Inheritance Tax Act 1984

the Board may, as the case requires, determine the amount of the tax or determine that no tax is chargeable; and subject to the payment of any tax so determined to be chargeable the Board may give a certificate of their determination, and shall do so if the transfer of value is one made on death or the transferor has died.

• (2A) An application under subsection (1) or (2) above with respect to tax which is or may become chargeable on the value transferred by a potentially exempt transfer may not be made before the expiration of two years from the death of the transferor (except where the Board think fit to entertain the application at an earlier time after the death).

• (3) Subject to subsection (4) below,—

• (a) a certificate under subsection (1) above shall discharge the property shown in it from the Inland Revenue charge on its acquisition by a purchaser, and

• (b) a certificate under subsection (2) above shall discharge all persons from any further claim for the tax on the value transferred by the chargeable transfer concerned and extinguish any Inland Revenue charge for that tax.

• (4) A certificate under this section shall not discharge any person from tax in case of fraud or failure to disclose material facts and shall not affect any further tax—

• (a) that may afterwards be shown to be payable by virtue of section 93, 142, 143, 144 or 145 above,

• (aa) that may afterwards be shown to be payable by reason of too great an increase having been made under section 8A(3) above, or

• (b) that may be payable if any further property is afterwards shown to have been included in the estate of a deceased person immediately before his death;

but in so far as the certificate shows any tax to be attributable to the value of any property it shall remain valid in favour of a purchaser of that property without notice of any fact invalidating the certificate.

• (5) References in this section to a transfer of value, or to the value transferred by a transfer of value, shall be construed as including references to an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79) or to the amount on which tax is then chargeable.

Adjustments

Underpayments

240

• (1) Where too little tax has been paid in respect of a chargeable transfer the tax underpaid shall be payable with interest under section 233 above, whether or not the amount that has been paid was that stated as payable in a notice under section 221 above; but subject to section 239 above and to the following provisions of this section.

• (2) Where tax attributable to the value of any property is paid in accordance with an account duly delivered to the Board under this Part of this Act and the payment is made and accepted in full satisfaction of the tax so attributable, no proceedings shall be brought for the recovery of any additional tax so attributable after the end of the period of 4 years beginning with the later of—

• (a) the date on which the payment (or in the case of tax paid by instalments the last payment) was made and accepted, and

• (b) the date on which the tax or the last instalment became due;

and at the end of that period any liability for the additional tax and any Inland Revenue charge for that tax shall be extinguished.

• (3) Subsection (2) has effect subject to subsections (4) to (5A) and to section 240B (underpayments involving offshore matter etc).

• (4) Proceedings in a case involving a loss of tax brought about carelessly by a person liable for the tax (or a person acting on behalf of such a person) may be brought at any time not more than 6 years after the later of the dates in subsection (2)(a) and (b).

• (5) Proceedings in a case involving a loss of tax brought about deliberately by a person liable for the tax (or a person acting on behalf of such a person) may be brought at any time not more than 20 years after the later of the dates in subsection (2)(a) and (b).

• (5A) Proceedings in a case involving a loss of tax attributable to arrangements which were expected to give rise to a tax advantage in respect of which a person liable for the tax was under an obligation to make a report under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so, may be brought at any time not more than 20 years after the later of the dates in subsection (2)(a) and (b).

• (6) Subsection (7) applies to any case not falling within subsection (2) where too little tax has been paid in respect of a chargeable transfer, provided that the case does not involve a loss of tax brought about deliberately by a person liable for the tax (or a person acting on behalf of such a person).

• (7) Where this subsection applies—

• (a) no proceedings are to be brought for the recovery of the tax after the end of the period of 20 years beginning with the date on which the chargeable transfer was made, and

• (b) at the end of that period any liability for the tax and any Inland Revenue charge for that tax is extinguished.

• (8) In relation to cases of tax chargeable under Chapter 3 of Part 3 of this Act (apart from section 79), the references in subsections (4) to (6) to a person liable for the tax are to be treated as including references to a person who is the settlor in relation to the settlement.

Overpayments

241

• (1) If it is proved to the satisfaction of the Board that too much tax has been paid on the value transferred by a chargeable transfer or on so much of that value as is attributable to any property, the Board shall repay the excess unless the claim for repayment was made more than 4 years after the date on which the payment or last payment of the tax was made.

• (2) References in this section to tax include references to interest on tax.

Recovery of tax

Recovery of tax

242

• (1) The Board shall not take any legal proceedings for the recovery of any amount of tax or of interest on tax which is due from any person unless the amount has been agreed in writing between that person and the Board or has been determined and specified in a notice under section 221 above.

• (2) Where an amount has been so determined and specified but an appeal to which this subsection applies is pending against the determination the Board shall not take any legal proceedings to recover the amount determined except such part of it as may be agreed in writing or determined and specified in a further notice under section 221 above to be a part not in dispute.

• (3) Subsection (2) above applies to any appeal under section 222 above but not to any further appeal; and section 222 above shall have effect, in relation to a determination made in pursuance of subsection (2) above, as if subsections (4) to (4B) of that section were omitted.

• (4) Where a person has been given an accelerated payment notice under Chapter 3 of Part 4 of the Finance Act 2014 and that notice has not been withdrawn, nothing in this section prevents legal proceedings being taken for the recovery of (as the case may be)—

• (a) the understated tax to which the payment specified in the notice under section 220(2)(b) of that Act relates, or

• (b) the disputed tax specified in the notice under section 221(2)(b) of that Act.

Scotland: recovery of tax in sheriff court

243

In Scotland, tax and interest on tax may, without prejudice to any other remedy, and if the amount of the tax and interest does not exceed the sum for the time being specified in section 35(1)(a) of the Sheriff Courts (Scotland) Act 1971, be sued for and recovered in the sheriff court.

Right to address court

244

An officer of the Board who is authorised by the Board to do so may address the court in any proceedings in a . . . sheriff court for the recovery of tax or interest on tax.

Penalties

Failure to provide information

245

• (1) This section applies where a person (“the taxpayer”) fails to deliver an account under section 216 or 217 above.

• (2) The taxpayer shall be liable—

• (a) to a penalty of £100; and

• (b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the tribunal and before the day on which the account is delivered.

• (3) If—

• (a) proceedings in which the failure could be declared are not commenced before the end of the relevant period, and

• (b) the taxpayer has not delivered the account by the end of that period,

he shall be liable to a further penalty of £100.

• (4) In subsection (3) above “the relevant period” means the period of six months beginning immediately after the end of the period given by section 216(6) or (7) or section 217 above (whichever is applicable).

• (4A) Without prejudice to any penalties under subsections (2) and (3) above, if—

• (a) the failure by the taxpayer to deliver the account continues after the anniversary of the end of the period given by section 216(6) or (7) (whichever is applicable), and

• (b) there would have been a liability to tax shown in the account,

the taxpayer shall be liable to a penalty of an amount not exceeding £3,000.

• (5) If the taxpayer proves that his liability to tax does not exceed a particular amount, the penalty under subsection (2)(a) above, together with any penalty under subsection (3) above, shall not exceed that amount.

• (6) A person shall not be liable to a penalty under subsection (2)(b) above if he delivers the account required by section 216 or 217 before proceedings in which the failure could be declared are commenced.

• (7) A person who has a reasonable excuse for failing to deliver an account shall not be liable by reason of that failure to a penalty under this section, unless he fails to deliver the account without unreasonable delay after the excuse has ceased.

Failure to appear before Special Commissioners, etc.

246

Provision of incorrect information

247

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Any person not liable for tax on the value transferred by a chargeable transfer who fraudulently or negligently furnishes or produces to the Board any incorrect information or document in connection with the transfer shall be liable to a penalty not exceeding £3,000.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to remedy errors

248

• (1) If after any . . . information or document has been . . . furnished or produced by any person without fraud or negligence it comes to his notice that it was incorrect in any material respect it shall be treated for the purposes of section 247 above as having been negligently . . . furnished or produced unless the error is remedied without unreasonable delay.

• (2) If after any account, information or document has been delivered, furnished or produced by any person in pursuance of this Part of this Act it comes to the notice of any other person that it contains an error whereby tax for which that other person is liable has been or might be underpaid, that other person shall inform the Board of the error; and if he fails to do so without unreasonable delay he shall be liable to the penalty to which he would be liable . . . if the account, information or document had been delivered, furnished or produced by him and the case were one of negligence.

Recovery of penalties

249

• (1) All proceedings for the recovery of penalties under this Part of this Act shall be commenced by the Board, or in Scotland, by the Board or the Lord Advocate.

• (2) Any such proceedings may be commenced either before the First-tier Tribunal or in the High Court or the Court of Session and shall, if brought in the High Court, be deemed to be civil proceedings by the Crown within the meaning of Part II of the Crown Proceedings Act 1947 or, as the case may be, that Part as for the time being in force in Northern Ireland.

• (3) Where any proceedings are brought before the First-tier Tribunal, in addition to any right of appeal on a point of law under section 11(2) of the TCEA 2007, the person liable to the penalty may appeal to the Upper Tribunal against the amount of a penalty which has been determined under this Part, but not against any decision which falls under section 11(5)(d) and (e) of the TCEA 2007 and was made in connection with the determination of the amount of the penalty.

• (3A) Section 11(3) and (4) of the TCEA 2007 applies to the right of appeal under subsection (3) as it applies to the right of appeal under section 11(2) of the TCEA 2007.

• (3B) On an appeal under this section the Upper Tribunal has the same powers as are conferred on the First-tier Tribunal by virtue of this section.

• (4) The person liable to the penalty shall be a party to the proceedings.

• (5) References in this section to the Court of Session are references to that Court as the Court of Exchequer in Scotland.

Time limit for recovery

250

• (1) No proceedings for the recovery of a penalty under this Part of this Act shall be brought after the end of the period of three years beginning with the date on which the amount of the tax properly payable in respect of the chargeable transfer concerned was notified by the Board to the person or one of the persons liable for the tax or any part of it.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Summary award

251

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of award by Special Commissioners

252

Any penalty awarded by the tribunal shall be recoverable by the Board as a debt due to the Crown.

Mitigation of penalties

253

The Board may in their discretion mitigate any penalty, or stay or compound any proceedings for recovery of any penalty, and may also, after judgment, further mitigate or entirely remit the penalty.

Miscellaneous

Evidence

254

• (1) For the purposes of the preceding provisions of this Part of this Act, a notice under section 221 above specifying any determination which can no longer be varied or quashed on appeal shall be sufficient evidence of the matters determined.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Determination of questions on previous view of law

255

Where any payment has been made and accepted in satisfaction of any liability for tax and on a view of the law then generally received or adopted in practice, any question whether too little or too much has been paid or what was the right amount of tax payable shall be determined on the same view, notwithstanding that it appears from a subsequent legal decision or otherwise that the view was or may have been wrong.

Regulations about accounts, etc.

256

• (1) The Board may make regulations—

• (a) dispensing with the delivery of accounts under section 216 above in such cases as may be specified in or determined under the regulations;

• (aa) requiring persons who by virtue of regulations under paragraph (a) above are not required to deliver accounts under section 216 above to produce to the Board, in such manner as may be specified in or determined under the regulations, such information or documents as may be so specified or determined

• (b) discharging, subject to such restrictions as may be so specified or determined , property from an Inland Revenue charge and persons from further claims for tax in cases other than those mentioned in section 239 above;

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) modifying section 264(8) below in cases where the delivery of an account has been dispensed with under the regulations.

• (1A) Regulations under subsection (1)(aa) may in particular—

• (a) provide that information or documents must be produced to the Board by producing it or them to—

• (i) a probate registry in England and Wales;

• (ii) the sheriff in Scotland;

• (iii) the Probate and Matrimonial Office in Northern Ireland;

• (b) provide that information or documents produced as specified in paragraph (a) is or are to be treated for any or all purposes of this Act as produced to the Board;

• (c) provide for the further transmission to the Board of information or documents produced as specified in paragraph (a).

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Regulations under this section may contain such supplementary or incidental provisions as the Board think fit and may make different provision for different cases .

• (3A) Regulations under this section may only be made—

• (a) in relation to England and Wales, after consulting the Lord Chancellor;

• (b) in relation to Scotland, after consulting the Scottish Ministers;

• (c) in relation to Northern Ireland, after consulting the Lord Chief Justice of Northern Ireland.

• (3B) The Lord Chief Justice of Northern Ireland may nominate any of the following to exercise his functions under subsection (3A)—

• (a) the holder of one of the offices listed in Schedule 1 to the Justice (Northern Ireland) Act 2002;

• (b) a Lord Justice of Appeal (as defined in section 88 of that Act).

• (4) The power to make regulations under this section shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of the House of Commons.

Form etc. of accounts

257

• (1) All accounts and other documents required for the purposes of this Act shall be in such form and shall contain such particulars as may be prescribed by the Board.

• (2) All accounts to be delivered to the Board under this Act shall be supported by such books, papers and other documents, and verified (whether on oath or otherwise) in such manner, as the Board may require.

• (3) For the purposes of this Act, an account delivered to a probate registry pursuant to arrangements made between the President of the Family Division and the Board or delivered to the Probate and Matrimonial Office in Northern Ireland pursuant to arrangements made between the Lord Chief Justice of Northern Ireland and the Board shall be treated as an account delivered to the Board.

• (4) The Lord Chief Justice of Northern Ireland may nominate any of the following to exercise his functions under subsection (3)—

• (a) the holder of one of the offices listed in Schedule 1 to the Justice (Northern Ireland) Act 2002;

• (b) a Lord Justice of Appeal (as defined in section 88 of that Act).

Service of documents

258

A notice or other document which is to be served on a person under this Act may be delivered to him or left at his usual or last known place of residence or served by post, addressed to him at his usual or last known place of residence or his place of business or employment.

Inspection of records

259

Section 16 of the Stamp Act 1891, section 56 of the Finance Act 1946 and section 27 of the Finance (No.2) Act (Northern Ireland) 1946 (inspection of public records and records of unit trusts) shall apply in relation to inheritance tax as they apply in relation to stamp duties.

Inland Revenue Regulation Act 1890

260

Sections 21, 22 and 35 of the Inland Revenue Regulation Act 1890 (proceedings for fines, etc.) shall not apply in relation to inheritance tax.

Scotland: inventories

261

In the application of this Part of this Act to Scotland, references to an account required to be delivered to the Board by the personal representatives of a deceased person, however expressed, shall be construed as references to such an inventory or additional inventory as is mentioned in section 38 of the Probate and Legacy Duties Act 1808 which has been duly exhibited as required by that section.

PART IX — MISCELLANEOUS AND SUPPLEMENTARY

Miscellaneous

Tax chargeable in certain cases of future payments, etc.

262

• (1) Where a disposition made for a consideration in money or money’s worth is a transfer of value and any payments made or assets transferred by the transferor in pursuance of the disposition are made or transferred more than one year after the disposition is made, tax (if any) shall be charged as if—

• (a) any payment made or asset transferred in pursuance of the disposition were made or transferred in pursuance of a separate disposition made, without consideration, at the time the payment is made or the asset is transferred, and

• (b) the amount of the payment made or the value of the asset transferred in pursuance of each of those separate dispositions were the chargeable portion of the payment or asset.

• (2) For the purposes of this section the chargeable portion of any payment made or any asset transferred at any time shall be such portion of its value at that time as is found by applying to it the fraction of which—

• (a) the numerator is the value actually transferred by the disposition first mentioned in subsection (1) above (calculated as if no tax were payable on it), and

• (b) the denominator is the value, at the time of that disposition, of the aggregate of the payments made or to be made and assets transferred or to be transferred by the transferor in pursuance of it.

Annuity purchased in conjunction with life policy

263

• (1) Where—

• (a) a policy of life insurance is issued in respect of an insurance made after 26th March 1974 or is after that date varied or substituted for an earlier policy, and

• (b) at the time the insurance is made or at any earlier or later date an annuity on the life of the insured is purchased, and

• (c) the benefit of the policy is vested in a person other than the person who purchased the annuity,

then, unless it is shown that the purchase of the annuity and the making of the insurance (or, as the case may be, the substitution or variation) were not associated operations, the person who purchased the annuity shall be treated as having made a transfer of value by a disposition made at the time the benefit of the policy became so vested (to the exclusion of any transfer of value which, apart from this section, he might have made as a result of the vesting, or of the purchase and the vesting being associated operations).

• (2) The value transferred by that transfer of value shall be equal to whichever of the following is less, namely,—

• (a) the aggregate of—

• (i) the value of the consideration given for the annuity, and

• (ii) any premium paid or other consideration given under the policy on or before the transfer; and

• (b) the value of the greatest benefit capable of being conferred at any time by the policy, calculated as if that time were the date of the transfer.

• (3) The preceding provisions of this section shall apply, with the necessary modifications, where a contract for an annuity payable on a person’s death is after 26th March 1974 made or varied or substituted for or replaced by such a contract or a policy of life insurance as they apply where a policy of life insurance is issued, varied or substituted as mentioned in subsection (1) above.

Transfers reported late

264

• (1) This section has effect where a person has made a transfer of value (“the earlier transfer”) which—

• (a) is not notified to the Board in an account under section 216 above or by information furnished under section 219 above before the expiration of the period specified in section 216 for the delivery of accounts, and

• (b) is not discovered until after payment has been accepted by the Board in full satisfaction of the tax on the value transferred by another transfer of value (“the later transfer”) made by him on or after the day on which he made the earlier transfer.

• (2) Where the earlier transfer is made in the period of ten years ending with the date of the later transfer there shall be charged on the value transferred by the earlier transfer, in addition to any tax chargeable on it apart from this section, an amount of tax equal to the difference, if any, between—

• (a) the tax which, having regard to the earlier transfer, was properly chargeable on the value transferred by the later transfer, and

• (b) the payment accepted by the Board in full satisfaction of the tax chargeable on that value;

and any such difference shall not be chargeable on the value transferred by the later transfer.

• (3) Where in the period mentioned in subsection (2) above there have been two or more earlier transfers the reference in paragraph (a) of that subsection to the earlier transfer shall be construed as a reference to both or all of those transfers, but the amount of tax chargeable under that subsection in respect of each of them shall, subject to subsection (4) below, be reduced in the proportion which the value transferred by it bears to the aggregate of the values transferred by it and the other or others.

• (4) Where the earlier transfers mentioned in subsection (3) above include a settled transfer, that is to say, a transfer in the case of which an amount in full satisfaction of the tax chargeable in respect of it under subsection (2) above has been paid to and accepted by the Board before the discovery of one or more of the other earlier transfers,—

• (a) no further tax shall be chargeable under subsection (2) above in respect of the settled transfer in consequence of regard being had under paragraph (a) of that subsection to the subsequently discovered transfer or transfers;

• (b) the amount so paid and accepted shall reduce the amount chargeable under subsection (2) above in respect of the subsequently discovered transfer or transfers; and

• (c) if there are two or more subsequently discovered transfers, the value transferred by the settled transfer shall be disregarded in calculating under subsection (3) above the reduction in the amount of tax chargeable in respect of each of them.

• (5) Where the later transfer referred to in subsection (2) above is itself an earlier transfer in relation to another later transfer the references in paragraphs (a) and (b) of that subsection to tax chargeable on the value transferred by it are references to tax so chargeable apart from this section.

• (6) Subsection (2) above shall not increase the amount in respect of which interest is payable under section 233 above in relation to the earlier transfer in respect of any period falling before the expiration of six months from the date on which it was discovered.

• (7) Where, apart from this subsection, the earlier transfer would be wholly or partly exempt by reason of some or all of the value transferred by it falling within a limit applicable to an exemption, then, if tax has been accepted as mentioned in subsection (1)(b) above on the basis that the later transfer is partly exempt by reason of part of the value thereby transferred falling within that limit—

• (a) tax shall not be chargeable on that part of the value transferred by the later transfer, but

• (b) a corresponding part of the value transferred by the earlier transfer shall be treated as falling outside that limit.

• (8) Subsection (1)(b) above shall apply to a transfer in respect of which no tax is chargeable because the rate of tax applicable under section 7 above is nil as if payment had been accepted when the transfer was notified in an account under section 216 above, and subsection (2)(b) above shall apply in relation to any such transfer as if the amount of the payment were nil.

• (9) For the purposes of this section a transfer is discovered—

• (a) if it is notified under the provisions mentioned in subsection (1)(a) above after the expiration of the period there mentioned, on the date on which it is so notified;

• (b) in any other case, on the date on which the Board give notice of a determination in respect of the transfer under section 221 above.

Chargeable transfers affecting more than one property

265

Where the value transferred by a chargeable transfer is determined by reference to the values of more than one property the tax chargeable on the value transferred shall be attributed to the respective values in the proportions which they bear to their aggregate, but subject to section 54B(3) above and to any provision reducing the amount of tax attributable to the value of any particular property.

More than one chargeable transfer on one day

266

• (1) Where the value transferred by more than one chargeable transfer made by the same person on the same day depends on the order in which the transfers are made, they shall be treated as made in the order which results in the lowest value chargeable.

• (2) Subject to subsection (1) above, the rate at which the tax is charged on the values transferred by two or more chargeable transfers made by the same person on the same day shall be the effective rate at which tax would have been charged if those transfers had been a single chargeable transfer of the same total value.

• (3) The chargeable transfers referred to in subsections (1) and (2) above do not include a transfer made on the death of the transferor.

• (4) Chargeable transfers under Chapter III of Part III of this Act shall if they relate to the same settlement be treated for the purposes of subsections (1) and (2) above as made by the same person.

Persons treated as domiciled in United Kingdom

267

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

Associated operations

268

• (1) In this Act “associated operations” means, subject to subsection (2) below, any two or more operations of any kind, being—

• (a) operations which affect the same property, or one of which affects some property and the other or others of which affect property which represents, whether directly or indirectly, that property, or income arising from that property, or any property representing accumulations of any such income, or

• (b) any two operations of which one is effected with reference to the other, or with a view to enabling the other to be effected or facilitating its being effected, and any further operation having a like relation to any of those two, and so on.

whether those operations are effected by the same person or different persons, and whether or not they are simultaneous; and “operation” includes an omission.

• (2) The granting of a lease for full consideration in money or money’s worth shall not be taken to be associated with any operation effected more than three years after the grant, and no operation effected on or after 27th March 1974 shall be taken to be associated with an operation effected before that date.

• (3) Where a transfer of value is made by associated operations carried out at different times it shall be treated as made at the time of the last of them; but where any one or more of the earlier operations also constitute a transfer of value made by the same transferor, the value transferred by the earlier operations shall be treated as reducing the value transferred by all the operations taken together, except to the extent that the transfer constituted by the earlier operations but not that made by all the operations taken together is exempt under section 18 above.

Control of company

269

• (1) For the purposes of this Act a person has control of a company at any time if he then has the control of powers of voting on all questions affecting the company as a whole which if exercised would yield a majority of the votes capable of being exercised on them.

• (2) For the purposes of this Act 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 section 161 above, they would be sufficient to give him control of the company (as defined in subsection (1) above).

• (3) Where shares or securities are comprised in a settlement, any powers of voting which they give to the trustees of the settlement shall for the purposes of subsection (1) above 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).

• (4) Where a company has shares or securities of any class giving powers of voting limited to either or both of—

• (a) the question of winding up the company, and

• (b) any question primarily affecting shares or securities of that class,

the reference in subsection (1) above to all questions affecting the company as a whole shall have effect as a reference to all such questions except any in relation to which those powers are capable of being exercised.

Connected persons

270

For the purposes of this Act any question whether a person is connected with another shall be determined as, for the purposes of the 1992 Act, it falls to be determined under section 286 of that Act, but as if in that section “relative” included uncle, aunt, nephew and niece and “settlement”, “settlor” and “trustee” had the same meanings as in this Act.

Property of corporations sole

271

References in this Act (except section 59) to property to which a person is beneficially entitled do not include references to property to which a person is entitled as a corporation sole.

General interpretation

272

• (1) In this Act, except where the context otherwise requires,—

• “amount” includes value;

• “authorised unit trust” means a scheme which is a unit trust scheme for the purposes of the Income Tax Acts (see section 1007 of the Income Tax Act 2007) and in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force;

• “barrister” includes a member of the Faculty of Advocates;

• “the Board” means the Commissioners of Inland Revenue;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “commencement” of a settlement has the meaning given by section 48A;

• “conditionally exempt transfer” shall be construed in accordance with section 30(2) above;

• “disabled person's interest” has the meaning given by section 89B above;

• “disposition” includes a disposition effected by associated operations;

• “estate” shall be construed in accordance with sections 5, 55 and 151(4) above;

• “estate duty” includes estate duty under the law of Northern Ireland;

• “excluded property” shall be construed in accordance with sections 6, 48 and 48ZA above and Schedule A1;

• “foreign-owned”, in relation to property at any time, means property— in the case of which the person beneficially entitled to it is at that time not a long-term UK resident, or if the property is comprised in a settlement, in the case of which the settlor— is alive and is at that time not a long-term UK resident,died on or after 6 April 2025 and was not a long-term UK resident immediately before they died, ordied before 6 April 2025 and was domiciled outside the United Kingdom when the property became comprised in the settlement,and section 48ZA(9) (accumulation of income) applies for the purposes of this paragraph as it applies for the purposes of section 48ZA(4);

• ...

• “Government department” includes a Northern Ireland department;

• “heritable security” means any security capable of being constituted over any interest in land by disposition or assignation of that interest in security of any debt and of being recorded in the General Register of Sasines;

• “HMRC” means Her Majesty's Revenue and Customs;

• “immediate post-death interest” means an immediate post-death interest for the purposes of Chapter 2 of Part 3 (see section 49A above);

• “incumbrance” includes any heritable security, or other debt or payment secured upon heritage;

• “Inland Revenue charge” means a charge imposed by virtue of section 237 above;

• “land” does not include any estate interest or right by way of mortgage or other security;

• “local authority” has the meaning given by section 1130 of the Corporation Tax Act 2010;

• “long-term UK resident” has the meaning given by sections 6A to 6C;

• “member”, in relation to a registered pension scheme, has the same meaning as in Part 4 of the Finance Act 2004 (see section 151 of that Act);

• “mortgage” includes a heritable security and a security constituted over any interest in movable property;

• “nil-rate band maximum” has the meaning given by section 8A(7);

• “open-ended investment company” means an open-ended investment company within the meaning given by section 236 of the Financial Services and Markets Act 2000 which is incorporated in the United Kingdom;

• “personal representatives” includes any person by whom or on whose behalf an application for a grant of administration or for the resealing of a grant made outside the United Kingdom is made, and any such person as mentioned in section 199(4)(a) above;

• “property” includes rights and interests of any description but does not include a settlement power;

• “public display” means display to which the public are admitted, on payment or not, but does not include display with a view to sale;

• “purchaser” means a purchaser in good faith for consideration in money or money’s worth other than a nominal consideration and includes a lessee, mortgagee or other person who for such consideration acquires an interest in the property in question;

• “quoted”, in relation to any shares or securities, means listed on a recognised stock exchange or dealt in on the Unlisted Securities Market and “unquoted”, in relation to any shares or securities, means neither so listed nor so dealt in;

• “registered pension scheme” has the same meaning as in Part 4 of the Finance Act 2004;

• “reversionary interest” has the meaning given by section 47 above;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “section 615(3) scheme” means a superannuation fund to which section 615(3)of the Taxes Act 1988 applies;

• “settlement power” has the meaning given by section 47A above;

• “settlement” and “settled property” shall be construed in accordance with section 43 above;

• “settlor” shall be construed in accordance with section 44 above;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “step-child”, in relation to a civil partner, shall be construed in accordance with section 246 of the Civil Partnership Act 2004;

• “tax” means inheritance tax;

• “tax year” means a year beginning with 6 April and ending with the following 5 April;

• “the tax year 2025-26” means the tax year beginning with 6 April 2025 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way);

• “transitional serial interest” means a transitional serial interest for the purposes of Chapter 2 of Part 3 (see section 49B above);

• “the Taxes Act 1970” means the Income and Corporation Taxes Act 1970;

• “The Taxes Act 1988” means the Income and Corporation Taxes Act 1988;

• “the TCEA 2007” means the Tribunals, Courts and Enforcement Act 2007;

• “the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal,

• “trustee” shall be construed in accordance with section 45 above;and

• “the 1992 Act” means the Taxation of Chargeable Gains Act 1992.

• (2) A reference in this Act to a settlor’s being alive or dying is to be read, in relation to a settlor who is a body corporate, as a reference (respectively) to the body’s being in existence or ceasing to exist.

Supplementary

Transition from estate duty

273

Schedule 6 to this Act shall have effect.

Commencement

274

• (1) This Act shall come into force on 1st January 1985, but shall not apply to transfers of value made before that date or to other events before that date on which capital transfer tax is chargeable or would be chargeable but for an exemption, exception or relief.

• (2) Subsection (1) above shall have effect subject to section 275 below, to Schedule 7 to this Act and to any other provision to the contrary.

Continuity, and construction of references to old and new law

275

• (1) The continuity of the operation of the law relating to capital transfer tax shall not be affected by the substitution of this Act for the repealed enactments.

• (2) Any reference, whether express or implied, in any enactment, instrument or document (including this Act and any enactment amended by Schedule 8 to this Act) to, or to things done or falling to be done under or for the purposes of, any provision of this Act shall, if and so far as the nature of the reference permits, be construed as including, in relation to the times, circumstances or purposes in relation to which the corresponding provision in the repealed enactments has or had effect, a reference to, or as the case may be, to things done or falling to be done under or for the purposes of, that corresponding provision.

• (3) Any reference, whether express or implied, in any enactment, instrument or document (including the repealed enactments and enactments, instruments and documents passed or made after the passing of this Act) to, or to things done or falling to be done under or for the purposes of, any of the repealed enactments shall, if and so far as the nature of the reference permits, be construed as including, in relation to the times, circumstances or purposes in relation to which the corresponding provision of this Act has effect, a reference to, or as the case may be, to things done or falling to be done under or for the purposes of, that corresponding provision.

• (4) Subsection (2) above shall have effect without prejudice to section 17(2) of the Interpretation Act 1978.

• (5) In this section “the repealed enactments” means the enactments repealed by this Act.

Consequential amendments

276

Schedule 8 to this Act shall have effect.

Repeals

277

The enactments mentioned in Schedule 9 to this Act are hereby repealed to the extent specified in the third column of that Schedule.

Short title

278

This Act may be cited as the Inheritance Tax Act 1984.

SCHEDULE 1

SCHEDULE 2

Interpretation

1

In this Schedule—

• (a) references to a reduction are to a reduction of tax by the substitution of a new Table in Schedule 1 to this Act, and

• (b) references to something happening before or after a reduction are to its happening before or, as the case may be, on or after the date on which the Table giving effect to the reduction comes into force.

Death within three years of chargeable transfer

2

Where a person who has made a chargeable transfer other than a potentially exempt transfer) before a reduction dies after that reduction (or after that and one or more subsequent reductions) and within seven years of the transfer, additional tax shall be chargeable by reason of his death only if, and to the extent that, it would have been so chargeable if . . . the Table in Schedule 1 as substituted by that reduction (or by the most recent of those reductions) had applied to that transfer.

Settlement without interest in possession

3

Where tax is chargeable under section 65 of this Act on any occasion after a reduction and the rate at which it is charged is determined under section 69 by reference to the rate that was (or would have been) charged under section 64 on an occasion before that reduction (or before that and one or more other reductions), the rate charged on the later occasion shall be determined as if . . . the Table in Schedule 1 as substituted by that reduction (or by the most recent of those reductions) had been in force on the earlier occasion.

Disposal of trees etc. following exemption on death

4

Where the value of any trees or underwood has been left out of account under Chapter III of Part V of this Act in determining the value transferred by the chargeable transfer made on a death before a reduction and tax is chargeable under section 126 on a disposal of the trees or underwood after that reduction (or after that and one or more subsequent reductions) the rate or rates mentioned in section 128 shall be determined as if . . . the Tables in Schedule 1 as substituted by that reduction (or by the most recent of those reductions) had applied to that transfer.

Conditionally exempt transfers

5

Where tax is chargeable under section 32 or 32A of this Act by reason of a chargeable event occurring after a reduction and the rate or rates at which it is charged fall to be determined under the provisions of section 33(1)(b)(ii) by reference to a death which occurred before that reduction (or before that and one or more other reductions) those provisions shall apply as if the Table in Schedule 1 as substituted by that reduction (or by the most recent of those reductions) had been in force at the time of the death.

Maintenance funds for historic buildings

6

Where tax is chargeable under paragraph 8 of Schedule 4 to this Act on any occasion after a reduction and the rate at which it is charged falls to be determined under paragraph 14 of that Schedule by reference to a death which occurred before that reduction (or before that and one or more other reductions) paragraph 14 shall apply as if the Table in Schedule 1 as substituted by that reduction (or by the most recent of those reductions) had been in force at the time of the death.

Mutual transfers

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 3

SCHEDULE 4

PART I — TREASURY DIRECTIONS

Giving of directions

1

• (1) If the conditions mentioned in paragraph 2(1) below are fulfilled in respect of settled property, the Treasury shall, on a claim made for the purpose, give a direction under this paragraph in respect of the property.

• (2) The Treasury may give a direction under this paragraph in respect of property proposed to be comprised in a settlement or to be held on particular trusts in any case where, if the property were already so comprised or held, they would be obliged to give the direction.

• (3) Property comprised in a settlement by virtue of a transfer of value made before the coming into force of section 94 of the Finance Act 1982 and exempt under section 84 of the Finance Act 1976 shall be treated as property in respect of which a direction has been given under this paragraph.

Conditions

2

• (1) The conditions referred to in paragraph 1 above are—

• (a) that the Treasury are satisfied—

• (i) that the trusts on which the property is held comply with the requirements mentioned in paragraph 3 below, and

• (ii) that the property is of a character and amount appropriate for the purposes of those trusts; and

• (b) that the trustees—

• (i) are approved by the Treasury,

• (ii) include a trust corporation, a solicitor, an accountant

or a member of such other professional body as the Treasury may allow in the case of the property concerned, and

• (iii) are, at the time the direction is given, resident in the United Kingdom.

• (2) For the purposes of this paragraph trustees shall be regarded as resident in the United Kingdom if—

• (a) the general administration of the trusts is ordinarily carried on in the United Kingdom, and

• (b) the trustees or a majority of them (and, where there is more than one class of trustees, a majority of each class) are resident in the United Kingdom;

and where a trustee is a corporation, the question whether the trustee is resident in the United Kingdom shall, for the purposes of paragraph (b) above, be determined as for the purposes of corporation tax.

• (3) In this paragraph—

• “accountant” means a member of an incorporated society of accountants;

• “trust corporation” means a person that is a trust corporation for the purposes of the Law of Property Act 1925 or for the purposes of Article 9 of the Administration of Estates (Northern Ireland) Order 1979.

3

• (1) The requirements referred to in paragraph 2(1)(a)(i) above are (subject to paragraph 4 below)—

• (a) that none of the property held on the trusts can at any time in the period of six years beginning with the date on which it became so held be applied otherwise than—

• (i) for the maintenance, repair or preservation of, or making provision for public access to, property which is for the time being qualifying property, for the maintenance, repair or preservation of property held on the trusts or for such improvement of property so held as is reasonable having regard to the purposes of the trusts, or for defraying the expenses of the trustees in relation to the property so held;

• (ii) as respects income not so applied and not accumulated, for the benefit of a body within Schedule 3 to this Act or of a qualifying charity; and

• (b) that none of the property can, on ceasing to be held on the trusts at any time in that period or, if the settlor dies in that period, at any time before his death, devolve otherwise than on any such body or charity; and

• (c) that income arising from property held on the trusts cannot at any time after the end of that period be applied except as mentioned in paragraph (a)(i) or (ii) above.

• (2) Property is qualifying property for the purposes of subparagraph (1) above if—

• (a) it has been designated under section 34(1) of the Finance Act 1975 or section 77(1)(b), (c), (d) or (e) of the Finance Act 1976 or section 31(1)(b), (c), (d) or (e) of this Act; and

• (b) the requisite undertaking has been given with respect to it under section 34 of the Finance Act 1975 or under section 76, 78(5)(b) or 82(3) of the Finance Act 1976 or under section 30, 32(5)(b), 32A(6), (8)(b) or (9)(b) or 79(3) of this Act or paragraph 5 of Schedule 5 to this Act; and

• (c) tax has not (since the last occasion on which such an undertaking was given) become chargeable with respect to it under the said section 34 or under section 78 or 82(3) of the Finance Act 1976 or under section 32, 32A or 79(3A) of this Act or paragraph 3 of Schedule 5 to this Act.

• (3) If it appears to the Treasury that provision is, or is to be, made by a settlement for the maintenance, repair or preservation of any such property as is mentioned in subsection (1)(b), (c), (d) or (e) of section 31 of this Act they may, on a claim made for the purpose—

• (a) designate that property under this sub-paragraph, and

• (b) accept with respect to it an undertaking such as is described in subsection (4), or (as the case may be) undertaking such as described in subsections (4) and (4A) of that section;

and, if they do so, sub-paragraph (2) above shall have effect as if the designation were under that section and the undertaking or undertakings under section 30 of this Act and as if the reference to tax becoming chargeable were a reference to the occurrence of an event on which tax would become chargeable under section 32 or 32A of this Act if there had been a conditionally exempt transfer of the property when the claim was made and the undertaking or undertakings had been given under section 30.

• (4) A charity is a qualifying charity for the purposes of sub-paragraph (1) above if it exists wholly or mainly for maintaining, repairing or preserving for the public benefit buildings of historic or architectural interest, land of scenic, historic or scientific interest or objects of national, scientific, historic or artistic interest; and in this sub-paragraph “national interest” includes interest within any part of the United Kingdom.

• (5) Designations, undertakings and acceptances made under section 84(6) of the Finance Act 1976 or section 94(3) of the Finance Act 1982 shall be treated as made under sub-paragraph (3) above.

• (5A) In the case of property which, if a direction is given under paragraph 1 above, will be property to which paragraph 15A below applies, sub-paragraph (1)(b) above shall have effect as if for the reference to the settlor there were substituted a reference to either the settlor or the person referred to in paragraph 15A(2).

4

• (1) Paragraphs (a) and (b) of paragraph 3(1) above do not apply to property which—

• (a) was previously comprised in another settlement, and

• (b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of paragraph 9(1) below there was no charge (or, but for paragraph 9(4), there would have been no charge) to tax in respect of it;

and in relation to any such property paragraph 3(1)(c) above shall apply with the omission of the words “at any time after the end of that period”.

• (2) Sub-paragraph (1) above shall not have effect if the time when the property comprised in the previous settlement devolved otherwise than on any such body or charity as is mentioned in paragraph 3(1)(a) above fell before the expiration of the period of six years there mentioned; but in such a case paragraph 3(1) above shall apply to the current settlement as if for the references to that period of six years there were substituted references to the period beginning with the date on which the property became comprised in the current settlement and ending six years after the date on which it became held on the relevant trusts of the previous settlment (or, where this sub-paragraph has already had effect in relation to the property, the date on which it became held on the relevant trusts of the first settlement in the series).

Withdrawal

5

If in the Treasury’s opinion the facts concerning any property or its administration cease to warrant the continuance of the effect of a direction given under paragraph 1 above in respect of the property, they may at any time by notice in writing to the trustees withdraw the direction on such grounds, and from such date, as may be specified in the notice; and the direction shall cease to have effect accordingly.

Information

6

Where a direction under paragraph 1 above has effect in respect of property, the trustees shall from time to time furnish the Treasury with such accounts and other information relating to the property as the Treasury may reasonably require.

Enforcement of trusts

7

Where a direction under paragraph 1 above has effect in respect of property, the trusts on which the property is held shall be enforceable at the suit of the Treasury and the Treasury shall, as respects the appointment, removal and retirement of trustees, have the rights and powers of a beneficiary.

PART II — PROPERTY LEAVING MAINTENANCE FUNDS

Charge to tax

8

• (1) This paragraph applies to settled property which is held on trusts which comply with the requirements mentioned in paragraph 3(1) above, and in respect of which a direction given under paragraph 1 above has effect.

• (2) Subject to paragraphs 9 and 10 below, there shall be a charge to tax under this paragraph—

• (a) where settled property ceases to be property to which this paragraph applies, otherwise than by virtue of an application of the kind mentioned in paragraph 3(1)(a)(i) or (ii) above or by devolving on any such body or charity as is mentioned in paragraph 3(1)(a)(ii);

• (b) in a case in which paragraph (a) above does not apply, where the trustees make a disposition (otherwise than by such an application) as a result of which the value of settled property to which this paragraph applies is less than it would be but for the disposition.

• (3) Subsections (4), (5) and (10) of section 70 of this Act shall apply for the purposes of this paragraph as they apply for the purposes of that section (with the substitution of a reference to sub-paragraph (2)(b) above for the reference in section 70(4) to section 70(2)(b)).

• (4) The rate at which tax is charged under this paragraph shall be determined in accordance with paragraphs 11 to 15 below.

• (5) The devolution of property on a body or charity shall not be free from charge by virtue of sub-paragraph (2)(a) above if, at or before the time of devolution, an interest under the settlement in which the property was comprised immediately before the devolution is or has been acquired for a consideration in money or money’s worth by that or another such body or charity; but for the purposes of this sub-paragraph any acqusition from another such body or charity shall be disregarded.

• (6) For the purposes of sub-paragraph (5) above a body or charity shall be treated as acquiring an interest for a consideration in money or money’s worth if it becomes entitled to the interest as a result of transactions which include a disposition for such consideration (whether to that body or charity or to another person) of that interest or of other property.

Exceptions from charge

9

• (1) Tax shall not be charged under paragraph 8 above in respect of property which, within the permitted period after the occasion on which tax would be chargeable under that paragraph, becomes comprised in another settlement as a result of a transfer of value which is exempt under section 27 of this Act.

• (2) In sub-paragraph (1) above “the permitted period” means the period of thirty days except in a case where the occasion referred to is the death of the settlor, and in such a case means the period of two years.

• (3) Sub-paragraph (1) above shall not apply to any property if the person who makes the transfer of value has acquired it for a consideration in money or money’s worth; and for the purposes of this sub-paragraph a person shall be treated as acquiring any property for such consideration 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 or other property.

• (4) If the amount on which tax would be charged apart from sub-paragraph (1) above in respect of any property exceeds the value of the property immediately after it becomes comprised in the other settlement (less the amount of any consideration for its transfer received by the person who makes the transfer of value), that sub-paragraph shall not apply but the amount on which tax is charged shall be equal to the excess.

• (5) The reference in sub-paragraph (4) above to the amount on which tax would be charged is a reference to the amount on which it would be charged apart from—

• (a) section 70(5)(b) of this Act (as applied by paragraph 8(3) above), and

• (b) Chapters I and II of Part V of this Act;

and the reference in that sub-paragraph to the amount on which tax is charged is a reference to the amount on which it would be charged apart from section 70(5)(b) and those Chapters.

10

• (1) Tax shall not be charged under paragraph 8 above in respect of property which ceases to be property to which that paragraph applies on becoming—

• (a) property to which the settlor or his spouse or civil partner is beneficially entitled, or

• (b) property to which the settlor’s widow or widower or surviving civil partner is beneficially entitled if the settlor has died in the two years preceding the time when it becomes such property.

• (2) If the amount on which tax would be charged apart from sub-paragraph (1) above in respect of any property exceeds the value of the property immediately after it becomes property of a description specified in paragraph (a) or (b) of that sub-paragraph (less the amount of any consideration for its transfer received by the trustees), that sub-paragraph shall not apply but the amount on which tax is charged shall be equal to the excess.

• (3) The reference in sub-paragraph (2) above to the amount on which tax would be charged is a reference to the amount on which it would be charged apart from—

• (a) section 70(5)(b) of this Act (as applied by paragraph 8(3) above), and

• (b) Chapters I and II of Part V of this Act;

and the reference in sub-paragraph (2) above to the amount on which tax is charged is a reference to the amount on which it would be charged apart from section 70(5)(b) and those Chapters.

• (4) Sub-paragraph (1) above shall not apply in relation to any property if, at or before the time when it becomes property of a description specified in paragraph (a) or (b) of that sub-paragraph, an interest under the settlement in which the property was comprised immediately before it ceased to be property to which paragraph 8 above applies is or has been acquired for a consideration in money or money’s worth by the person who becomes beneficially entitled.

• (5) For the purposes of sub-paragraph (4) above a person shall be treated as acquiring an interest for a consideration in money or money’s worth if he becomes entitled to the interest as a result of transactions which include a disposition for such consideration (whether to him or to another person) of that interest or of other property.

• (6) Sub-paragraph (1) above shall not apply in respect of property if it was relevant property before it became (or last became) property to which paragraph 8 above applies and, by virtue of paragraph 16(1) or 17(1) below, tax was not chargeable (or, but for paragraph 16(2) or 17(4), would not have been chargeable) under section 65 of this Act in respect of its ceasing to be relevant property before becoming (or last becoming) property to which paragraph 8 above applies.

• (7) Sub-paragraph (1) above shall not apply in respect of property if—

• (a) before it last became property to which paragraph 8 above applies it was comprised in another settlement in which it was property to which that paragraph applies, and

• (b) it ceased to be comprised in the other settlement and last became property to which that paragraph applies in circumstances such that by virtue of paragraph 9(1) above there was no charge (or, but for paragraph 9(4), there would have been no charge) to tax in respect of it.

• (8) Sub-paragraph (1) above shall not apply unless the person who becomes beneficially entitled to the property is a long-term UK resident at the time when he becomes so entitled.

Rates of charge

11

• (1) This paragraph applies where tax is chargeable under paragraph 8 above and—

• (a) the property in respect of which the tax is chargeable was relevant property before it became (or last became) property to which that paragraph applies, and

• (b) by virtue of paragraph 16(1) or 17(1) below tax was not chargeable (or, but for paragraph 16(2) or 17(4), would not have been chargeable) under section 65 of this Act in respect of its ceasing to be relevant property on or before becoming (or last becoming) property to which paragraph 8 above applies.

• (2) Where this paragraph applies, the rate at which the tax is charged shall be the aggregate of the following percentages—

• (a) 0.25 per cent. for each of the first forty complete successive quarters in the relevant period,

• (b) 0.20 per cent. for each of the next forty,

• (c) 0.15 per cent. for each of the next forty,

• (d) 0.10 per cent. for each of the next forty, and

• (e) 0.05 per cent. for each of the next forty.

• (3) In sub-paragraph (2) above “the relevant period” means the period beginning with the latest of—

• (a) the date of the last ten-year anniversary of the settlement in which the property was comprised before it ceased (or last ceased) to be relevant property,

• (b) the day on which the property became (or last became) relevant property before it ceased (or last ceased) to be such property, and

• (c) 13th March 1975,

and ending with the day before the event giving rise to the charge.

• (4) Where the property in respect of which the tax is chargeable has at any time ceased to be and again become property to which paragraph 8 above applies in circumstances such that by virtue of paragraph 9(1) above there was no charge to tax in respect of it (or, but for paragraph 9(4), there would have been no charge), it shall for the purposes of this paragraph be treated as having been property to which paragraph 8 above applies throughout the period mentioned in paragraph 9(1).

12

• (1) This paragraph applies where tax is chargeable under paragraph 8 above and paragraph 11 above does not apply.

• (2) Where this paragraph applies, the rate at which the tax is charged shall be the higher of—

• (a) the first rate (as determined in accordance with paragraph 13 below), and

• (b) the second rate (as determined in accordance with paragraph 14 below).

13

• (1) The first rate is the aggregate of the following percentages—

• (a) 0.25 per cent. for each of the first forty complete successive quarters in the relevant period,

• (b) 0.20 per cent. for each of the next forty,

• (c) 0.15 per cent. for each of the next forty,

• (d) 0.10 per cent. for each of the next forty, and

• (e) 0.05 per cent. for each of the next forty.

• (2) In sub-paragraph (1) above “the relevant period” means the period beginning with the day on which the property in respect of which the tax is chargeable became (or first became) property to which paragraph 8 above applies, and ending with the day before the event giving rise to the charge.

• (3) For the purposes of sub-paragraph (2) above, any occasion on which property became property to which paragraph 8 above applies, and which occurred before an occasion of charge to tax under that paragraph in respect of the property, shall be disregarded.

• (4) The reference in sub-paragraph (3) above to an occasion of charge to tax under paragraph 8 does not include a reference to—

• (a) the occasion by reference to which the rate is being determined in accordance with this Schedule, or

• (b) an occasion which would not be an occasion of charge but for paragraph 9(4) above.

14

• (1) If the settlor is alive, the second rate is the effective rate at which tax would be charged, on the amount on which it is chargeable, in accordance with the appropriate provision of section 7 of this Act if the amount were the value transferred by a chargeable transfer made by him on the occasion on which the tax becomes chargeable.

• (1A) The rate or rates of tax determined under sub-paragraph (1) above in respect of any occasion shall not be affected by the death of the settlor after that occasion.

• (2) If the settlor is dead, the second rate is (subject to sub-paragraph (3) below) the effective rate at which tax would have been charged, on the amount on which it is chargeable, in accordance with the appropriate provision of section 7 of this Act if the amount had been added to the value transferred on his death and had formed the highest part of it.

• (3) If the settlor died before 13th March 1975, the second rate is the effective rate at which tax would have been charged, on the amount on which it is chargeable (“the chargeable amount”), in accordance with the appropriate provision of section 7 of this Act if the settlor had died when the event occasioning the charge under paragraph 8 above occurred, the value transferred on his death had been equal to the amount on which estate duty was chargeable when he in fact died, and the chargeable amount had been added to that value and had formed the highest part of it.

• (2A) In determining for the purposes of sub-paragraph (2) the effective rate or rates at which tax would have been charged on the amount in accordance with section 7(1), the effect of Schedule 1A (if it would have applied) is to be disregarded.

• (4) Where, in the case of a settlement (“the current settlement”), tax is chargeable under paragraph 8 above in respect of property which—

• (a) was previously comprised in another settlement, and

• (b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of paragraph 9(1) above was no charge (or, but for paragraph 9(4), there would have been no charge) to tax in respect of it,

then, subject to sub-paragraph (5) below, references in sub-paragraphs (1) to (3) above to the settlor shall be construed as references to the person who was the settlor in relation to the settlement mentioned in paragraph (a) above (or, if the Board so determine, the person who was the settlor in relation to the current settlement).

• (5) Where, in the case of a settlement (“the current settlement”), tax is chargeable under paragraph 8 above in respect of property which—

• (a) was previously comprised at different times in other settlements (“the previous settlements”), and

• (b) ceased to be comprised in each of them, and became comprised in another of them or in the current settlement, in circumstances such that by virtue of paragraph 9(1) above there was no charge (or, but for paragraph 9(4), there would have been no charge) to tax in respect of it,

references in sub-paragraphs (1) to (3) above to the settlor shall be construed as references to the person who was the settlor in relation to the previous settlement in which the property was first comprised (or, if the Board so determine, any person selected by them who was the settlor in relation to any of the other previous settlements or the current settlement).

• (6) Sub-paragraph (7) below shall apply if—

• (a) in the period of seven years preceding a charge under paragraph 8 above (the “current charge”), there has been another charge under that paragraph where tax was charged at the second rate, and

• (b) the person who is the settlor for the purposes of the current charge is the settlor for the purposes of the other charge (whether or not the settlements are the same and, if the settlor is dead, whether or not he has died since the other charge);

and in sub-paragraph (7) below the other charge is referred to as the “previous charge”.

• (7) Where this sub-paragraph applies, the amount on which tax was charged on the previous charge (or, if there have been more than one, the aggregate of the amounts on which tax was charged on each)—

• (a) shall, for the purposes of calculating the rate of the current charge under sub-paragraph (1) above, be taken to be the value transferred by a chargeable transfer made by the settlor immediately before the occasion of the current charge, and

• (b) shall, for the purposes of calculating the rate of the current charge under sub-paragraph (2) or (3) above, be taken to increase the value there mentioned by an amount equal to that amount (or aggregate).

• (8) References in sub-paragraphs (1) to (3) above to the effective rate are to the rate found by expressing the tax chargeable as a percentage of the amount on which it is charged.