2(1)In section 7 (rates of tax), in subsection (1)—U.K.
(a)at the beginning there shall be inserted the words “Subject to subsections (2), (4) and (5) below”;
(b)for the words “ten years” there shall be substituted “ seven years ”; and
(c)the word “appropriate” shall be omitted.
(2)For subsection (2) of that section there shall be substituted the following subsection—
“(2)Except as provided by subsection (4) below, the tax charged on the value transferred by a chargeable transfer made before the death of the transferor shall be charged at one-half of the rate or rates referred to in subsection (1) above.”
(3)In subsection (3) of that section for the words “each of the Tables” there shall be substituted “ Table ”.
(4)After subsection (3) of that section there shall be inserted the following subsections—
“(4)Subject to subsection (5) below, subsection (2) does not apply in the case of a chargeable transfer made at any time within the period of seven years ending with the death of the transferor but, in the case of a chargeable transfer made within that period but more that three years before the death, the tax charged on the value transferred shall be charged at the following percentage of the rate or rates referred to in subsection (1) above—
(a)where the transfer is made more than three but not more than four years before the death, 80 per cent;
(b)where the transfer is made more than four but not more than five years before the death, 60 per cent;
(c)where the transfer is made more than five but not more than six years before the death, 40 per cent; and
(d)where the transfer is made more than six but not more than seven years before the death, 20 per cent.
(5)If, in the case of a chargeable transfer made before the death of the transferor, the tax which would fall to be charged in accordance with subsection (4) above is less than the tax which would have been chargeable (in accordance with subsection (2) above) if the transferor had not died within the period of seven years beginning with the date of the transfer, subsection (4) above shall not apply in the case of that transfer.”