Capital Transfer Tax

Abstract

There has been a tax in the United Kingdom on the transfer of capital assets on death since 1894. Known by various titles, in recent years the tax was properly entitled Estate Duty and known colloquially as ‘death duties’. Estate Duty was abolished, and a wholly new tax on the transfer of capital assets, Capital Transfer Tax, was imposed by the Finance Act 1975, Part III and Schedules 4–12. This tax differs in three major ways from its immediate predecessor, Estate Duty

• (1) transfers of capital assets during the life of the transferor are taxed at the date of the transfer

• (2) differing rates of tax are charged on transfers between living persons (gifts inter vivos) from those charged on transfer on death

• (3) all transfers by the same individual whether inter vivos or on deaths are cumulative and tax is charged by reference to the aggregate of all transfers, so that the more transfers of value made by that individual inter vivos the higher the rate of tax eventually charged on death.