any person to whom any such document or writing is, or is intended to be delivered or sent, shall be entitled to have credit with, or in account with, or to draw upon any other person for, or to receive from such other person any sum of money therein mentioned." Excepting only, "All drafts or orders for the payment of money to the *bearer on demand drawn upon any banker or bankers, now by law ex[*374] empt from stamp duty," and, "all letters of credit, whether in sets or not, sent by persons in the United Kingdom to persons abroad, authorizing drafts on the United Kingdom." 18. A settlement of a policy will also be liable to a specific and appro priate stamp. A settlement is defined to be any deed or instrument, whether voluntary or gratuitous, or upon any good or valuable consideration other than a bona fide pecuniary consideration, whether any definite or certain principal sum or sums of money, &c., or any definite and certain share or shares in any of the government or parliamentary stocks or funds, or in the stocks and funds of the Governor and Company of the Bank of England, &c., or of any other company or corporation, shall be settled or agreed to be settled upon, or for the benefit of any person or persons either in possession or reversion, either absolutely or for any partial interest, and is subject to an ad valorem duty at the rate of 5s. for every 1007. and any additional fractional sum less than 1007. of the sums of money, and of the value of the stock or shares comprised in the settle ment. And this ad valorem duty, when exceeding the common deed stamp of 17. 15s., is only once payable, so that where it has been impressed upon marriage articles, or upon one of several instruments effecting the settlement, the formal settlement, and the other instruments in the two cases, will be respectively chargeable only with the common deed stamp, or the duties to which the same may be liable under any more general description in the table, and may be stamped with the denoting stamp to prove the payment of the ad valorem duty. And instruments chargeable with the ad valorem duties, as settlements in respect of such money or stock when comprising any other matter or thing, or any settlement of lands or other property, shall be further chargeable with such other stamp duties as any separate instrument, in respect of such settlement of lands *or other property or other matter or thing, would have been liable unto, exclusive of progressive duties.(ƒ) (f) 13 & 14 Vict. c. 59, schedule. [*375] Under the old Stamp Act, the duties upon settlements were:-If the sum or sums of money or the value of such share or shares, in all or any of the said stocks or funds, or both, Shall not amount to 1000%. . And if the same shall amount to 1000%. and not to 20007. And if the same shall amount to 2000l. and not to 30007. . £ s. d. 412346792 1 15 0 0 0 0 0 0 0 0 12 0 0 [*376] *CHAPTER VI. THE RECENT LEGISLATION AFFECTING LIFE INSURANCES, AND PARTICULARLY THE SUCCESSION DUTY AND INCOME TAX ACTS. ALSO THE PROSPECTS OF FUTURE LEGISLATION ON THIS SUBJECT AS DEVELOPED BY THE REPORT OF THE SELECT COMMITTEE OF 1853. THE Succession Duty Act of 1853(a) is the most important measure of the session, and marks an epoch in the history of taxation, not only on account of the magnitude of the sum proposed to be levied under it, but as evolving a new principle, in permitting a tax upon past transactions. By this Act the legacy duties, or their equivalent, are extended to real estate, and not only so, but every devolution of property, whether real or personal, taking effect at the death of any individual, by virtue of the limitations of an instrument operating as a settlement, is subjected to the like duty to which the same, if personal, would have been liable had such limitations been contained in a will. The duty is payable notwithstanding that the settlement may have been executed long prior to the passing of the Act. So large is its operation, that every devolution by law, or disposition by the act of any party whereby any other person may have or shall become beneficially entitled to property, or to the income thereof, upon the death of any person dying on or before the 19th of May, 1853,(b) is to be deemed to confer a succession, the party beneficially entitled being termed the successor, the person from whom the interest is derived the predecessor. (c) An *accruer on the death [*377] of a joint-tenant is deemed a devolution, (d) a general power of appointment(e) (if exercised), and church patronage (if sold) property, and the extinction of a determinable charge a succession.(ƒ) An immediate disposition not being a bona fide sale when subject to a reservation or contract for a benefit to the grantor, or any other person, for any term of life or period ascertainable only by reference to death, is to be liable to the duty in respect of the property reserved or contracted for by the grantor.(g) The only exception to the liability appears to be when the reversionary character of the property is created upon a bona fide sale for money or money's worth. Dispositions of property for the purpose of evading the Act are expressly provided for, (h) and so stringent are its provisions, that the duty appears invariably to attach unless the disposition is an actual gift in presenti, without any reservation. And if the same shall amount to 12,000l. and not to 15,0002. And if the same shall amount to 23,000 and upwards £ s. d. 15 0 0 20 0 0 25 0 0 But the stocks and funds then subject to duty were only the public funds, Bank, East India, and South Sea stocks. (c) Sect. 2. (f) Sect. 5. (d) Sect. 3. (g) Sect. 7. 2. The duty is made a first charge upon the interest of the successor, and all persons claiming under him, as regards real property absolutely, subject only to a provision in favour of bona fide purchasers for valuable consideration without notice, (i) and as regards personalty while the same shall remain in his custody, or in that of any trustees for him. The duty is made a debt to the Crown; but, as such, is not to charge the other real estate of the successor, or to suspend his right to exercise any power of consenting to any sale, exchange, or partition.(k) 3. It is expressly provided that when at the time of the commencement of the Act any reversionary property shall be vested by alienation or other derivative title in any other person than the person who shall have been originally entitled thereto under any such disposition or devolution, "then the person in whom such property *shall be so vested shall be chargeable with the duty in respect thereof as [*378] a succession, at the same time and at the same rate as the person so originally entitled would have been chargeable with if no such alienation had been made or other derivative title created." And when after the commencement of the Act any succession before vesting in possession shall have become vested in a purchaser, the duty shall be paid at the same time and rate as if no derivative title had been created.(7) 4. To prevent mistakes under the operation of the sweeping clauses of the Act, it became necessary to provide expressly that moneys payable upon life policies or post-obit contracts shall not. be esteemed to confer successions. To have enacted that they should have done so would indeed have operated as a bar to such transactions, for the insurer or grantor of a post-obit being almost invariably a stranger in blood to the grantee, the highest duty would have been payable. The exemption under the Act is carried out in the following terms :— "No policy of insurance on the life of any person shall create the relation of predecessor and successor between the insurers and the assured, or between the insurers and any assignee of the assured, and on bond or contract made by any person bona fide for valuable consideration in money or money's worth, for the payment of money or money's worth after the death of any other person, shall create the relation of predecessor and successor between the person making such bond or contract and the person to or with whom the same shall be made; but any disposition or devolution of the moneys payable under such policy, bond, or contract, if otherwise such as in itself to create a succession within the provisions of this Act, shall be deemed to confer a succession." 5. When therefore a person has insured the life of another on the death of the latter, the assured or his representatives will be entitled to receive the money without *any duty being payable in respect of [*379] it, and in like manner the representatives of the assured, when the policy is on his life, will receive the assurance moneys without the same being subject to any deduction, so long as they form part of the personal estate of their testator. When, however, the estate itself is administered, these moneys, as well as every other part of such estate, (i) Sect. 52. (7) Sect. 15. (k) Sect. 42. will be liable to the succession duty in passing to a legatee or to the next of kin. When the policy has been assigned, the purchaser or mortgagee will be entitled to the full benefit of the policy moneys; but when they have been assigned upon the trusts of any settlement they will become subject to the succession duty as property falling into possession under the trusts of that settlement, the rate at which the duty is payable being determined by the degree of consanguinity between the settlor and his cestui que trusts.(m) *6. By the Income Tax Act of 1853,(n) that impost is levied [*380] for a further term of 7 years up to the 5th of April, 1860; but upon a descending scale, upon the annual proceeds and income specified under the respective schedules of the Act; namely, under Schedule (A.) upon the annual value of all real estates in respect of the property thereof; under Schedule (B.) in respect of the occupation of real estate (other than a dwelling-house occupied by a tenant, distinct from a farm of land,) upon the annual value thereof; under Schedule (C.) upon the profits arising from the interest, annuities, and dividends payable out of any public revenue (except as to shares of a less half-yearly value than 50s.); under Schedule (D.) upon the annual profits and gains arising to any resident in the United Kingdom, from any property situate there or elsewhere, or from any profession, trade, employment, or vocation, whether carried on there or elsewhere; and upon the annual profits or gains arising from any property there situate, or any such profession, &c. there exercised to any person, whether a subject of her Majesty or not, although not resident in the United Kingdom.(0) (m) The duties are charged upon the following scale according to the relationship between the successor and predecessor,' being the same rates as are chargeable upon legacies by the Legacy Duty Act. Where the successor is the lineal issue or ancestor Where the successor is the brother or sister, or their descendant Per cent. 1 3 Where the successor is the brother or sister of the father or mother, or their descendant Where the successor is the brother or sister of the grandfather or grandmother, or their descendant 6 Where the successor is in any other degree of consanguinity, or a stranger in blood 10 For the purpose of reducing the rate both upon successions, and legacies bequeathed by a testator dying after the commencement of the act, every successor or legatee is to be considered as bearing the same degree of consanguinity to the predecessor or testator, as any wife or husband of nearer consanguinity to whom he or she shall have been married, and neither in respect of successions or legacies is any duty chargeable on gifts between husband and wife.3 The interest of any successor in real property is to be considered as the value of an annuity (equal to the annual value of the property) for the term for which it is given, and calcu lated according to the tables appended to the act, and is payable by eight halfyearly instalments in manner appointed by the act;4 and interests in personalty are to be charged as if given by will.5 (n) 16 & 17 Vict. c. 34. (o) For every 20s. of annual value the yearly charge is 7d. for two years from the 5th of April, 1853. 1 Sect. 10. 2 Sect. 11. 3 Sect. 18. 4 Sect. 21. 5 Sect. 32. But in such [*381] 7. The duty payable under Schedule (A.) is in the first instance paid by the occupier, and by him deducted from the rent paid to his landlord. That payable under Schedule (C.) is deducted from the dividends by the officials paying the same; while for that chargeable under (D.) and (E.) returns are made by the owners of the respective amounts. return, under Schedule (D.), no mention is made of any interest of money, or other annual payment arising out of the property of any other person for which such other person ought to be charged by virtue of the Act; nor is any deduction to be made on account of any interest or annual payment payable out of such income; but the party liable to such interest, or making such payment, is to pay duty on his entire income, and then deduct out of the interest or annual payment with which he is chargeable the amount of the income tax thereon. Under Schedule (E.), when the salaries, &c. are payable at any public office, the amount of duty is retained or stopped out of such payment. 8. From the duties thus payable, a not unreasonable deduction is allowed to all persons having effected insurances on their lives or on the lives of their wives, or having contracted for deferred annuities on their lives or the lives of their wives. This exemption is given in the following terms: "Any person who shall have made insurance on his life or on the life of his wife, or shall have contracted for any deferred annuity on his own life or on the life of his wife, in or with any insurance company, which shall become registered under any Act to be passed in the present Session of Parliament for that purpose, and which shall comply with the requirements of such Act, and any person who shall under any Act of Parliament be liable to the payment of an annual sum, or to have an annual sum deducted from his salary or stipend, in order to secure a deferred annuity to his widow or a provision to his children after his death, shall be entitled to deduct the amount of the annual premium paid by him for such insurance or contract, or the annual sum paid by him or deducted from his salary or stipend as aforesaid, from any profits or gains in respect of which he shall be liable to be assessed under either of the Schedules (D.) or (E.) of this Act, or to have any assessment which may be made upon him under either of the said Schedules reduced or abated by the deduc. tion of the amount of the said annual premium from the amount of the profits or gains on which such assessment has been made; or if such person shall be assessed to duties under any of the *Schedules contained in this Act, and shall have paid such assessment, or [*382] shall have paid or been charged with any of the said duties by deduction or otherwise, such person, on claim made to the commissioners for special purposes, and on production to them of the receipt for such annual pay For every 208. annual value the yearly charge is 6d. for two years from the 5th of April, 1855. For every 208. of annual value the yearly charge is 5d. for three years from the 5th of April, 1857. The occupation tax, namely, that payable under schedule (B.), is one-half of the above in England, with the further deduction in Scotland and Ireland of 1d. for the first two years, and d. for the five years following from the English rates. |