Inheritance Tax Act 1984

• (9) For the purposes of sub-paragraph (1) above the appropriate provision of section 7 of this Act is subsection (2), and for the purposes of sub-paragraphs (2) and (3) above it is (if the settlement was made on death) subsection (1) and (if not) subsection (2).

15

Where property is, by virtue of paragraph 1(3) above, treated as property in respect of which a direction has been given under paragraph 1, it shall for the purposes of paragraphs 11 to 14 above be treated as having become property to which paragraph 8 above applies when the transfer of value mentioned in paragraph 1(3) was made.

PART III — PROPERTY BECOMING COMPRISED IN MAINTENANCE FUNDS

16

• (1) Tax shall not be charged under section 65 of this Act in respect of property which ceases to be relevant property on becoming property in respect of which a direction under paragraph 1 above then has effect.

• (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 in respect of which the direction has effect (less the amount of any consideration for its transfer received by the trustees of the settlement in which it was comprised immediately before it ceased to be relevant property), that sub-paragraph shall not apply but the amount on which tax is charged shall be equal to the excess.

• (3) Sub-paragraph (1) above shall not apply in relation to any property if, at or before the time when it becomes property in respect of which the direction has effect, an interest under the settlement in which it was comprised immediately before it ceased to be relevant property is or has been acquired for a consideration in money or money’s worth by the trustees of the settlement in which it becomes comprised on ceasing to be relevant property.

• (4) For the purposes of sub-paragraph (3) above trustees shall be treated as acquiring an interest for a consideration in money or money’s worth if they become entitled to the interest as a result of transactions which include a disposition for such consideration (whether to them or to another person) of that interest or of other property.

17

• (1) Tax shall not be charged under section 65 of this Act in respect of property which ceases to be relevant property if within the permitted period an individual makes a transfer of value—

• (a) which is exempt under section 27 of this Act, and

• (b) the value transferred by which is attributable to that property.

• (2) In sub-paragraph (1) above “the permitted period” means the period of thirty days beginning with the day on which the property ceases to be relevant property except in a case where it does so on the death of any person, and in such a case means the period of two years beginning with that day.

• (3) Sub-paragraph (1) above shall not apply if the individual has acquired the property concerned for a consideration in money or money’s worth; and for the purposes of this sub-paragraph an individual 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 the transfer there referred to (less the amount of any consideration for its transfer received by the individual), that sub-paragraph shall not apply but the amount on which tax is charged shall be equal to the excess.

18

In paragraphs 16(2) and 17(4) above the references to the amount on which tax would be charged are references to the amount on which it would be charged apart from—

• (a) paragraph (b) of section 65(2) of this Act, and

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

and the references to the amount on which tax is charged are references to the amount on which it would be charged apart from that paragraph and those Chapters.

SCHEDULE 5

Charge on failure of condition of exemption—objects

1

• (1) Where, under section 31 of the Finance Act 1975, the value of an object has been left out of account and the Treasury are satisfied that at any time the undertaking given under that section or under paragraph 5 below with respect to the object has not been observed in a material respect, tax shall be chargeable with respect to the object in accordance with paragraph 2 below.

• (2) Where, under section 31 of the Finance Act 1975, the value of any object has been left out of account and—

• (a) sub-paragraph (1) above does not apply, but

• (b) the object is disposed of, whether on sale or otherwise,

then, subject to the following provisions of this paragraph, tax shall be chargeable with respect to the object in accordance with paragraph 2 below; but where the value of an object has been so left out of account on the death of more than one person, the tax chargeable under this sub-paragraph shall be chargeable only by reference to the last death.

• (3) Tax shall not be chargeable by virtue of sub-paragraph (2) above with respect to an object—

• (a) on its being sold by private treaty to a body mentioned in Schedule 3 to this Act or on its being disposed of to such a body otherwise than by sale, or

• (b) if it is disposed of otherwise than by sale and the undertaking previously given with respect to it is replaced by a further undertaking under paragraph 5 below.

• (4) For the purposes of sub-paragraph (2) above, the acceptance of an object under section 230 of this Act shall not be treated as a disposal of the object.

2

• (1) The following provisions of this paragraph shall have effect where, under section 31 of the Finance Act 1975, the value of any object has been left out of account in determining the value transferred by the transfer of value made on the death of any person (in this paragraph referred to as the value transferred on death) and tax becomes chargeable with respect to the object under paragraph 1 above by reason of the disposal of the object or the non-observance of an undertaking (in this paragraph referred to as a chargeable event).

• (2) The tax chargeable under paragraph 1 above with respect to an object shall be so much of the tax that would have been chargeable on the value transferred on death as would have been attributable to the value of the object if—

• (a) section 31 of the Finance Act 1975 had not applied to the object, and

• (b) the value of the object at the time of the death had been equal to its value at the time of the chargeable event and, if the chargeable event was a disposal on sale complying with paragraph 6 below, that value had been equal to the proceeds of sale.

• (3) Where—

• (a) under section 31 of the Finance Act 1975 the value of two or more objects has been left out of account in determining the value transferred on death, and

• (b) those objects formed a set at the time of death, and

• (c) tax becomes chargeable under paragraph 1 above with respect to two or more of the objects by reason of chargeable events occurring at different times,

the preceding provisions of this paragraph shall apply as if both or all the chargeable events had occurred at the time of the earlier or earliest one, and the tax chargeable with respect to the objects shall be adjusted accordingly on the occurrence of each of the subsequent chargeable events.

• (4) Sub-paragraph (3) above shall not apply with respect to two or more chargeable events which are disposals to different persons who are neither acting in concert nor connected with each other.

Charge on failure of condition of exemption—buildings etc.

3

• (1) Where, under subsection (2) of section 34 of the Finance Act 1975, the value of any property has been left out of account and the Treasury are satisfied that at any time the undertaking given under that subsection or under paragraph 5 below in respect of that property has not been observed in a material respect, then, subject to sub-paragraph (3) below, tax shall be chargeable in accordance with paragraph 4 below with respect to the property and any property associated with it.

• (2) Where, under section 34(2) of the Finance Act 1975, the value of any property has been left out of account in determining the value transferred on the death of any person and—

• (a) sub-paragraph (1) above does not apply, but

• (b) the property is disposed of, whether on sale or otherwise,

then, subject to sub-paragraphs (3) and (4) below, tax shall be chargeable in accordance with paragraph 4 below with respect to the property and any property associated with it; but where the value of the property has been left out of account on the death of more than one person, the tax chargeable under this sub-paragraph shall be chargeable only by reference to the last death.

• (3) The Treasury may direct that the tax chargeable under this paragraph on a failure to observe an undertaking with respect to any property or on the disposal of any property shall be chargeable with respect only to that property, if it appears to them that the entity consisting of the building, land and objects concerned has not been materially affected.

• (4) Tax shall not be chargeable under sub-paragraph (2) above with respect to any property—

• (a) on its being sold by private treaty to a body mentioned in Schedule 3 to this Act or on its being disposed of to such a body otherwise than by sale, or

• (b) if it is disposed of otherwise than by sale and the undertaking previously given with respect to it is replaced by a further undertaking under paragraph 5 below;

and for the purposes of sub-paragraph (2) above the acceptance of any property under section 230 of this Act shall not be treated as a disposal of the property.

• (5) For the purposes of this paragraph, two or more properties are associated with each other if one of them is a building falling within subsection (1)(b) of section 34 of the Finance Act 1975 and the other or others such land or objects as, in relation to that building, fall within subsection (1)(c) or (d) of that section.

4

The tax chargeable under paragraph 3 above with respect to any property shall be so much of the tax that would have been chargeable on the value transferred on the death as would have been attributable to the value of the property if—

• (a) section 34 of the Finance Act 1975 had not applied to the property; and

• (b) the value of the property at the time of the death had been equal to its value at the time the tax becomes chargeable and, if it becomes chargeable on a sale complying with paragraph 6 below, that value had been equal to the proceeds of sale.

Further undertaking on disposal

5

• (1) The further undertaking referred to in paragraph 1 above is an undertaking given, by such person as the Treasury think appropriate in the circumstances of the case, that, until the person entitled to the object dies or the object is disposed of, whether by sale or gift or otherwise,—

• (a) the object will be kept permanently in the United Kingdom and will not leave it temporarily except for a purpose and a period approved by the Treasury; and

• (b) reasonable steps will be taken for the preservation of the object; and

• (c) reasonable facilities for examining the object for the purpose of seeing the steps taken for its preservation or, subject to sub-paragraph (3) below, for purposes of research, will be allowed to any person authorised by the Treasury to examine it.

• (2) The further undertaking referred to in paragraph 3 above is an undertaking given by such person as the Treasury think appropriate in the circumstances of the case that, until the person entitled to the property dies or the property is disposed of, whether by sale or gift or otherwise, reasonable steps will be taken—

• (a) in the case of land falling within subsection (1)(a) of section 34 of the Finance Act 1975, for the maintenance of the land and the preservation of its character, and

• (b) in the case of any other property, for the maintenance, repair and preservation of the property and, if it is an object falling within subsection (1)(d) of that section, for keeping it associated with the building concerned,

and for securing reasonable access to the public.

• (3) If it appears to the Treasury, on a claim made for the purpose, that any documents which are designated as objects to which section 31 of the Finance Act 1975 applies contain information which for personal or other reasons ought to be treated as confidential, they may exclude those documents, either entirely or to such extent as they think fit, from so much of an undertaking given or to be given under sub-paragraph (1)(c) above as relates to their examination for purposes of research.

Requirements of sale

6

A sale complies with this paragraph if—

• (a) it was not intended to confer any gratuitous benefit on any person, and

• (b) it was either a transaction at arm’s length between persons not connected with each other or a transaction such as might be expected to be made at arm’s length between persons not connected with each other.

SCHEDULE 6

General

1

References in any enactment, in any instrument made under any enactment, or in any document (whether executed before or after the passing of this Act) to estate duty or to death duties shall have effect, as far as may be, as if they included references to capital transfer tax chargeable under section 4 of this Act (or under section 22 of the Finance Act 1975).

Surviving spouse or former spouse

2

In determining for the purposes of this Act the value of the estate, immediately before his death, of a person whose spouse (or former spouse) died before 13th November 1974, there shall be left out of account the value of any property which, if estate duty were chargeable on the later death, would be excluded from the charge by section 5(2) of the Finance Act 1894 (relief on death of surviving spouse); and tax shall not be chargeable under section 52 of this Act on the coming to an end of an interest in possession in settled property if—

• (a) the spouse (or former spouse) of the person beneficially entitled to the interest died before 13th November 1974, and

• (b) the value of the property in which the interest subsists would by virtue of the preceding provisions of this paragraph have been left out of account in determining the value of the survivor’s estate had he died immediately before the interest came to an end.

Sales and mortgages of reversionary interests

3

• (1) Where a reversionary interest in settled property was before 27th March 1974 sold or mortgaged for full consideration in money or money’s worth, no greater amount of tax shall be payable by the purchaser or mortgagee when the interest falls into possession than the amounts of estate duty that would have been payable by him if none of the provisions of the Finance Act 1975 or this Act had been passed; and any tax which, by virtue of this paragraph, is not payable by the mortgagee but which is payable by the mortgagor shall rank as a charge subsequent to that of the mortgagee.

• (2) Where the interest referred to in sub-paragraph (1) above was sold or mortgaged to a close company in relation to which the person entitled to the interest was a participator, sub-paragraph (1) above shall apply only to the extent that other persons had rights and interests in the company; and this sub-paragraph shall be construed as if contained in Part IV of this Act.

Objects of national etc. interest left out of account on death

4

• (1) In its application to a sale which does not comply with paragraph 6 of Schedule 5 to this Act, subsection (2) of section 40 of the Finance Act 1930 shall have effect as if the reference to the proceeds of sale were a reference to the value of the objects on that date.

• (2) Where there has been a death in relation to which the value of any property has been left out of account under section 40 of the Finance Act 1930 and, before any estate duty has become chargeable under the provisions of that section or of section 48 of the Finance Act 1950, there is a conditionally exempt transfer of that property, then, on the occurrence of a chargeable event in respect of that property—

• (a) tax shall be chargeable under section 32 or 32A of this Act (as the case may be), or

• (b) estate duty shall be chargeable under those provisions,

as the Board may elect, and in this sub-paragraph “conditionally exempt transfer” includes a conditionally exempt occasion within the meaning of section 78(2) of this Act.

• (3) In sections 33(7) and 8 and 79(1) of this Act, references to a conditionally exempt transfer of any property include references to a death in relation to which the value of any property has been left out of account under section 40 of the Finance Act 1930 and, in relation to such property, references to a chargeable event or to the tax chargeable in accordance with section 33 of this Act by reference to a chargeable event include references to an event on the occurrence of which estate duty becomes chargeable under section 40 of the Finance Act 1930 or section 48 of the Finance Act 1950 or to the estate duty so chargeable.

• (4) In determining for the purposes of section 40(2) or (2A) of the Finance Act 1930 what is the last death on which the objects passed, there shall be disregarded any death after 6th April 1976.

• (5) In the application of this paragraph to Northern Ireland for references to section 40 of the Finance Act 1930 and section 48 of the Finance Act 1950 there shall be substituted references to section 2 of the Finance Act (Northern Ireland) 1931 and Article 6 of the Finance (Northern Ireland) Order 1972 respectively.

SCHEDULE 7

1

In this Schedule “the repealed enactments” means the enactments repealed by this Act.

2

Sections 126 to 130 of this Act shall have effect (to the exclusion of the corresponding repealed enactments) in relation to any disposal after the end of 1984, whether the death in respect of which relief was given occurred before or after that time.

3

Where section 146 of this Act has effect in relation to a death after the end of 1984, it shall also have effect (to the exclusion of section 122 of the Finance Act 1976) in relation to any chargeable transfer of the kind referred to in section 146(2), whether made before or after that time.

4

Section 147 of this Act, so far as it relates to charges to tax in respect of claims to legitim made in the circumstances described in subsection (4) of that section, shall have effect (to the exclusion of the corresponding repealed enactments) in relation to claims made after the end of 1984, whether the testator died before or after that time.

5

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

6

Section 150 of this Act shall have effect (to the exclusion of section 88 of the Finance Act 1976) in relation to any claim made after the end of 1984.

7

Section 203 of this Act shall have effect (to the exclusion of the corresponding repealed enactments) in relation to any chargeable transfer made after the end of 1984 (whether the spouse transfer concerned was made before or after that time).

8

Section 218 of this Act, and section 245 so far as it relates to section 218, shall have effect in relation to settlements made after the end of 1984 to the exclusion of the corresponding repealed enactments, and those enactments shall continue to have effect in relation to settlements made before that time.

9

Section 219 of this Act, and section 245 so far as it relates to section 219, shall come into force on 1st January 1985 for all purposes to the exclusion of the corresponding repealed enactments, except that those enactments shall continue to have effect in relation to notices given before that time.

10

Section 220 of this Act shall come into force on 1st January 1985 for all purposes to the exclusion of the corresponding repealed enactments, except that those enactments shall continue to have effect in relation to authorisations given before that time.

11

Any order made under section 233 of this Act shall have effect in relation to interest chargeable (under the repealed enactments) in respect of chargeable transfers and other events before the end of 1984 as it has effect in relation to interest chargeable (under this Act) in respect of transfers and other events after that time.

12

Where payments are made or assets transferred after the end of 1984 in the circumstances described in section 262 of this Act, that section shall have effect (to the exclusion of the corresponding repealed enactments) whether the disposition first mentioned in that section was made before or after that time.

13

Section 264 of this Act shall have effect (to the exclusion of section 114 of the Finance Act 1976) in any case where the later transfer is made after the end of 1984, whether the earlier transfer was made before or after that date.

14

This Act shall not have effect in a case which would otherwise fall within paragraph 2(3) of Schedule 5 if the first chargeable event occurred before the end of 1984.

SCHEDULE 8

The Land Registration Act 1925

1

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

The Crown Proceedings Act 1947

2

In section 14(1)(b) of the Crown Proceedings Act 1947, for the words from “payment” to the end there shall be substituted the words “payment of capital transfer tax under the Capital Transfer Tax Act 1984”.

The Land Charges Act 1972

3

• (1) In section 2 of the Land Charges Act 1972—

• (a) in subsection (4)(ii) for the words “Part III of the Finance Act 1975” there shall be substituted the words “the Capital Transfer Tax Act 1984”; and

• (b) in subsection (5)(i) for the words “Part III of the Finance Act 1975 (capital transfer tax)” there shall be substituted the words “the Capital Transfer Tax Act 1984”.

• (2) In section 4(6) of that Act for the words “Part III of the Finance Act 1975” there shall be substituted the words “the Capital Transfer Tax Act 1984”.

The Finance Act 1975

4

In section 49(4) of the Finance Act 1975 after the words “paragraph 1 of Schedule 6 to this Act” there shall be inserted the words “or section 18 of the Capital Transfer Tax Act 1984”.

The Development Land Tax Act 1976

5

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

6

• (1) Section 34 of the Development Land Tax Act 1976 shall be amended as follows.

• (2) In subsection (3)(d)(ii) for the words " Chapter II of Part IV of the Finance Act 1982 " there shall be substituted the words " any provision, apart from section 79, of Chapter III of Part III of the Capital Transfer Tax Act 1984 ".

• (3) In subsection (5)(a) after the words "Act 1976 " there shall be inserted the words " or section 31 of the Capital Transfer Tax Act 1984 " and for the words "section 76 of that Act" there shall be substituted the words " section 30(2) of the Capital Transfer Tax Act 1984 ".

• (4) In subsection (6) for the words " Subsections (2) and (2A) of section 51 of the Finance Act 1975 " there shall be substituted the words " Sections 2(3) and 3(4) of the Capital Transfer Tax Act 1984 " and for the words "Part III of the Finance Act 1975 " there shall be substituted the words " the Capital Transfer Tax Act 1984 ".

7

• (1) Schedule 6 to the Development Land Tax Act 1976 shall be amended as follows.

• (2) In paragraph 18(2)—

• (a) after the words " section 22 of the Finance Act 1927 " there shall be inserted the words " or section 4 of the Capital Transfer Tax Act 1984 " , for the words "that Act" there shall be substituted the words " the Finance Act 1975 " and after the words " section 77 of the Finance Act 1976 " there shall be inserted the words " or under section 31 of the Capital Transfer Tax Act 1984 "; and

• (b) in paragraph (a) for the words from " subsection (7) " to " Act 1976 " there shall be substituted the words " section 32 of, or paragraph 3 of Schedule 5 to, the Capital Transfer Tax Act 1984 ".

• (3) In paragraph 19(4) for the words " paragraph 1(2) of Schedule 10 to the Finance Act 1975 " there shall be substituted the words " section 5(4) of the Capital Transfer Tax Act 1984 ".

• (4) In paragraph 24(1)—

• (a) in paragraph (b) for the words " subsection (3) of section 37 of the Finance Act 1975 " there shall be substituted the words " Schedule 1 to the Capital Transfer Tax Act 1984 " ; and

• (b) in paragraph (c) for the words " the said subsection (3) " there shall be substituted the words " the said Schedule 1 ".

The Finance Act 197

8

In section 38 of the Finance Act 1977—

• (a) in subsection (1) for the words “a direction has effect under section 93 of the Finance Act 1982” there shall be substituted the words “a direction has effect under paragraph 1 of Schedule 4 to the Capital Transfer Tax Act 1984”; and

• (b) in subsection (5)(a) for the words “the said section 93” there shall be substituted the words “the said paragraph 1”.

The Capital Gains Tax Act 1979

9

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

10

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

11

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

12

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

The National Heritage Act J 980

13

In section 8(1) of the National Heritage Act 1980 after the words “Finance Act 1975” there shall be inserted the words “or section 230 of the Capital Transfer Tax Act 1984”.

14

In section 12(3) of the National Heritage Act 1980 for the words “the said paragraph 17(4)” there shall be substituted the words “section 230(4) of the Capital Transfer Tax Act 1984”.

15

In section 13(3) of the National Heritage Act 1980 after the words “this section” there shall be inserted the words “or section 230(1) or 231(2) of the Capital Transfer Tax Act 1984”.

16

In section 14(1) of the National Heritage Act 1980, for the words “or of the provisions amended by section 12 above” there shall be substituted the words “or under section 230 of the Capital Transfer Tax Act 1984”.

The Finance Act 1980

17

• (1) Section 52 of the Finance Act 1980 shall be amended as follows.

• (2) In subsection (1)—

• (a) for the words “a direction has effect under section 93 of the Finance Act 1982” there shall be substituted the words “a direction has effect under paragraph 1 of Schedule 4 to the Capital Transfer Tax Act 1984”;

• (b) in paragraph (a) for the words “subsection (3) of that section” there shall be substituted the words “sub-paragraph (1) of paragraph 3 of that Schedule”; and

• (c) in paragraph (b) for the words “that subsection” there shall be substituted the words “that sub-paragraph”.

• (3) In subsections (2) and (3) for the words “subsection (3)(a)(i) or (ii) of the said section 93” there shall be substituted the words “sub-paragraph (1)(a)(i) or (ii) of the said paragraph 3”.

• (4) In subsection (7)—

• (a) in paragraph (a) for the words from “paragraph 3(1)” to “paragraph 3(4)” there shall be substituted the words “paragraph 9(1) of Schedule 4 to the Capital Transfer Tax Act 1984 there is (or, but for paragraph 9(4)”; and

• (b) in paragraph (b) for the words “section 93 of that Act” there shall be substituted the words “paragraph 1 of that Schedule”.

18

• (1) Section 53 of the Finance Act 1980 shall be amended as follows.

• (2) In subsection (1)—

• (a) for the words “subsection (3) of section 93 of the Finance Act 1982” there shall be substituted the words “sub-paragraph (1) of paragraph 3 of Schedule 4 to the Capital Transfer Tax Act 1984”; and

• (b) in paragraph (a) for the words “the said section 93” there shall be substituted the words “paragraph 1 of the said Schedule 4”.

• (3) In subsection (4)—

• (a) in paragraph (a) for the words from “paragraph 3(1)” to “paragraph 3(4)” there shall be substituted the words “paragraph 9(1) of Schedule 4 to the Capital Transfer Tax Act 1984 there is (or, but for paragraph 9(4)”; and

• (c) in paragraph (b) for the words “section 93 of that Act” there shall be substituted the words “paragraph 1 of that Schedule”.

19

In section 98 of the Finance Act 1980 for the words between “by virtue of” and “but” there shall be substituted the words “paragraph 9(1) or 17(1) of Schedule 4 to the Capital Transfer Tax Act 1984 there is no charge to capital transfer tax in respect of the property ceasing to be comprised in the settlement or a reduced charge to that tax by virtue of paragraph 9(4) or 17(4) of that Schedule”.

The Supreme Court Act 1981

20

In section 109 of the Supreme Court Act 1981—

• (a) in subsections (1) and (2) for the words “Part III of the Finance Act 1975” there shall be substituted the words “the Capital Transfer Tax Act 1984”; and

• (b) in subsection (3) for the words “section 94(1)(a) of the Finance Act 1980” there shall be substituted the words “section 256(1)(a) of the Capital Transfer Act 1984”.

The Finance Act 1982

21

In section 61(1) of the Finance Act 1982—

• (a) for the words “section 93 below” there shall be substituted the words “paragraph 1 of Schedule 4 to the Capital Transfer Tax Act 1984”; and

• (b) in paragraph (a) for the words “subsection (3)(a)(i) of section 93” there shall be substituted the words “paragraph 3(1)(a)(i) of that Schedule”.

22

In section 62 of the Finance Act 1982 for the words “section 93 below” there shall be substituted the words “paragraph 1 of Schedule 4 to the Capital Transfer Tax Act 1984”.

The Finance (No. 2) Act 1983

23

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

The Value Added Tax Act 1983

24

In Group 11 of Schedule 6 to the Value Added Tax Act 1983—

• (a) in item 2, for the words from “section 32(3)(a)” onwards there shall be substituted the words “paragraph 1(3)(a) or (4), paragraph 3(4)(a), or the words following paragraph 3(4), of Schedule 5 to the Capital Transfer Tax Act 1984”; and

• (b) in item 3, for the words “section 78(4) of the Finance Act 1976” there shall be substituted the words “section 32(4) of the Capital Transfer Tax Act 1984”.

The Land Registration Act (Northern Ireland) 1970

25

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

SCHEDULE 9

Charge on transfers.

3A

• (1) Any reference in this Act to a potentially exempt transfer is a reference to a transfer of value—

• (a) which is made by an individual on or after 18th March 1986 but before 22nd March 2006 ; and

• (b) which, apart from this section, would be a chargeable transfer (or to the extent to which, apart from this section, it would be such a transfer); and

• (c) to the extent that it constitutes either a gift to another individual or a gift into an accumulation and maintenance trust or a disabled trust;

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

• (1A) Any reference in this Act to a potentially exempt transfer is also a reference to a transfer of value—

• (a) which is made by an individual on or after 22nd March 2006,

• (b) which, apart from this section, would be a chargeable transfer (or to the extent to which, apart from this section, it would be such a transfer), and

• (c) to the extent that it constitutes—

• (i) a gift to another individual,

• (ii) a gift into a disabled trust, or

• (iii) a gift into a bereaved minor's trust on the coming to an end of an immediate post-death interest.

• (1B) Subsections (1) and (1A) above have effect subject to any provision of this Act which provides that a disposition (or transfer of value) of a particular description is not a potentially exempt transfer.

• (2) Subject to subsection (6) below, a transfer of value falls within subsection (1)(c) or (1A)(c)(i) above, as a gift to another individual,—

• (a) to the extent that the value transferred is attributable to property which, by virtue of the transfer, becomes comprised in the estate of that other individual, . . . , or

• (b) so far as that value is not attributable to property which becomes comprised in the estate of another person, to the extent that, by virtue of the transfer, the estate of that other individual is increased, . . .

• (3) Subject to subsection (6) below, a transfer of value falls within subsection (1)(c) above, as a gift into an accumulation and maintenance trust or a disabled trust, to the extent that the value transferred is attributable to property which, by virtue of the transfer, becomes settled property to which section 71 or 89 of this Act applies.

• (3A) Subject to subsection (6) below, a transfer of value falls within subsection (1A)(c)(ii) above to the extent that the value transferred is attributable to property which, by virtue of the transfer, becomes settled property to which section 89 below applies.

• (3B) A transfer of value falls within subsection (1A)(c)(iii) above to the extent that the value transferred is attributable to settled property (whenever settled) that becomes property to which section 71A below applies in the following circumstances—

• (a) under the settlement, a person (“L”) is beneficially entitled to an interest in possession in the settled property,

• (b) the interest in possession is an immediate post-death interest,

• (c) on or after 22nd March 2006, but during L's life, the interest in possession comes to an end,

• (d) L is beneficially entitled to the interest in possession immediately before it comes to an end, and

• (e) on the interest in possession coming to an end, the property—

• (i) continues to be held on the trusts of the settlement, and

• (ii) becomes property to which section 71A below applies.

• (4) A potentially exempt transfer which is made seven years or more before the death of the transferor is an exempt transfer and any other potentially exempt transfer is a chargeable transfer.

• (5) During the period beginning on the date of a potentially exempt transfer and ending immediately before—

• (a) the seventh anniversary of that date, or

• (b) if it is earlier, the death of the transferor,

it shall be assumed for the purposes of this Act that the transfer will prove to be an exempt transfer.

• (6) Where, under any provision of this Act . . . tax is in any circumstances to be charged as if a transfer of value had been made, that transfer shall be taken to be a transfer which is not a potentially exempt transfer.

• (6A) The reference in subsection (6) above to any provision of this Act does not include section 52 below except where the transfer of value treated as made by that section is one treated as made on the coming to an end of an interest which falls within section 5(1B) below.

• (7) In the application of this section to an event on the happening of which tax is chargeable under section 52 below, the reference in subsection (1)(a) or (1A)(a) above to the individual by whom the transfer of value is made is a reference to the person who, by virtue of section 3(4) above, is treated as the transferor.

8A

• (1) This section applies where—

• (a) immediately before the death of a person (a “deceased person”), the deceased person had a spouse or civil partner (“the survivor”), and

• (b) the deceased person had unused nil-rate band on death.

• (2) A person has unused nil-rate band on death if—

$$M>VT$where—M is the maximum amount that could be transferred by a chargeable transfer made (under section 4 above) on the person's death if it were to be wholly chargeable to tax at the rate of nil per cent. (assuming, if necessary, that the value of the person's estate were sufficient but that the maximum amount chargeable at nil per cent. under section 8D(2) is equal to the person's residence nil-rate amount and otherwise having regard to the circumstances of the person); andVT is the value actually transferred by the chargeable transfer so made (or nil if no chargeable transfer is so made).$

• (3) Where a claim is made under this section, the nil-rate band maximum at the time of the survivor's death is to be treated for the purposes of the charge to tax on the death of the survivor as increased by the percentage specified in subsection (4) below (but subject to subsection (5) and section 8C below).

• (4) That percentage is—

$$ENRBMD×100$where—E is the amount by which M is greater than VT in the case of the deceased person; andNRBMD is the nil-rate band maximum at the time of the deceased person's death.$

• (5) If (apart from this subsection) the amount of the increase in the nil-rate band maximum at the time of the survivor's death effected by this section would exceed the amount of that nil-rate band maximum, the amount of the increase is limited to the amount of that nil-rate band maximum.

• (6) Subsection (5) above may apply either—

• (a) because the percentage mentioned in subsection (4) above (as reduced under section 8C below where that section applies) is more than 100 because of the amount by which M is greater than VT in the case of one deceased person, or

• (b) because this section applies in relation to the survivor by reference to the death of more than one person who had unused nil-rate band on death.

• (7) In this Act “nil-rate band maximum” means the amount shown in the second column in the first row of the Table in Schedule 1 to this Act (upper limit of portion of value charged at rate of nil per cent.) and in the first column in the second row of that Table (lower limit of portion charged at next rate).

8B

• (1) A claim under section 8A above may be made—

• (a) by the personal representatives of the survivor within the permitted period, or

• (b) (if no claim is so made) by any other person liable to the tax chargeable on the survivor's death within such later period as an officer of Revenue and Customs may in the particular case allow.

• (2) If no claim under section 8A above has been made in relation to a person (P) by reference to whose death that section applies in relation to the survivor, the claim under that section in relation to the survivor may include a claim under that section in relation to P if that does not affect the tax chargeable on the value transferred by the chargeable transfer of value made on P's death.

• (3) In subsection (1)(a) above “the permitted period” means—

• (a) the period of two years from the end of the month in which the survivor dies or (if it ends later) the period of three months beginning with the date on which the personal representatives first act as such, or

• (b) such longer period as an officer of Revenue and Customs may in the particular case allow.

• (4) A claim made within either of the periods mentioned in subsection (3)(a) above may be withdrawn no later than one month after the end of the period concerned.

8C

• (1) This section applies where—

• (a) the conditions in subsection (1)(a) and (b) of section 8A above are met, and

• (b) after the death of the deceased person, tax is charged on an amount under any of sections 32, 32A and 126 below by reference to the rate or rates that would have been applicable to the amount if it were included in the value transferred by the chargeable transfer made (under section 4 above) on the deceased person's death.

• (2) If the tax is charged before the death of the survivor, the percentage referred to in subsection (3) of section 8A above is (instead of that specified in subsection (4) of that section)—

$$(ENRBMD-TANRBME)×100$where—E and NRBMD have the same meaning as in subsection (4) of that section;TA is the amount on which tax is charged; andNRBME is the nil-rate band maximum at the time of the event occasioning the charge.$

• (3) If this section has applied by reason of a previous event or events, the reference in subsection (2) to the fraction

$TANRBME$

is to the aggregate of that fraction in respect of the current event and the previous event (or each of the previous events).

• (4) If the tax is charged after the death of the survivor, it is charged as if the personal nil-rate band maximum of the deceased person were appropriately reduced.

• (5) In subsection (4) above—

• “the personal nil-rate band maximum of the deceased person” is the nil rate band maximum which is treated by Schedule 2 to this Act as applying in relation to the deceased person's death, increased in accordance with section 8A above where that section effected an increase in that nil-rate band maximum in the case of the deceased person (as survivor of another deceased person), and

• “appropriately reduced” means reduced by the amount (if any) by which the amount on which tax was charged at the rate of nil per cent. on the death of the survivor was increased by reason of the operation of section 8A above by virtue of the position of the deceased person.

24A

• (1) A transfer of value is exempt to the extent that the value transferred by it is attributable to land in the United Kingdom given to a body falling within subsection (2) below.

• (2) A body falls within this subsection if it is—

• (za) a non-profit registered provider of social housing;

• (a) a registered social landlord within the meaning of Part I of the Housing Act 1996;

• (b) a registered housing association within the meaning of the Housing Associations Act 1985; or

• (c) a registered housing association within the meaning of Part II of the Housing (Northern Ireland) Order 1992.

• (3) Subsections (2) to (5) of section 23 and subsection (4) of section 24 above shall apply in relation to subsection (1) above as they apply in relation to section 24(1).

26A

A potentially exempt transfer which would (apart from this section) have proved to be a chargeable transfer shall be an exempt transfer to the extent that the value transferred by it is attributable to property which has been or could be designated under section 31(1) below and which, during the period beginning with the date of the transfer and ending with the death of the transferor,—

• (a) has been disposed of by sale by private treaty to a body mentioned in Schedule 3 to this Act or has been disposed of to such a body otherwise than by sale, or

• (b) has been disposed of in pursuance of section 230 below or in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation).

29A

• (1) This section applies where—

• (a) apart from this section the transfer of value made on the death of any person is an exempt transfer to the extent that the value transferred by it is attributable to an exempt gift, and

• (b) the exempt beneficiary, in settlement of the whole or part of any claim against the deceased’s estate, effects a disposition of property not derived from the transfer.

• (2) The provisions of this Act shall have effect in relation to the transfer as if—

• (a) so much of the relevant value as is equal to the following amount, namely the amount by which the value of the exempt beneficiary’s estate immediately after the disposition is less than it would be but for the disposition, or

• (b) where that amount exceeds the relevant value, the whole of the relevant value,

were attributable to such a gift to the exempt beneficiary as is mentioned in subsection (3) below (instead of being attributable to a gift with respect to which the transfer is exempt).

• (3) The gift referred to in subsection (2) above is a specific gift with respect to which the transfer is chargeable, being a gift which satisfies the conditions set out in paragraphs (a) and (b) of section 38(1) below.

• (4) In determining the value of the exempt beneficiary’s estate for the purposes of subsection (2) above—

• (a) no deduction shall be made in respect of the claim referred to in subsection (1)(b) above, and

• (b) where the disposition referred to in that provision constitutes a transfer of value—

• (i) no account shall be taken of any liability of the beneficiary for any tax on the value transferred, and

• (ii) sections 104 and 116 below shall be disregarded.

• (5) Subsection (1)(b) above does not apply in relation to any claim against the deceased’s estate in respect of so much of any liability as is, in accordance with this Act, to be taken into account in determining the value of the estate.

• (6) In this section—

• “exempt gift”, in relation to a transfer of value falling within subsection (1)(a) above, means—a gift with respect to which the transfer is (apart from this section) exempt by virtue of the provisions of any sections 18 and 23 to 28A above, orwhere (apart from this section) the transfer is so exempt with respect to a gift up to a limit, so much of the gift as is within that limit;

• “the exempt beneficiary”, in relation to an exempt gift, means any of the following, namely—where the gift is exempt by virtue of section 18 above, the deceased’s spouse or civil partner,where the gift is exempt by virtue of section 23 above, any person or body—whose property the property falling within subsection (1) of that section becomes, orby whom that property is held on trust for charitable purposes,where the gift is exempt by virtue of section 24, or 25 above, any body whose property the property falling within subsection (1) of that section becomes,where the gift is exempt by virtue of section 24A above, any body to whom the land falling within subsection (1) of that section is given, andwhere the gift is exempt by virtue of section 27 , 28 or 28A above, the trustees of any settlement in which the property falling within subsection (1) of that section becomes comprised;

• “gift” and “specific gift” have the same meaning as in Chapter III of this Part; and

• “the relevant value”, in relation to a transfer of value falling within subsection (1)(a) above, means so much of the value transferred by the transfer as is attributable to the gift referred to in that provision.

32A

• (1) For the purposes of this section the following properties are associated with each other, namely, a building falling within section 31(1)(c) above and (to the extent that any of the following exists) an area or areas of land falling within section 31(1)(d) above in relation to the building and an object or objects falling within section 31(1)(e) above in relation to the building; and this section applies where there are such properties, which are referred to as associated properties.

• (2) Where there has been a conditionally exempt transfer of any property (or part), tax shall be charged under this section in respect of that property (or part) on the first occurrence after the transfer (or, if the transfer was a potentially exempt transfer, after the death of the transferor of an event which under this section is a chargeable event with respect to that property (or part).

• (3) If the Treasury are satisfied that at any time an undertaking given under section 30 above or this section for the maintenance, repair, preservation, access or keeping of any of the associated properties has not been observed in a material respect, then (subject to subsection (10) below) the failure to observe the undertaking is a chargeable event with respect to the whole of each of the associated properties of which there has been a conditionally exempt transfer.

• (4) If—

• (a) the person beneficially entitled to property dies, or

• (b) property (or part of it) is disposed of, whether by sale or gift or otherwise,

then, if the property is one of the associated properties and an undertaking for its maintenance, repair, preservation, access or keeping has been given under section 30 above or this section, the death or disposal is (subject to subsections (5) to (10) below) a chargeable event with respect to the whole of each of the associated properties of which there has been a conditionally exempt transfer.

• (5) Subject to subsection (6) below, the death of a person beneficially entitled to property, or the disposal of property (or part), is not a chargeable event if the personal representatives of the deceased (or, in the case of settled property, the trustees or the person next entitled) within three years of the death make or, as the case may be, the disposal is—

• (a) a disposal of the property (or part) concerned by sale by private treaty to a body mentioned in Schedule 3 to this Act, or to such a body otherwise than by sale, or

• (b) a disposal of the property (or part) concerned in pursuance of section 230 below.

• (5A) The death of a person beneficially entitled to property, or the disposal of property, is not a chargeable event if—

• (a) in the case of a death, a person who became beneficially entitled to the property on the death disposes of it in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation) within 3 years of the death, or

• (b) in the case of a disposal, the disposal is made in the circumstances described in paragraph 1 of that Schedule.

• (6) Where a disposal mentioned in subsection (5)(a) or (b) above is a part disposal, that subsection does not make the event non-chargeable with respect to property other than that disposed of unless—

• (a) the requisite undertaking described in section 31 above is given with respect to the property (or part) not disposed of by such person as the Board think appropriate in the circumstances of the case, or

• (b) (where any of the property or part not disposed of is an area of land within section 31(1)(d) above) the requisite undertakings described in that section are given with respect to that property (or that part) by such person or persons as the Board think appropriate in the circumstances of the case;

and in this subsection “part disposal” means a disposal of property which does not consist of or include the whole of each property which is one of the associated properties and of which there has been a conditionally exempt transfer.

• (7) Where, after a relevant disposal (that is, a disposal mentioned in subsection (5)(a) or (b) or (5A)(a) or (b) above made in circumstances where that subsection applies), a person beneficially entitled to the property (or part) concerned dies or the property (or part) concerned is disposed of, the death or disposal is not a chargeable event with respect to the property (or part) concerned unless there has again been a conditionally exempt transfer of the property (or part) concerned after the relevant disposal.

• (8) The death of a person beneficially entitled to property, or the disposal of property (or part) otherwise than by sale, is not a chargeable event if—

• (a) the transfer of value made on the death or the disposal is itself a conditionally exempt transfer of the property (or part) concerned, or

• (b) the condition specified in subsection (8A) below is satisfied with respect to the property (or part) concerned.

• (8A) The condition referred to in subsection (8)(b) above is satisfied if—

• (a) the requisite undertaking described in section 31 above is given with respect to the property (or part) by such person as the Board think appropriate in the circumstances of the case, or

• (b) (where any of the property or part is an area of land within section 31(1)(d) above) the requisite undertakings described in that section are given with respect to the property (or part) by such person or persons as the Board think appropriate in the circumstances of the case.

• (9) If the whole or part of any property is disposed of by sale and—

• (a) the requisite undertaking described in section 31 above is given with respect to the property (or part) by such person as the Board think appropriate in the circumstances of the case, or

• (b) (where any of the property or part is an area of land within section 31(1)(d) above) the requisite undertakings described in that section are given with respect to the property (or part) by such person or persons as the Board think appropriate in the circumstances of the case,

the disposal is a chargeable event only with respect to the whole or part actually disposed of (if it is a chargeable event with respect to such whole or part apart from this subsection).

• (10) If—

• (a) the Treasury are satisfied that there has been a failure to observe, as to one of the associated properties or part of it, an undertaking for the property’s maintenance, repair, preservation, access or keeping, or

• (b) there is a disposal of one of the associated properties or part of it,

and it appears to the Treasury that the entity consisting of the associated properties has not been materially affected by the failure or disposal, they may direct that it shall be a chargeable event only with respect to the property or part as to which there has been a failure or disposal (if it is a chargeable event with respect to that property or part apart from this subsection.

35A

• (1) An undertaking given under section 30, 32 or 32A above or paragraph 5 of Schedule 5 to this Act may be varied from time to time by agreement between the Board and the person bound by the undertaking.

• (2) Where the tribunal is satisfied that—

• (a) the Board have made a proposal for the variation of such an undertaking to the person bound by the undertaking,

• (b) that person has failed to agree to the proposed variation within six months after the date on which the proposal was made, and

• (c) it is just and reasonable, in all the circumstances, to require the proposed variation to be made,

the tribunal may direct that the undertaking is to have effect from a specified date as if the proposed variation had been agreed to by the person bound by the undertaking.

• (3) The date specified by the tribunal must not be less than sixty days after the date of the tribunal's direction.

• (4) A direction under this section shall not take effect if, before the date specified by the tribunal, a variation different from that to which the direction relates is agreed between the Board and the person bound by the undertaking.

39A

• (1) Where any part of the value transferred by a transfer of value is attributable to—

• (a) the value of relevant business property, or

• (b) the agricultural value of agricultural property,

then, for the purpose of attributing the value transferred (as reduced in accordance with section 104 or 116 below), to specific gifts and gifts of residue or shares of residue, sections 38 and 39 above shall have effect subject to the following provisions of this section.

• (2) The value of any specific gifts of relevant business property or agricultural property shall be taken to be their value as reduced in accordance with section 104 or 116 below.

• (3) The value of any specific gifts not falling within subsection (2) above shall be taken to be the appropriate fraction of their value.

• (4) In subsection (3) above “the appropriate fraction” means a fraction of which—

• (a) the numerator is the difference between the value transferred and the value, reduced as mentioned in subsection (2) above, of any gifts falling within that subsection, and

• (b) the denominator is the difference between the unreduced value transferred and the value, before the reduction mentioned in subsection (2) above, of any gifts falling within that subsection;

and in paragraph (b) above “the unreduced value transferred” means the amount which would be the value transferred by the transfer but for the reduction required by sections 104 and 116 below.

• (5) If or to the extent that specific gifts fall within paragraphs (a) and (b) of subsection (1) of section 38 above, the amount corresponding to the value of the gifts shall be arrived at in accordance with subsections (3) to (5) of that section by reference to their value reduced as mentioned in subsection (2) or, as the case may be, subsection (3) of this section.

• (6) For the purposes of this section the value of a specific gift of relevant business property or agricultural property does not include the value of any other gift payable out of that property; and that other gift shall not itself be treated as a specific gift of relevant business property or agricultural property.

• (7) In this section—

• “agricultural property” and “the agricultural value of agricultural property” have the same meaning as in Chapter II of Part V of this Act; and

• “relevant business property” has the same meaning as in Chapter I of that Part.

46A

• (1) Subsections (2) and (4) below apply where—

• (a) a settlement commenced before 22nd March 2006,

• (b) a contract of life insurance was entered into before that day,

• (c) a premium payable under the contract is paid, or an allowed variation is made to the contract, at a particular time on or after that day,

• (d) immediately before that day, and at all subsequent times up to the particular time, there were rights under the contract that—

• (i) were comprised in the settlement, and

• (ii) were settled property in which a transitionally-protected interest (whether or not the same such interest throughout that period) subsisted,

• (e) rights under the contract become, by reference to payment of the premium or as a result of the variation,—

• (i) comprised in the settlement, and

• (ii) part of the settled property in which the then-current transitionally-protected interest subsists, and

• (f) any variation of the contract on or after 22nd March 2006 but before the particular time, so far as it is a variation that—

• (i) increased the benefits secured by the contract, or

• (ii) extended the term of the insurance provided by the contract,

was an allowed variation.

• (2) For the purposes of the provisions mentioned in subsection (3) below—

• (a) the rights mentioned in subsection (1)(e) above shall be taken to have become comprised in the settlement, and

• (b) the person beneficially entitled to the then-current transitionally-protected interest shall be taken to have become beneficially entitled to his interest in possession so far as it subsists in those rights,

before 22nd March 2006.

• (3) Those provisions are—

• section 3A(2) above;

• section 5(1A) above;

• section 49(1A) and (1B) below;

• section 51(1A) and (1B) below;

• section 52(2A) and (3A) below;

• section 53(1A) and (2A) below;

• section 54(2A) and (2B) below;

• section 54A(1A) below;

• section 57A(1A) below;

• section 58(1B) and (1C) below;

• section 59(1) and (2) below;

• section 80(4) below;

• section 100(1A) below;

• section 101(1A) below;

• section 102ZA(1) of the Finance Act 1986 (gifts with reservation); and

• sections 72(1A) and (2A) and 73(2A) of the 1992 Act.

• (4) If payment of the premium is a transfer of value made by an individual, that transfer of value is a potentially exempt transfer.

• (5) In this section—

• “allowed variation”, in relation to a contract, means a variation that takes place by operation of, or as a result of exercise of rights conferred by, provisions forming part of the contract immediately before 22nd March 2006;

• “transitionally-protected interest” means—an interest in possession to which a person was beneficially entitled immediately before, and on, 22nd March 2006, ora transitional serial interest.

46B

• (1) Subsections (2) and (5) below apply where—

• (a) a settlement commenced before 22nd March 2006,

• (b) a contract of life insurance was entered into before that day,

• (c) a premium payable under the contract is paid, or an allowed variation is made to the contract, at a particular time on or after that day,

• (d) immediately before that day, and at all subsequent times up to the particular time, there were rights under the contract that—

• (i) were comprised in the settlement, and

• (ii) were settled property to which section 71 below applied,

• (e) rights under the contract become, by reference to payment of the premium or as a result of the variation, comprised in the settlement, and

• (f) any variation of the contract on or after 22nd March 2006 but before the particular time, so far as it was a variation that—

• (i) increased the benefits secured by the contract, or

• (ii) extended the term of the insurance provided by the contract,

was an allowed variation.

• (2) If the rights mentioned in subsection (1)(e) above would, but for subsection (1A) of section 71 below, become property to which that section applies, those rights shall become settled property to which that section applies when they become comprised in the settlement.

• (3) Subsection (5) below also applies where—

• (a) a settlement commenced before 22nd March 2006,

• (b) a contract of life insurance was entered into before that day,

• (c) a premium payable under the contract is paid, or an allowed variation is made to the contract, at a particular time on or after that day when there are rights under the contract—

• (i) that are comprised in the settlement and are settled property to which section 71A or 71D below applies,

• (ii) that immediately before that day were settled property to which section 71 below applied, and

• (iii) that on or after that day, but before the particular time, became property to which section 71A or 71D below applies in circumstances falling within subsection (4) below,

• (d) rights under the contract become, by reference to payment of the premium or as a result of the variation, comprised in the settlement, and

• (e) any variation of the contract on or after 22nd March 2006 but before the particular time, so far as it was a variation that—

• (i) increased the benefits secured by the contract, or

• (ii) extended the term of the insurance provided by the contract,

was an allowed variation.

• (4) The circumstances referred to in subsection (3)(c)(iii) above are—

• (a) in the case of property to which section 71D below applies, that the property on becoming property to which section 71D below applies ceased to be property to which section 71 below applied without ceasing to be settled property;

• (b) in the case of property to which section 71A below applies—

• (i) that the property on becoming property to which section 71A below applies ceased, by the operation of section 71(1B) below, to be property to which section 71 below applied, or

• (ii) that the property, having become property to which section 71D below applied in circumstances falling within paragraph (a) above, on becoming property to which 71A below applies ceased, by the operation of section 71D(5)(a) below, to be property to which section 71D below applied.

• (5) If payment of the premium is a transfer of value made by an individual, that transfer of value is a potentially exempt transfer.

• (6) In this section “allowed variation”, in relation to a contract, means a variation that takes place by operation of, or as a result of exercise of rights conferred by, provisions forming part of the contract immediately before 22nd March 2006.

47A

In this Act “settlement power” means any power over, or exercisable (whether directly or indirectly) in relation to, settled property or a settlement.

49A

• (1) Where a person (“L”) is beneficially entitled to an interest in possession in settled property, for the purposes of this Chapter that interest is an “immediate post-death interest” only if the following conditions are satisfied.

• (2) Condition 1 is that the settlement was effected by will or under the law relating to intestacy.

• (3) Condition 2 is that L became beneficially entitled to the interest in possession on the death of the testator or intestate.

• (4) Condition 3 is that—

• (a) section 71A below does not apply to the property in which the interest subsists, and

• (b) the interest is not a disabled person's interest.

• (5) Condition 4 is that Condition 3 has been satisfied at all times since L became beneficially entitled to the interest in possession.

49B

Where a person is beneficially entitled to an interest in possession in settled property, for the purposes of this Chapter that interest is a “transitional serial interest” only—

• (a) if section 49C or 49D below so provides, or

• (b) if, and to the extent that, section 49E below so provides.

49C

• (1) Where a person (“B”) is beneficially entitled to an interest in possession in settled property (“the current interest”), that interest is a transitional serial interest for the purposes of this Chapter if the following conditions are met.

• (2) Condition 1 is that—

• (a) the settlement commenced before 22nd March 2006, and

• (b) immediately before 22nd March 2006, the property then comprised in the settlement was property in which B, or some other person, was beneficially entitled to an interest in possession (“the prior interest”).

• (3) Condition 2 is that the prior interest came to an end at a time on or after 22nd March 2006 but before 6th October 2008.

• (4) Condition 3 is that B became beneficially entitled to the current interest at that time.

• (5) Condition 4 is that—

• (a) section 71A below does not apply to the property in which the interest subsists, and

• (b) the interest is not a disabled person's interest.

49D

• (1) Where a person (“E”) is beneficially entitled to an interest in possession in settled property (“the successor interest”), that interest is a transitional serial interest for the purposes of this Chapter if the following conditions are met.

• (2) Condition 1 is that—

• (a) the settlement commenced before 22nd March 2006, and

• (b) immediately before 22nd March 2006, the property then comprised in the settlement was property in which a person other than E was beneficially entitled to an interest in possession (“the previous interest”).

• (3) Condition 2 is that the previous interest came to an end on or after 6th October 2008 on the death of that other person (“F”).

• (4) Condition 3 is that, immediately before F died, F was the spouse or civil partner of E.

• (5) Condition 4 is that E became beneficially entitled to the successor interest on F's death.

• (6) Condition 5 is that—

• (a) section 71A below does not apply to the property in which the successor interest subsists, and

• (b) the successor interest is not a disabled person's interest.

49E

• (1) Where—

• (a) a person (“C”) is beneficially entitled to an interest in possession in settled property (“the present interest”), and

• (b) on C's becoming beneficially entitled to the present interest, the settled property consisted of, or included, rights under a contract of life insurance entered into before 22nd March 2006,

the present interest so far as subsisting in rights under the contract, or in property comprised in the settlement that directly or indirectly represents rights under the contract, is a “transitional serial interest” for the purposes of this Chapter if the following conditions are met.

• (2) Condition 1 is that—

• (a) the settlement commenced before 22nd March 2006, and

• (b) immediately before 22nd March 2006—

• (i) the property then comprised in the settlement consisted of, or included, rights under the contract, and

• (ii) those rights were property in which C, or some other person, was beneficially entitled to an interest in possession (“the earlier interest”).

• (3) Condition 2 is that—

• (a) the earlier interest came to an end at a time on or after 6th October 2008 (“the earlier-interest end-time”) on the death of the person beneficially entitled to it and C became beneficially entitled to the present interest—

• (i) at the earlier-interest end-time, or

• (ii) on the coming to an end, on the death of the person beneficially entitled to it, of an interest in possession to which that person became beneficially entitled at the earlier-interest end-time, or

• (iii) on the coming to an end of the second or last in an unbroken sequence of two or more consecutive interests in possession to the first of which a person became beneficially entitled at the earlier-interest end-time and each of which ended on the death of the person beneficially entitled to it, or

• (b) C became beneficially entitled to the present interest—

• (i) on the coming to an end, on the death of the person entitled to it, of an interest in possession that is a transitional serial interest under section 49C above, or

• (ii) on the coming to an end of the second or last in an unbroken sequence of two or more consecutive interests in possession the first of which was a transitional serial interest under section 49C above and each of which ended on the death of the person beneficially entitled to it.

• (4) Condition 3 is that rights under the contract were comprised in the settlement throughout the period beginning with 22nd March 2006 and ending with C's becoming beneficially entitled to the present interest.

• (5) Condition 4 is that—

• (a) section 71A below does not apply to the property in which the present interest subsists, and

• (b) the present interest is not a disabled person's interest.

54A

• (1) If the circumstances fall within subsection (2) below, this section applies to any chargeable transfer made—

• (a) under section 52 above, on the coming to an end of an interest in possession in settled property during the life of the person beneficially entitled to it, or

• (b) on the death of a person beneficially entitled to an interest in possession in settled property;

and in the following provisions of this section the interest in possession mentioned in paragraph (a) or paragraph (b) above is referred to as “the relevant interest”.

• (1A) Where a person becomes beneficially entitled on or after 22nd March 2006 to an interest in possession in settled property, subsection (1)(b) above applies in relation to the person's death only if the interest is—

• (a) a disabled person's interest, or

• (b) a transitional serial interest.

• (2) The circumstances referred to in subsection (1) above are—

• (a) that the whole or part of the value transferred by the transfer is attributable to property in which the relevant interest subsisted and which became settled property in which there subsisted an interest in possession (whether the relevant interest or any previous interest) on the making by the settlor of a potentially exempt transfer at any time on or after 17th March 1987 and within the period of seven years ending with the date of the chargeable transfer; and