PART IV

Capital Transfer Tax
CHAPTER II

Settlements Without Interests in Possession

Special cases

Property leaving employee trusts and newspaper trusts
116
1
This section applies to settled property to which paragraph 17 of Schedule 5 to the Finance Act 1975 applies if no qualifying interest in possession subsists in it.
2
Subject to subsections (4) and (5) below, there shall be a charge to tax under this section—
a
where settled property ceases to be property to which this section applies, otherwise than by virtue of a payment out of the settled property, and
b
where a payment is made out of settled property to which this section applies for the benefit of a person within subsection (3) below, or a person connected with such a person, and
c
in a case in which paragraphs (a) and (b) above do not apply, where the trustees make a disposition (otherwise than by way of a payment out of the settled property) as a result of which the value of settled property to which this section applies is less than it would be but for the disposition.
3
A person is within this subsection if—
a
he has directly or indirectly provided any of the settled property otherwise than by additions not exceeding in value £1,000 in any one year; or
b
in a case where the employment in question is employment by a close company, he is a participator in relation to that company and either—
i
is beneficially entitled to, or to rights entitling him to acquire, not less than 5 per cent, of, or of any class of the shares comprised in, its issued share capital, or
ii
would, on a winding-up of the company, be entitled to not less than 5 per cent, of its assets ; or
c
he has acquired an interest in the settled property for a consideration in money or money's worth.
4
If the trusts are those of a profit sharing scheme approved in accordance with Schedule 9 to the Finance Act 1978, tax shall not be chargeable under this section by virtue of subsection (3)(b) above on an appropriation of shares in pursuance of the scheme.
5
Subsections (3) to (9) of section 113 above shall apply for the purposes of this section as they apply for the purposes of that section (with the substitution of a reference to subsection (2)(c) above for the reference in section 113(4) to section 113(2)(b)).
6
In this section—
a
" close company " and " participator " have the same meanings as in section 39 of the Finance Act 1975; and
b
"year" means the period beginning with 26th March 1974 and ending with 5th April 1974, and any subsequent period of twelve months ending with 5th April;
and a person shall be treated for the purposes of this section as acquiring an interest for a consideration in money or money's worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that interest or of other property.
1975 c. 7.
1978 c. 42.
1975 c. 7.