56 Payment of inheritance tax by transfer of securities

Summary

This section provides that Government securities which were issued with the condition that they might be used to pay death duties may be used to pay inheritance tax.

Details

This section provides that section 22 of the Finance Act 1954 and the regulations made under that Act shall apply, with any necessary modifications, to the payment of inheritance tax by the transfer of securities to the Minister for Finance, as they apply to the payment of death duties by the transfer of securities to the Minister for Finance.

Section 22 of the Finance Act 1954 provides that where a security is issued by the Government with the condition that it will be accepted in payment of death duties, it may be used (by the person from whom the death duties are due) to pay death duties by transfer of the security and it will be accepted at par in payment of the amount due.

The conditions under which the security will be accepted are stated in regulations made by the Minister for Finance under section 22(5) of the Finance Act 1954, and are contained in a number of statutory instruments. These statutory instruments are all broadly similar. The conditions are that—

• the stock will only be accepted in payment of death duties on the property passing under the will or intestacy of a deceased person if it formed part of such property at his/her death and for 3 months before that date (or from the date of the original subscription).
• the stock will only be accepted in payment of death duties on property passing on the death of a person under a title other than his/her will or intestacy if it formed part of such property continuously from the date of the original subscription to the date of his/her death or for 3 months immediately preceding his/her death.

If the testator bequeaths the Government stock to one person and the residue to another, it is the practice of the Revenue Commissioners to allow the inheritance tax in respect of the residue to be paid by Government stock if the beneficiaries involved agree to this course of action.

The section applies to mainstream inheritance tax only – it does not apply to the 6% or 1% charges imposed on certain discretionary trusts.

It should be noted that the only stock which qualifies under this section is 6.5% Exchequer Stock 2000/2005.

Relevant Date: Finance Act 2015