Inheritance Tax Act 1984

79 Exemption from ten-yearly charge. U.K.

(1) Where property is comprised in a settlement and there has been a conditionally exempt transfer of the property on or before the occasion on which it became comprised in the settlement, section 64 above shall not have effect in relation to the property on any ten-year anniversary falling before the first occurrence after the transfer of a chargeable event with respect to the property.

(2) Where property is comprised in a settlement and there has been, on or before the occasion on which it became comprised in the settlement, a disposal of the property in relation to which subsection (4) of section [F1 258 of the 1992 Act] (capital gains tax relief for works of art etc.) had effect, section 64 above shall not have effect in relation to the property on any ten-year anniversary falling before the first occurrence after the disposal of an event on the happening of which the property is treated as sold under subsection (5) of the said section [F1 258].

(3) Where property is comprised in a settlement and there has been no such transfer or disposal of the property as is mentioned in subsection (1) or (2) above on or before the occasion on which it became comprised in the settlement, [F2 subsection (3A) below applies if] —

(a) the property [F3 has, on a claim made for the purpose, been] designated by the Treasury under section 31 above,

[F4 (aa) that claim is made during the period beginning with the date of a ten-year anniversary of the settlement (“the relevant ten-year anniversary”) and ending—

(i) two years after that date, or

(ii) on such later date as the Board may allow,]

(b) the requisite undertaking described in [F5 section 31 is given] [F6 with respect to the property] by such person as the Treasury think appropriate in the circumstances of the case, [F6 or (where the property is an area of land within subsection (1)(d) of that section) the requisite undertakings described in that section [F7 are given] with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case], and

(c) the property is relevant property,

F8 ...

[F9 (3A) Tax is not chargeable under section 64 above in relation to the property by reference to the relevant ten-year anniversary concerned or any subsequent ten-year anniversaries; but on the first occurrence of an event which, if there had been a conditionally exempt transfer of the property immediately before that relevant ten-year anniversary, would be a chargeable event with respect to the property—

(a) there is a charge to tax under this subsection, and

(b) on any ten-year anniversary falling after that event, tax is chargeable under section 64 above in relation to the property.]

(4) Tax shall not be charged under [F10 subsection (3A) above in respect of property if, after the occasion mentioned in subsection (3) above and before the occurrence mentioned in subsection (3A)] , there has been a conditionally exempt occasion in respect of the property.

(5) The amount on which tax is charged under [F11 subsection (3A)] above shall be an amount equal to the value of the property at the time of the event.

[F12 (5A) Where the event giving rise to a charge to tax under [F13 subsection (3A)] above is a disposal on sale, and the sale—

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

(b) 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,

the value of the property at the time of that event shall be taken for the purposes of subsection (5) above to be equal to the proceeds of the sale.]

(6) The rate at which tax is charged under [F14 subsection (3A) ] above 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) 0·5 per cent. for each of the next forty.

[F15 (7) In subsection (6) above “the relevant period” means the period given by subsection (7A) below or, if shorter, the period given by subsection (7B) below.

(7A) The period given by this subsection is the period beginning with the latest of—

(a) the day on which the settlement commenced,

(b) the date of the last ten-year anniversary of the settlement to fall before the day on which the property became comprised in the settlement,

(c) the date of the last ten-year anniversary of the settlement to fall before the [F16 relevant ten-year anniversary] , and

(d) 13th March 1975,

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

(7B) The period given by this subsection is the period equal in length to the number of relevant-property days in the period—

(a) beginning with the day that is the latest of those referred to in paragraphs (a) to (d) of subsection (7A) above, and

(b) ending with the day before the event giving rise to the charge.

(7C) For the purposes of subsection (7B) above, a day is a “relevant-property day” if at any time on that day the property was relevant property.]

(8) Subsection (9) below shall have effect where—

(a) by virtue of [F17 subsection (3A)] above, section 64 does not have effect in relation to property [F18 by reference to the relevant ten-year anniversary of the settlement] ,

(b) on that anniversary a charge to tax falls to be made in respect of the settlement under section 64, and

(c) the property became comprised in the settlementF19 ... within the period of ten years ending with that anniversary.

[F20 (9A) Subsection (9B) below applies where the same event gives rise—

(a) to a charge under [F21 subsection (3A)] above in relation to any property, and

(b) to a charge under section 32 or 32A above in relation to that property.

(9B) If the amount of each of the charges is the same, each charge shall have effect as a charge for one half of the amount that would be charged apart from this subsection; otherwise, whichever of the charges is lower in amount shall have effect as if it were a charge the amount of which is nil.]

(9) In calculating the rate at which tax is charged under section 64 above, the value of the consideration given for the property on its becoming comprised in the settlement shall be treated for the purposes of section 66(5)(b) above as if it were an amount on which a charge to tax was imposed in respect of the settlement under section 65 above at the time of the property becoming so comprised.

(10) In subsection (1) above, the reference to a conditionally exempt transfer of any property includes a reference to a transfer of value in relation to which the value of any property has been left out of account under the provisions of sections 31 to 34 of the M1 Finance Act 1975 and, in relation to such property, the reference to a chargeable event includes a reference to an event on the occurrence of which tax becomes chargeable under Schedule 5 to this Act.

Textual Amendments

F1 Words in s. 79(2) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289 , 290, Sch. 10 para. 8(3) (with ss. 60, 101(1), 201(3)).

F2 Words in s. 79(3) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(2)(a)

F3 Words in s. 79(3)(a) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(2)(b)

F4 S. 79(3)(aa) inserted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(2)(c)

F5 Words in s. 79(3)(b) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(2)(d)(i)

F6 Finance Act 1985 Sch. 26 para. 9,in relation to events occurring after 18March 1985.

F7 Words in s. 79(3)(b) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(2)(d)(ii)

F8 Words in s. 79(3) omitted (with effect in accordance with s. 12(9) of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), s. 12(2)(e)

F9 S. 79(3A) inserted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(3)

F10 Words in s. 79(4) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(4)

F11 Words in s. 79(5) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(5)

F12 S. 79(5A) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 para. 34(2)

F13 Words in s. 79(5A) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(5)

F14 Words in s. 79(6) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(5)

F15 S. 79(7)-(7C) substituted for s. 79(7) (19.7.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 para. 34(3)

F16 Words in s. 79(7A)(c) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(6)

F17 Words in s. 79(8)(a) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(5)

F18 Words in s. 79(8)(a) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(7)(a)

F19 Words in s. 79(8)(c) omitted (with effect in accordance with s. 12(9) of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), s. 12(7)(b)

F20 S. 79(9A)(9B) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 para. 34(4)

F21 Words in s. 79(9A)(a) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(5)

Modifications etc. (not altering text)

C1 By Finance Act 1985 s. 95,the functions of the Treasury were transferred to the Commissioners of Inland Revenue (“the Board”).

Marginal Citations

M1 1975 c. 7.