Finance Act 1975

5 (1) Where the value transferred by a chargeable transfer falls to be determined by reference to the value of any settled property in which there subsists an interest in possession to which the transferor is entitled, and—

(a) the value transferred by an earlier chargeable transfer also fell to be determined by reference to the value of that property; and

(b) that earlier transfer either was or included the making of the settlement or was made after the making of the settlement;

then, if the period between those transfers is not more than four years, tax shall be charged as if the value of that property were reduced—

(i) by 80 per cent, if that period is one year or less;

(ii) by 60 per cent, if that period is more than one year but not more than two years ;

(iii) by 40 per cent, if that period is more than two years but not more than three years ; and

(iv) by 20 per cent, if that period is more than three years.

(2) Where the transferor became entitled to the interest on the death of a person and estate duty was payable on that death in respect of the settled property sub-paragraph (1) above shall apply as if the period referred to therein were the period between the death and the chargeable transfer.