Finance Act, 1961

Exception of certain property from passing on death.

28.—(1) Property taken under a gift, whether by way of settlement or otherwise, made by any person dying after the passing of this Act shall not be included in the property deemed to pass on his death under the provisions of paragraph (c) or paragraph (e) of subsection (1) of section 2 of the Finance Act, 1894 , by reason only of the fact that an interest in the property for life or any other period determinable by reference to death was reserved to the donor or that bona fide possession and enjoyment of the property had not been assumed by the donee immediately on the gift and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise.

(2) Any interest or benefit reserved by or secured to the donor in connection with a disposition to which subsection (1) of this section applies shall be subject to the following provisions:

(a) if it was not charged upon or did not issue out of the property comprised in the disposition it shall nevertheless be deemed for the purposes of estate duty to have been an interest in that property,

(b) if it was subject as to its amount, payment or provision to a discretion vested in any person or persons, it shall nevertheless be deemed for the purposes of estate duty to be an interest in that property equivalent in annual value to one-third of the aggregate of all such interests or benefits actually received, enjoyed or disposed of by the donor during the three years immediately preceding his death,

and, in relation to property in which any such interest or benefit subsisted or is deemed by this subsection to have subsisted, paragraph (b) of subsection (1) of section 2 of the Finance Act, 1894 , shall have effect subject to the deletion of “holder of an office, or”.

(3) Property shall not be deemed to be included in the property passing on a death occurring after the passing of this Act by virtue of subsection (1) of section 30 of the Finance Act, 1941 , by reason only of the fact that bona fide possession and enjoyment of the property has not been assumed, immediately after the disposition or determination of the interest limited to cease on the death, by the person becoming entitled by virtue of or upon the disposition or determination and has not thenceforward been retained to the entire exclusion of the person who had the interest and of any benefit to him by contract or otherwise.

(4) Where, in connection with any such disposition or determination as is mentioned in subsection (1) of section 30 of the Finance Act, 1941 , any interest or benefit was reserved by or secured to the person whose interest was disposed of or determined, being a person whose death occurs after the passing of this Act, the interest or benefit shall be subject to the following provisions:

(a) if it was not charged upon or did not issue out of the property in which the interest which was disposed of or determined subsisted, it shall nevertheless be deemed for the purposes of estate duty to have been an interest in that property,

(b) if it was subject as to its amount, payment or provision to a discretion vested in any person or persons, it shall nevertheless be deemed for the purposes of estate duty to be an interest in that property equivalent in annual value to one-third of the aggregate of all such interests or benefits actually received, enjoyed or disposed of by the person whose interest was disposed of or determined during the three years immediately preceding the death on which the interest which was disposed of or determined had been limited to cease,

and, in relation to property in which any such interest or benefit subsisted or is deemed by this subsection to have subsisted, paragraph (b) of subsection (1) of section 2 of the Finance Act, 1894 , shall have effect subject to the deletion of “holder of an office, or”.