sub-paragraph, does not exceed £250,000; and if it does exceed that amount the excess shall be attributed to the tax attributable to the values of the shares, securities, business or interest concerned in proportion to those values respectively.

(6) The reference in sub-paragraph (5) above to the same transferor includes, in relation to chargeable transfers which are made under paragraph 6, 12 or 15 of Schedule 5 to this Act, the assumed transferor referred to in paragraph 6(4) of that Schedule.

(7) For the purposes of this paragraph transfers of value made by the same transferor on the same day shall be treated as one.