Quick-succession Relief
24.47. Quick-succession relief is intended to lessen the impact of estate duty in circumstances involving property
passing as a result of two or more deaths within a short period. Extensions of the tax base proposed by the Committee
will increase the
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number of occasions where property is brought to tax. In the result there may be a need
for more generous relief than is provided at present. The principle adopted by the Committee is that all property
should be taxed at least once each generation, but the operation of provisions necessary to ensure this should be
mitigated when the result is more frequent tax. The relief should not be so framed that it is available only against
the tax on a particular item of property. It would be wrong, for example, to provide relief for the estate of a widow
who inherits a house she retains, and to deny relief if the widow sells the house shortly before her death and
purchases a home unit and shares with the proceeds. The relief should take the form of a credit against the tax
payable on the death of the person who inherits, and it should be related to the tax that was imposed on the inherited
property on the occasion of the earlier death.
24.48. Where assets have been the subject of an inheritance and the estate of the person who inherits those assets includes on his death at least an amount equivalent to the value of those assets, a fraction of the tax already paid on the assets inherited should be credited against tax payable on that amount. The credit should be determined by spreading total tax on assets subject to tax over those assets. The whole of the tax should be available for credit where the death occurs within five years of the inheritance. It should be scaled down by one-tenth for each further year elapsing, so that there would be no relief available where death occurs more than fifteen years after the inheritance. The tax for which credit is available should not exceed the tax on the amount in the estate of the deceased equivalent to the inheritance. Illustrations of the relief are to be found in Appendix B to this chapter.
24.49. Problems arise in determining whether there has been an inheritance requiring the application of the relief provisions. In paragraphs 24.64–24.66 reference is made to cases where what might be called notional estate is subject to estate duty. Quick-succession relief provisions should identify the person who may be treated as inheriting such an estate. Thus the person who becomes absolutely entitled to assets that were the subject of a life estate should be treated as having inherited those assets from the deceased life tenant. Where there is a succession of life tenants, provisions will be necesary to deem inheritances of the assets by each succeeding life tenant.
24.50. Quick-succession relief provisions have generally been thought of in terms of succession on death. The Committee's recommendations for integration of estate and gift duties raise the possibility of applying relief provisions where a gift is followed by a succession on death of the donee. (The possibility of relief provisions applying to a succession followed by a gift or to a series of gifts is excluded from consideration on the ground that the second occasion of transfer is in the discretion of the donor.) The Committee sees no reason in principle why relief should not be available where a gift is followed by a succession. The tax on the gift that may be the subject of credit would be determined by spreading the tax on all gifts in the relevant year of return over gifts made in that year.
24.51. In paragraph 24.42 proposals were made by which in conditions of continuing inflation gifts made at one time can be meaningfully related to gifts made at another. The Committee considers there should be measures to bring about an equivalence in value between tax paid on the inheritance and tax against which relief is allowable. These measures, based on the proposal in paragraph 24.42, are illustrated in Appendix B to this chapter.