SCHEDULES 1, 2 AND 3

Overview

There are 3 Schedules to the Act.

Schedule 1 deals with the valuation of limited interests i.e. life interests and interests for a period of certain duration.

Schedule 2 contains provisions dealing with the computation of tax.

Schedule 3 contains amendments to other enactments consequential on the passing of this Act.

SCHEDULE 1: Valuation of limited interests

Summary

Schedule 1 is divided into 3 Parts. Part 1 lays down the rules for ascertaining the value of limited interests according to age and gender in the case of life interests, and according to the period of time in the case of an interest for a period of certain duration.

Parts 2 and 3 contain the 2 tables required for valuing those limited interests.

Details

Section 28(4) provides that where the gift or inheritance is a limited interest, the value of that limited interest in a capital sum equal to the encumbrance-free value (i.e. the value of the capital of the property, less debts) will be ascertained in accordance with the Rules contained in Schedule 1. The Rules are as follows:

rule 1 This rule provides that the value of an interest for a single life in a capital sum will be that sum multiplied by the factor, contained in column (3) or (4) of Table A, which is appropriate to the age and gender of the person in respect of the duration of whose life the interest is to be valued.

Table A (in Part 2 of the Schedule) is based on actuarial statistics.

rule 2 This rule provides a simplified method for valuing an interest for the joint continuance of 2 lives, employing the joint factor given in Table A in Part 2.

rule 3 This rule is an extension of the method in rule 2 to the case of 3 or more lives.

rules 4 & 5 Rules 4 and 5 provide a method for valuing an interest for the longest of 2 or more lives.

rule 6 This rule provides a method for valuing an interest for a period of certain duration. Table B in Part 3 of the Schedule is used. Paragraph (b) of rule 6 deals with valuing an interest for part of a year.

rule 7 This rule provides a simplified method of valuing an interest which is to endure for a life or lives, but is guaranteed for a period of certain duration.

rule 8 This rule deals with the case of a limited interest which is given in such terms that the other rules cannot be applied. It provides that each payment on account of the interest is treated as a separate gift or inheritance.

Part 2 contains Table A which sets out how the value of a life interest in a capital sum is valued for capital acquisitions tax purposes. The value of a life interest for the joint continuance of 2 lives is also provided for in the Table.

Part 3 contains Table B which sets out how an interest for a definite period is valued for capital acquisitions tax purposes.

Relevant Date: Finance Act 2015