81 Exemption of certain securities

Summary

This section exempts from gift and inheritance tax gifts and inheritances of certain Government and other securities (including units in certain unit trusts) issued with a condition that they be exempt from tax when in the beneficial ownership of persons neither domiciled nor ordinarily resident in this country. In order to qualify for the exemption, the securities or units must be held by the disponer for 6 years prior to the date of the gift or inheritance (15 years where the securities were acquired on or after 24 February 2003), unless the disponer was neither domiciled nor ordinarily resident in this country at the date of the disposition, or the securities or units were owned by the disponer prior to 26 March 1997, or became subject to the disposition before that date, and the disponer was neither domiciled nor ordinarily resident in this country at the date of the gift or inheritance.

The securities or units must be comprised in the gift or inheritance at the date of the gift or inheritance and at the valuation date.

Where the securities or units were acquired prior to 15 February 2001, the period during which the securities or units must be held in order to qualify for the exemption is 3 years.

Details

(1) “security” means any security, stock, share, debenture, debenture stock, certificate of charge or other form of security issued before, on, or after the passing of the Act and which by virtue of any enactment or by virtue of the exercise of any power conferred by any enactment is exempt from tax when in the beneficial ownership of a person neither domiciled nor ordinarily resident in the State;

“unit trust scheme” means an authorised unit trust scheme within the meaning of the Unit Trusts Act 1990, whose deed restricts the property subject to those trusts to securities.

Qualifying securities or units comprised in a gift or inheritance are exempt from capital acquisitions tax if it is shown that—

• (2)(a) the securities or units were comprised in the disposition (e.g. where they were held by a trust) continuously for a period of 6 years prior to the date of the gift or inheritance. [Where the securities or units were acquired on or after 24 February 2003, the relevant period is 15 years.] A period immediately before the date of the disposition during which the stock was in the beneficial ownership of the disponer is treated as part of the period during which it was comprised in the disposition,
• (2)(b) the securities or units must have been comprised in the gift or inheritance both at the date of the gift or inheritance and at the valuation date, and
• (2)(c) the donee or successor is, at the date of the gift or inheritance, neither domiciled nor ordinarily resident in the State.

Where, in the administration of an estate, an exempt security or unit is appropriated in satisfaction of a benefit, the security or unit will be deemed, for the purposes of subsection (2), to be comprised in the gift or inheritance at the date of the gift or inheritance, provided it formed part of the estate at the date of the gift or inheritance.

(3) The requirement that the securities or units be comprised in the disposition for the 6 year period will not apply where the disponer was neither domiciled nor ordinarily resident in the State at the date of the disposition or, in the case of securities or units purchased before 26 March 1997, where the disponer was neither domiciled nor ordinarily resident in the State at the date of the gift or inheritance.

(4) Where the securities or units were acquired prior to 15 February 2001, the period during which the securities or units must be held in order to qualify for the exemption is 3 years rather than the normal 6 year or 15 year period.

Relevant Date: Finance Act 2015