Estate & Capital Taxes

Early Twentieth Century

A range of taxes on land were commenced in the famous 1910 budget. Many of them were repealed in 1920. They included incremental value duty, undeveloped land duty reversion duty and mineral rights duty.

• Incremental value duty was to represent on the increase of the site value after 1909 payable when land was transferred on sale or death.
• Reversion duty was a 10% duty applying to a lessor at the end of the lease by reason of the end of the lease.
• Undeveloped land tax was on annual tax of one-half pence in the pound on the site value of undeveloped land.
• Mineral rights duty was an annual duty of one shilling in the pound on the rental value of the right work minerals.

Death Duties

There are three principal death duties up to 1975. Estate duty applied under the Finance Act 1894 and was the principal tax. It produced 90% of the revenue. It was a duty on property passing on death of the total estate. I

t included all movable property or immovable property situated in the State regardless of domicile. Properties abroad was taxed that the deceased died domiciled in the state.

The rates were prescribed based on the value of the estate. In 1973 there was an exemption of £10,000 with graduated rates up to 55% applicable above £200,000. 50% above £150,000, 45 percent above £100,000,41 percent above £80,000,including  18% above £30,000, 14 percent £20,000, 10 percent above £15,000, and 4% above £10,000

Position in 1941

		Principal Value of the Estate Rate per cent. of Duty £            £ Exceeding 100 and not exceeding   500 1   £ 500  to    1,000 2   £1,000  to    5,000 3   £5,000  to   10,000 4   £10,000  to   12,500 6   £12,500  to   15,000 7·2   £15,000  to   18,000 8·4   £18,000  to   21,000 9·6   £21,000  to   25,000 10·8   £25,000  to   30,000 12   £30,000  to   35,000 13·2   £35,000  to   40,000 14·4   £40,000  to   45,000 15·6   £45,000  to   50,000 16·8   £50,000  to   55,000 19·5   £55,000  to   65,000 20·8   £65,000  to   75,000 22·1   £75,000  to   85,000 23·4   £85,000  to   100,000 24·7   £100,000  to   120,000 26   £120,000  to   150,000 28·6   £150,000  to   200,000 31·2   £200,000  to   250,000 33·8   £250,000  to   300,000 36·4   £300,000  to   400,000 39   £400,000 41·6

 

1960

£ £ Rate Exceeding 5,000 and not exceeding 7,500 3 “ 7,500 ” ” “ 10,000 4 “ 10,000 ” ” “ 12,500 6 “ 12,500 ” ” “ 15,000 8 “ 15,000 ” ” “ 17,500 10 “ 17,500 ” ” “ 20,000 12 “ 20,000 ” ” “ 25,000 14 “ 25,000 ” ” “ 30,000 16 “ 30,000 ” ” “ 35,000 18 “ 35,000 ” ” “ 40,000 21 “ 40,000 ” ” “ 45,000 24 “ 45,000 ” ” “ 50,000 27 “ 50,000 ” ” “ 60,000 30 “ 60,000 ” ” “ 75,000 33 “ 75,000 ” ” “ 100,000 37 “ 100,000 ” ” “ 150,000 41 “ 150,000 ” ” “ 200,000 45 “ 200,000 ” ” “ 250,000 49 “ 250,000 53

 

1972

		Principal Value of the Estate Rate per cent. of duty £ £ Exceeding 7,500 and not exceeding 8,000 1 “ 8,000   “ 9,000 2 “ 9,000   “ 10,000 3 “ 10,000   “ 11,000 4 “ 11,000   “ 12,500 6 “ 12,500   “ 15,000 8 “ 15,000   “ 17,500 10 “ 17,500   “ 20,000 12 “ 20,000   “ 25,000 14 “ 25,000   “ 30,000 16 “ 30,000   “ 35,000 18 “ 35,000   “ 40,000 21 “ 40,000   “ 45,000 24 “ 45,000   “ 50,000 27 “ 50,000   “ 55,000 30 “ 55,000   “ 60,000 33 “ 60,000   “ 75,000 37 “ 75,000   “ 100,000 41 “ 100,000   “ 150,000 45 “ 150,000   “ 200,000 50 “ 200,000   “ 55
		Section 12.

Succession & Legacy Duty

in addition to estate duty legacy duty and succession duty applied. The applied on the basis of acquisition of asset by beneficiaries. All movable property worldwide passing under the will and testament the person domiciled in the State attracted legacy duty.

Settled movable property not liable to legacy duty was subject to succession duty where the settlement was governed by the laws of the State  All the movable property in the State was subject to succession duty regardless of the domicile of the settlor or testator. The rates depended on the relationship.

CAT

In 1974 the government produced a White Paper on Capital Taxation. It highlighted some of the obvious difficulties with estate duty. It did not apply to gifts, provided the donor survived by five years.

The White Paper proposed a capital acquisitions tax to apply to gifts and inheritances. The Capital Acquisitions Tax Act 1976 implemented the proposal.

The tax applied to the recipient, being an acquisition tax. The tax-free threshold was based on the relationship with the donor or the persons who had provided the asset originally.

CARates

The rate on gifts was at 75% of the rate on inheritances. The threshold for relation for benefits gifts inheritances from

• family members was £150,000
• The rate for lineal ancestors and descendants was £20,000.
• The rate  for others was £10,000.

Initially the tax rate increased from 25% for the first £50,000 above the threshold, increasing cumulatively  with each £50,000 by 5% so that over £400,000 the rate s tax 50%.

The highest rate increased to 55% in 1984 and it applied until 1994. The allowances were graduated. From 1994 the rates were nil on the threshold amount 20% in the next £10,000.30 percent in the next £30,000 and 40 percent of the balance.

The thresholds were increased gradually from 1989 taking account of inflation. By 1994 irrespective thresholds £174,000 £23,200 and £11,600.

Capital gains tax

The White Paper on capital taxation recommend the introduction of a capital gains tax. Capital gains tax had been introduced in 1965 in the United Kingdom. It addressed the anomaly that income is taxable the capital gains were untaxed.

This was perceived to be doubly inequitable as capital gains were more likely to be made by persons who had considerable wealth. The initial rate of capital gains tax was 26%

Wealth Tax 1975-77

The White Paper proposed an annual Wealth tax on persons domiciled and ordinarily resident in the State on their worldwide property. There was an exemption for the dwelling house and garden up to acre. The property of a spouse and  children were included.

The threshold levels applicable to individuals  £100,000 married £90,000 widowed £70,000 single person with an allowance of £2,500 per child.

The tax applied at a rate of 1% on the net market value of taxpayer’s chargeable wealth for the years commencing 5 April 1975. The combined income tax and wealth tax of a person domiciled and resident in the state was not to exceed 80% of his total income

The tax was abolished in 1977 on change of government.