The Government yesterday released details of its new concessions on Capital Transfer Tax, aimed particularly at reducing the impact on small businesses and farms.
It published a new table of charges for lifetime gifts, where the tax rate starts at around half the rate charged if the assets changed hands at death.
And where a lifetime gift involves the transfer of around £250,000, the charge is reduced by about one-third. But the differential disappears at
around the £300,000 level.
The new rates mark a major climb-down by the Treasury which had originally envisaged the same scale for both lifetime transfers and those on the death
of the donor.
The lifetime rates were part of a number of concessions made Finance Bill, which introduces the Capital Transfer Tax, has been going through its committee stage in the Commons.
TORY RELIEF
Thatcher
‘grateful’
Our Political Staff writes: Mrs Thatcher, Opposition Treasury spokesman, who has led the Conservative assault in the Finance Bill Committee against the tax, said yesterday: “This is a major relief, and we are
grateful for it.
“It will be a very much less severe tax as a result,” she added.
Exemption level
Other concessions, which have been welcomed by a number of the lobby
groups who have sought relaxation of some of the effects of the tax, have
included the doubling of the exemption level for gifts to charities, new
arrangements for what the Treasury has classed “the national
heritage” and a fresh look at the problem of Forestry.
The Government has also said it will exempt indefinitely the estates of members of the Armed Forces who die on active service. These are at present exempt from Estate Duty but, under the Finance Bill, that exemption would have ended
on Dec. 31, 1984.
An Inland Revenue spokesman said last night that an example of the way in which the new lifetime transfer rates might operate is:
If a £250,000 business were transferred by an owner to his son, with the son paying the tax, the levy would be £76,376 on the lifetime scale, compared with the £114,750 payable on the scale published in the
Finance Bill.
‘Extremely welcome’
Besides raising the exemption level on gifts to charities from £50,000 to £100,000, the Government has also decided that there should be complete exemption for lifetime gifts made more than a year
before death.
“This is extremely welcome,” said a spokesman for Oxfam. “We had made a number of representations to the Chancellor but we were not prepared for this extra bonanza.”
Mr Joel Barnett, Chief Secretary to the
Treasury, said yesterday that following Mr Healey 's
undertaking to look again at the problem of woodlands, the Government had so far
come to no firm conclusions but was favouring an outline scheme on the following
lines: Tax would not be p
ayable on the value of timber growing on woodland transferred on death but, on a sale thereafter of either the woodland itself or of standing or felled timber, tax would be payable on the the sale proceeds attributable
to the trees.
On any lifetime gift or a transwer not at the full market value, there would be a deferred charge and the scheme may be tied to five years' ownership and probably to dedication under the Forestry
Commission schemes.
The next step, through the Committee stage, comes next week, when the implications for agriculture of capital transfer tax will be on the agenda.
Strong lobbying
There has already been some strong lobbying by a consortium of
the Royal Institution of Chartered Surveyors, the National
Farmers Union and the Country Landowner's Association who are,
among other things, seeking special reliefs for transfers to
closely-related members of a family and relief to encourage
transfers on retirement.
The farmers also want relief to all agricultural land and,
because of the low rate of return, the assessment of such land to
be based on its current earning capacity rather than on market
values.
The Government announced yesterday that the Royal Commission that has been appointed to examine the proposed Wealth Tax will hear evidence from the public on Mondays and Tuesdays
starting next week.
The hearings will be held in Room 134, Cleland House, Page Street, Westminster, and members of the public wanting to attend should contact the commission's secretary at Neville House, Page
Street.
