Capital Transfer Tax (now known as Inheritance Tax) Act 1984
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Capital Transfer Tax(now known as Inheritance Tax)Act 1984
1984 CHAPTER 51
An Act to consolidate provisions of Part III of the Finance Act 1975 and other enactments relating to capital transfer tax.
[31st July 1984]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I
General
Main charges and definitions
1 Charge on transfers.
1. Capital transfer tax shall be charged on tho value transferred by a chargeable transfer.
2 Chargeable transfers and exempt transfers.
(1) A chargeable transfer is a transfer of value which is made by an individual but is not (by virtue of Part II of this Act or any other enactment) an exempt transfer.
(2) A transfer of value made by an individual and exempt only to a limited extent—
(a ) is, if all the value transferred by it is within the limit, an exempt transfer, and
(b ) is, if that value is partly within and partly outside the limit, a chargeable transfer of so much of that value as is outside the limit as well as an exempt transfer of so much of that value as is within the limit.
(3) Except where the context otherwise requires, references in this Act to chargeable transfers, to their making or to the values transferred by them shall be construed as including references to occasions on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79), to their occurrence or to the amounts on which tax is then chargeable.
3 Transfers of value.
(1) Subject to the following provisions of this Part of this Act, a transfer of value is a disposition made by a person (the transferor) as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition; and the amount by which it is less is the value transferred by the transfer.
(2) For the purposes of subsection (1) above no account shall be taken of the value of excluded property which ceases to form part of a person's estate as a result of a disposition.
(3) Where the value of a person's estate is diminished and that of another person's estate, or of settled property in which no interest in possession subsists, is increased by the first-mentioned person's omission to exercise a right, he shall be treated for the purposes of this section as having made a disposition at the time (or latest time) when he could have exercised the right, unless it is shown that the omission was not deliberate.
(4) Except as otherwise provided, references in this Act to a transfer of value made, or made by any person, include references to events on the happening of which tax is chargeable as if a transfer of value had been made, or, as the case may be, had been made by that person; and ‘transferor’ shall be construed accordingly.
4 Transfers on death.
(1) On the death of any person tax shall be charged as if, immediately before his death, he had made a transfer of value and the value transferred by it had been equal to the value of his estate immediately before his death.
(2) For the purposes of this section, where it cannot be known which of two or more persons who have died survived the other or others they shall be assumed to have died at the same instant.
5 Meaning of estate.
(1) For the purposes of this Act a person's estate is the aggregate of all the property to which he is beneficially entitled, except that the estate of a person immediately before his death does not include excluded property.
(2) A person who has a general power which enables him, or would if he were sui juris enable him, to dispose of any property other than settled property, or to charge money on any property other than settled property, shall be treated as beneficially entitled to the property or money; and for this purpose ‘general power’ means a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit.
(3) In determining the value of a person's estate at any time his liabilities at that time shall be taken into account, except as otherwise provided by this Act.
(4) The liabilities to be taken into account in determining the value of a transferor's estate immediately after a transfer of value include his liability for capital transfer tax on the value transferred but not his liability (if any) for any other tax or duty resulting from the transfer.
(5) Except in the case of a liability imposed by law, a liability incurred by a transferor shall be taken into account only to the extent that it was incurred for a consideration in money or money's worth.
6 Excluded property.
(1) Property situated outside the United Kingdom is excluded property if the person beneficially entitled to it is an individual domiciled outside the United Kingdom.
(2) Where securities have been issued by the Treasury subject to a condition authorised by section 22 of the Finance (No. 2) Act 1931 (or section 47 of the Finance (No. 2) Act 1915 ) for exemption from taxation so long as the securities are in the beneficial ownership of persons neither domiciled nor ordinarily resident in the United Kingdom, the securities are excluded property if they are in the beneficial ownership of such a person.
(3) Where the person beneficially entitled to the rights conferred by any of the following, namely—
(a ) war savings certificates;
(b ) national savings certificates (including Ulster savings certificates);
(c ) premium savings bonds;
(d ) deposits with the National Savings Bank or with a trustee savings bank;
(e ) a certified contractual savings scheme within the meaning of section 415 of the Taxes Act;
is domiciled in the Channel Islands or the Isle of Man, the rights are excluded property.
(4) Property to which this subsection applies by virtue of section 155(1) below is excluded property.
Rates
7 Rates.
(1) The tax charged on the value transferred by a chargeable transfer made by any transferor shall be charged at the following rate or rates, that is to say—
(a ) if the transfer is the first chargeable transfer made by that transferor in the period of ten years ending with the date of the transfer, at the rate or rates applicable to that value under the appropriate Table in Schedule 1 to this Act;
(b ) in any other case, at the rate or rates applicable under that Table to such part of the aggregate of—
(i) that value, and
(ii) the values transferred by previous chargeable transfers made by him in that period,
as is the highest part of that aggregate and is equal to that value.
(2) Except as otherwise provided, the first Table in Schedule 1 to this Act is the appropriate Table for a transfer made on or at any time within three years of the death of the transferor, and the second Table in that Schedule is the appropriate Table for any other transfer.
(3) In each of the Tables in Schedule 1 to this Act any rate shown in the third column is that applicable to such portion of the value concerned as exceeds the lower limit shown in the first column but does not exceed the upper limit (if any) shown in the second column.
8 Indexation of rate bands.
(1) If the retail prices index for the month of December in 1984 or any later year is higher than it was for the previous December, then, unless Parliament otherwise determines, section 7 above and Schedule 1 to this Act shall apply to chargeable transfers made on or after 6th April in the following year with the substitution of new Tables for the Tables applying (whether by virtue of this section or otherwise) to earlier chargeable transfers.
(2) The new Tables shall differ from the Tables they replace in that for each of the amounts specified in the first and second columns there shall be substituted amounts arrived at by increasing the previous amounts by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of 1,000, rounding it up to the nearest amount which is such a multiple.
(3) The references in this section to the retail prices index are references to the general index of retail prices (for all items) published by the Department of Employment; and if that index is not published for a month of December those references shall be construed as references to any substituted index or index figures published by that Department.
(4) The Treasury shall before 6th April 1985 and each subsequent 6th April make an order specifying the amounts which by virtue of this section will be treated, in...
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