PART III SETTLED PROPERTY
C1C2C3C4 CHAPTER III SETTLEMENTS WITHOUT INTERESTS IN POSSESSION F12, AND CERTAIN SETTLEMENTS IN WHICH INTERESTS IN POSSESSION SUBSIST
See Finance Act 1990 s. 126—exemption for pools payments to trustees for football ground improvements in respect of events on or after 6April 1990.
Pt. 3 Ch. 3 modified (22.7.2004) by Finance Act 2004 (c. 12), s. 283, Sch. 36 para. 57(1) (with s. 283(5))
Pt. 3 Ch. 3 modified (22.7.2004) by Finance Act 2004 (c. 12), s. 283, Sch. 36 para. 56(2)(b) (with s. 283(5))
Part III Chapter III (ss.58-85) excluded by Finance Act 1991 (c.31, SIF 63:1), s. 121(4).
Pt. III Ch. III (ss. 58-85) restricted (3.5.1994) by 1994 c. 9, s. 248
Rates of principal charge
66 Rate of ten-yearly charge.
1
Subject to subsection (2) below, the rate at which tax is charged under section 64 above at any time shall be three tenths of the effective rate (that is to say the rate found by expressing the tax chargeable as a percentage of the amount on which it is charged) at which tax would be charged on the value transferred by a chargeable transfer of the description specified in subsection (3) below.
2
Where the whole or part of the value mentioned in section 64 above is attributable to property which was not relevant property, or was not comprised in the settlement, throughout the period of ten years ending immediately before the ten-year anniversary concerned, the rate at which tax is charged on that value or part shall be reduced by one-fortieth for each of the successive quarters in that period which expired before the property became, or last became, relevant property comprised in the settlement.
F132A
Subsection (2) above does not apply to property which is regarded as relevant property as a result of section 64(1A) (and accordingly that property is charged to tax at the rate given by subsection (1) above).
3
The chargeable transfer postulated in subsection (1) above is one—
a
the value transferred by which is equal to an amount determined in accordance with subsection (4) below;
b
which is made immediately before the ten-year anniversary concerned by a transferor who has in the F1preceding seven years made chargeable transfers having an aggregate value determined in accordance with subsection (5) below; and
F2c
on which tax is charged in accordance with section 7(2) of this Act.
4
The amount referred to in subsection (3)(a) above is equal to the aggregate of—
a
the value on which is charged under section 64 above;
F15b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
the value, immediately after a related settlement commenced, of the F16relevant property then comprised in it;
F17d
the value of any same-day addition; and
e
where—
i
an increase in the value of the property comprised in another settlement is represented by the value of a same-day addition aggregated under paragraph (d) above, and
ii
that other settlement is not a related settlement,
the value immediately after that other settlement commenced of the relevant property then comprised in that other settlement;
but subject to subsection (6) below.
5
The aggregate value referred to in subsection (3)(b) above is equal to the aggregate of—
a
the values transferred by any chargeable transfers made by the settlor in the period of F3seven years ending with the day on which the settlement commenced, disregarding transfers made on that day or before 27th March 1974, and
b
the amounts on which any charges to tax were imposed under section 65 above in respect of the settlement in the ten years before the anniversary concerned;
but subject to subsection (6) and section 67 below.
6
In relation to a settlement which commenced before 27th March 1974—
a
subsection (4) above shall have effect with the omission of F14paragraphs (c) to (e) ; and
b
subsection (5) above shall have effect with the omission of paragraph (a);
and where tax is chargeable under section 64 above by reference to the first ten-year anniversary of a settlement which commenced before 9th March 1982, the aggregate mentioned in subsection (5) above shall be increased by the amounts of any distribution payments (determined in accordance with the rules applicable under paragraph 11 of Schedule 5 to the M1Finance Act 1975) made out of settled property before 9th March 1982 (or, where paragraph 6, 7 or 8 of Schedule 15 to the M2Finance Act 1982 applied, 1st April 1983, or, as the case may be, 1st April 1984) and within the period of ten years before the anniversary concerned.
67 Added property, etc.
1
This subsection applies where, after the settlement commenced and after 8th March 1982, but before the anniversary concerned, the settlor made a chargeable transfer as a result of which the value of the property comprised in the settlement was increased.
2
For the purposes of subsection (1) above, it is immaterial whether the amount of the property so comprised was increased as a result of the transfer, but a transfer as a result of which the value increased but the amount did not shall be disregarded if it is shown that the transfer—
a
was not primarily intended to increase the value, and
b
did not result in the value being greater immediately after the transfer by an amount exceeding five per cent. of the value immediately before the transfer.
3
Where subsection (1) above applies in relation to a settlement which commenced after 26th March 1974, section 66(5)(a) above shall have effect as if it referred to the greater of—
a
the aggregate of the values there specified, and
b
the aggregate of the values transferred by any chargeable transfers made by the settlor in the period of F4seven years ending with the day on which the chargeable transfer falling within subsection (1) above was made—
i
disregarding transfers made on that day or before 27th March 1974, and
ii
excluding the values mentioned in subsection (5) below;
and where the settlor made two or more chargeable transfers falling within subsection (1) above, paragraph (b) above shall be taken to refer to the transfer in relation to which the aggregate there mentioned is the greatest.
4
Where subsection (1) above applies in relation to a settlement which commenced before 27th March 1974, the aggregate mentioned in section 66(5) above shall be increased (or further increased) by the aggregate of the values transferred by any chargeable transfers made by the settlor in the period of F5seven years ending with the day on which the chargeable transfer falling within subsection (1) above was made—
a
disregarding transfers made on that day or before 27th March 1974, and
b
excluding the values mentioned in subsection (5) below; and where the settlor made two or more chargeable transfers falling within subsection (1) above, this subsection shall be taken to refer to the transfer in relation to which the aggregate to be added is the greatest.
5
The values excluded by subsections (3)(b)(ii) and (4)(b) above are—
a
any value attributable to property whose value is taken into account in determining the amount mentioned in section 66(4) above; and
b
any value attributable to property in respect of which a charge to tax has been made under section 65 above and by reference to which an amount mentioned in section 66(5)(b) above is determined.
6
Where the property comprised in a settlement immediately before the ten-year anniversary concerned, or any part of that property, had on any occasion within the preceding ten years ceased to be relevant property then, if on that occasion tax was charged in respect of the settlement under section 65 above, the aggregate mentioned in section 66(5) above shall be reduced by an amount equal to the lesser of—
a
the amount on which tax was charged under section 65 (or so much of that amount as is attributable to the part in question), and
b
the value on which tax is charged under section 64 above (or so much of that value as is attributable to the part in question);
and if there were two or more such occasions relating to the property or the same part of it, this subsection shall have effect in relation to each of them.
7
References in subsection (6) above to the property comprised in a settlement immediately before an anniversary shall, if part only of the settled property was then relevant property, be construed as references to that part.
68 Rate before first ten-year anniversary.
1
The rate at which tax is charged under section 65 above on an occasion preceding the first ten-year anniversary after the settlement’s commencement shall be the appropriate fraction of the effective rate at which tax would be charged on the value transferred by a chargeable transfer of the description specified in subsection (4) below (but subject to subsection (6) below).
2
For the purposes of this section the appropriate fraction is three tenths multiplied by so many fortieths as there are complete successive quarters in the period beginning with the day on which the settlement commenced and ending with the day before the occasion of the charge, but subject to subsection (3) below.
3
Where the whole or part of the amount on which tax is charged is attributable to property which was not relevant property, or was not comprised in the settlement, throughout the period referred to in subsection (2) above, then in determining the appropriate fraction in relation to that amount or part—
a
no quarter which expired before the day on which the property became, or last became, relevant property comprised in the settlement shall be counted, but
b
if that day fell in the same quarter as that in which the period ends, that quarter shall be counted whether complete or not.
4
The chargeable transfer postulated in subsection (1) above is one—
a
the value transferred by which is equal to an amount determined in accordance with subsection (5) below;
b
which is made at the time of the charge to tax under section 65 by a transferor who has in the period of F6seven years ending with the day of the occasion of the charge made chargeable transfers having an aggregate value equal to that of any chargeable transfers made by the settlor in the period of F7seven years ending with the day on which the settlement commenced, disregarding transfers made on that day or before 27th March 1974; and
F8c
on which tax is charged in accordance with section 7(2) of this Act.
5
The amount referred to in subsection (4)(a) above is equal to the aggregate of—
a
the value, immediately after the settlement commenced, of the F18relevant property then comprised in it;
b
F20c
the value, immediately after it became comprised in the settlement, of property which—
i
became comprised in the settlement after the settlement commenced and before the occasion of the charge under section 65 above, and
ii
was relevant property immediately after it became so comprised,
whether or not the property has remained relevant property comprised in the settlement;
d
the value, at the time it became (or last became) relevant property, of property which—
i
was comprised in the settlement immediately after the settlement commenced and was not then relevant property but became relevant property before the occasion of the charge under section 65 above, or
ii
became comprised in the settlement after the settlement commenced and before the occasion of the charge under section 65 above, and was not relevant property immediately after it became comprised in the settlement, but became relevant property before the occasion of the charge under that section,
whether or not the property has remained relevant property comprised in the settlement;
e
the value of any same-day addition; and
f
where—
i
an increase in the value of the property comprised in another settlement is represented by the value of a same-day addition aggregated under paragraph (e) above, and
ii
that other settlement is not a related settlement,
the value immediately after that other settlement commenced of the relevant property then comprised in that other settlement.
6
Where the settlement commenced before 27th March 1974, subsection (1) above shall have effect with the substitution of a reference to three tenths for the reference to the appropriate fraction; and in relation to such a settlement the chargeable transfer postulated in that subsection is one—
a
the value transferred by which is equal to the amount on which tax is charged under section 65 above;
b
which is made at the time of that charge to tax by a transferor who has in the period of F9seven years ending with the day of the occasion of the charge made chargeable transfers having an aggregate value equal to the aggregate of—
i
any amounts on which any charges to tax have been imposed under section 65 above in respect of the settlement in F10the period of ten years ending with that day; and
ii
the amounts of any distribution payments (determined in accordance with the rules applicable under paragraph 11 of Schedule 5 to the M3Finance Act 1975) made out of the settled property before 9th March 1982 (or, where paragraph 6, 7 or 8 of Schedule 15 to the M4Finance Act 1982 applied, 1st April 1983, or, as the case may be, 1st April 1984) and within the said period of ten years; and
F11c
on which tax is charged in accordance with section 7(2) of this Act.
69 Rate between ten-year anniversaries.
1
Subject to F23subsection (2A) below, the rate at which tax is charged under section 65 above on an occasion following one or more ten-year anniversaries after the settlement’s commencement shall be the appropriate fraction of the rate at which it was last charged under section 64 (or would have been charged apart from section 66(2)).
F222
Subsection (2A) below applies—
a
if, at any time in the period beginning with the most recent ten-year anniversary and ending immediately before the occasion of the charge under section 65 above (the “relevant period”), property has become comprised in the settlement which was relevant property immediately after it became so comprised, or
b
if—
i
at any time in the relevant period, property has become comprised in the settlement which was not relevant property immediately after it became so comprised, and
ii
at a later time in the relevant period, that property has become relevant property, or
c
if property which was comprised in the settlement immediately before the relevant period, but was not then relevant property, has at any time during the relevant period become relevant property.
2A
Whether or not all of the property within any of paragraphs (a) to (c) of subsection (2) above has remained relevant property comprised in the settlement, the rate at which tax is charged under section 65 is to be the appropriate fraction of the rate at which it would last have been charged under section 64 above (apart from section 66(2) above) if—
a
immediately before the most recent ten-year anniversary, all of that property had been relevant property comprised in the settlement with a value determined in accordance with subsection (3) below, and
b
any same-day addition made on or after the most recent ten-year anniversary had been made immediately before that anniversary.
3
In the case of property within subsection (2)(a) above F24...
the value to be attributed to it for the F25purposes of subsection (2A) above is its value immediately after it became comprised in the settlement; and in any other case the value to be so attributed is the value of the property when it became (or last became) relevant property.
4
For the purposes of this section the appropriate fraction is so many fortieths as there are complete successive quarters in the period beginning with the most recent ten-year anniversary and ending with the day before the occasion of the charge; but subsection (3) of section 68 above shall have effect for the purposes of this subsection as it has effect for the purposes of subsection (2) of that section.
Words in Pt. 3 Ch. 3 heading added (22.3.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 para. 20(5)