The Gazette 1971

Death Duties Section 29 is designed to remove any doubt in relation to the definition of the expression "death duties". Section 30 substitutes the following scale for the exist- ing scale of rates of estate duty. Principal Value of the Estate Rate per cent of Duty £ £ Exceeding 5,000 and not exceding 6,000 1 7,000 2 8,000 3 10,000 4 12,500 6 15,000 8 17,500 - 10 20,000 12 25,000 14 30,000 16 35,000 18 40,000 21 45,000 24 50,000 27 55,000 30 60,000 33 75,000 37 100,000 41 150,000 45 200,000 50 55 Section 31 increases, from 4 per cent to 9 per cent per annum, the rate of interest on death duties in arrear. The section provides that the increased rate will not apply to duty at present being paid by instalments. It also provides an interest-free period of four months from the date of death for estate duty on personal property and further, that the new 9 per cent rate will not come into operation until the expiration of four months from the dae tof the passing of the Act. Section 32 effects a technical change to enable estate duty to be collected from trustees, beneficiaries, and other persons in whom property liable to duty is vested in cases in which, at present, the executor is the only person accountable. (The executor's liability remains limited to the amount of the estate vested in him as executor.) Section 33 is designed to prevent the avoidance of estate duty through the medium of the exemption, at present available, for objects of national, scientific, historic or artistic interest. The section provides that the exemption will be revoked if the exempted articles are sold within six years of the date of death, unless the sale is to the National Gallery, National Museum or other similar institution. Grant and Lease Back Duty Payable Section 34 is concerned with the avoidance of estate duty by means of the device known as a "grant and lease back" and is designed to ensure that property disposed of by a person shall be liable to duty if such person subsequently re-acquires the property through a lease back from the grantee. Controlled Company Section 35 makes certain amendments of Section 20 of the Finance Act, 1965, designed to prevent avoid- 6,000 7,000 8,000 10,000 12,500 15,000 17,500 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 75,000 100,000 150,000 200.000

undercharged. The section applies only to tax charge- able for the year 1971-72 and subsequent years of assessment. Provisions corresponding to Sections 15-18 in relation to corporation profits tax are contained in Sections 46 to 49 of the Bill. Deduction of Tax at Source in Building Operations Section 19 removes doubt that, with effect from 6th April 1971 local authorities, housing associations, hous- ing trusts and housing societies are within the scope of Section 17 of the Finance Act, 1970, under which a person making a payment in respect of construction operations under a construction contract is, in certain circumstances, obliged to deduct tax at 35 per cent from the amount of the payment. The amendment will not have effect in relation to payments made before the passing of the Finance Act, 1971, unless tax has been deducted. The section also imposes interest on amounts deduc- tible from payments to sub-contractors which have not been paid over to the Collector General. The interest rate of 1 per cent for each month or part of a month during which an amount remains unpaid is the same as that which applies in relation to deductions under PAYE and to amounts of turnover atx and wholesale tax which have not been remitted. Interest will not be charged for any period prior to the passing of the Finance Act, 1971. Investment Allowance for Capital Expenditure Section 20 provides that, where a person carrying on a trade or profession incurs capital'expenditure between 1st April 1971 and 31st March 1973 on the provision of new machinery or plant for use in a designated area, he shall be entitled to an investment allowance of one- fifth of such expenditure in the year of assessment in the basis period for which the expenditure is incurred. Section 21 defines "basis period" for the purposes of investment allowance. Section 22 secures that the investment allowance will not be treated as diminishing the cost of machinery or plant for purposes of free depreciation or ordinary wear and tear allowances. (Under existing law the new invest- ment allowance is excluded from the provisions relating to balancing allowances and balancing charges.) Section 23 provides for the withdrawal of the invest- ment allowance where the relevant machinery or plant is sold without having been used for the purposes of the trade or profession or before two years from the date on which it was first so used. Provisions corresponding to Sections 20-23 in relation to corporation profits tax are contained in Section 45 of the Bill. Depreciation for Machinery and Plant Section 24 extends to the entire country the system of free depreciation now confined to machinery or plant provided for use in designated areas. The new relief which will enable a trader to write off 100 per cent of his expenditure in the first year, if he so desires, will apply in respect of new machinery or plant (other than road vehicles) provided for use outside the designated areas in the period from 1st April 1971 to 31st March 1973. A corresponding provision in relation to corporation profits tax is contained in Section 45 of the Bill.

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