power, as the predecessor. On the other hand, in all cases where the power of appointment aforesaid is merely a special power (that is to say, is a power which the donee. thereof cannot exercise for his own sole and exclusive benefit), it is provided, that the appointee who becomes entitled under any exercise of the power (and not, as in the former case, the donee of the power) shall be deemed to become entitled to the real estate appointed to him, as to a succession derived from the donor of the power, as the predecessor (o). But the donee of the power, where (as in the case of a general power) he becomes chargeable with the duty, is not to be subjected to double duty, that is to say, he is not to be chargeable with duty in respect of the real estate appointed by him under such general power, and also with the duty payable on a succession in the same property taken by himself independently of the power. In the case of such conjunction of general power with beneficial estate, he is to be allowed, off the duty payable by him as donee of the power, any duty he may have already paid in respect of his own independent beneficial succession (p). These observations will suffice on the succession duty as originally imposed by the Succession Duty Act, 1853, there being many specific provisions contained in that Act which are of too minute a character to be dealt with in this work. The Succession Duty Act, 1853, has been recently amended, in some particulars, by the Custom and Inland Revenue Acts, 1888 (9) and 1889 (r), and the Finance Act, 1894 (s). By the first of these three Acts (t), an additional succession duty of 10s. per cent. has been added to the succession duty when it is payable at the rate of 11. per cent., and an additional duty of 30s. per cent. when it is (0) 16 & 17 Vict. c. 51, s. 4. (p) Ibid. s. 33. (g) 51 & 52 Vict. c. 8. (r) 52 & 53 Vict. c. 7. payable at the rate of 31., 5., 6., or 10l. per cent. By the second of the three Acts (u), certain provisions are made for the protection of purchasers and mortgagees against liability for the unpaid succession duty, where they are bona fide purchasers or mortgagees, and were without notice of the duty having remained unpaid; and this protection arises, in favour of such bonâ fide purchasers and mortgagees, after the expiration of twelve years (and, in certain cases, after the expiration of six years) from the happening of the succession. By the third of the three Acts (r), but only in the case of successors competent to dispose of the real estate comprised in their succession, it is provided, that the value of the succession on which the duty is to be payable shall be the principal value of such real estate, less the estate duty imposed by that Act, and less certain expenses incident to the payment of such last-mentioned duty. The principal value of the succession is now to be ascertained in the same way as if it were being ascertained for the purposes of the estate duty; and the succession duty is now to be payable by the like instalments as by the Act are appointed for the payment of the estate duty thereby imposed. 2. THE ESTATE DUTY.-The Customs and Inland Revenue Act, 1888 (x), besides amending the Succession Duty Act, 1853, in the particulars above referred to, imposed also a new tax called the Estate Duty, being a payment at the rate of 11. per cent. on all personal estate liable to probate duty, where the estate on which such duty was to be paid exceeded 10,000l., or liable to account duty, where the estate on which such duty was to be paid exceeded 10,000l.; and on all real estate comprised in any succession and liable to succession duty, where the estate on which such duty was to be paid exceeded 10,000l. But the duty so imposed was intended to be of a merely 15. (u) 52 & 53 Vict. c. 7, ss. 10— (v) 57 & 58 Vict. c. 30, s. 18. (x) 51 & 52 Vict. c. 8, s. 21. j temporary character; and it is hereinafter referred to as the temporary estate duty, that being also the designation by which it is referred to in the Finance Act, 1894, already mentioned, being the Act under which the estate duty properly so called, and which we now proceed to consider, has been imposed. By the Finance Act, 1894, s. 1, estate duty is imposed, in the case of any death on or after the 2nd August, 1894, on all property, whether real or personal, which passes, or for the purposes of the Act is deemed to pass, on such death (y). In every such case, the estate duty so imposed is in lieu of and supersedes the probate duty and the account duty respectively before referred to, and the additional succession duty, as well as the temporary estate duty before referred to; and also (but only in cases where it would have been payable at the rate of 11. per cent.) the legacy duty aforesaid, and the succession duty aforesaid. The estate duty so imposed is a duty payable in respect of the corpus of the estate (otherwise the inheritance) (z), in whatever shares the beneficiaries may ultimately contribute thereto; and it is paid rateably in proportion to the value of such shares. Estate duty is payable on the principal value of the entire property passing on the death. That principal value is to be estimated at the price the property comprising the estate would fetch, if sold in open market at the time of the death of the deceased. The estate duty (sect. 7, sub-sect. 5), is to be calculated according to a percentage varying with, and gradually increasing with the increase in, the amount of the principal value of the estate subject thereto, that is to say:-By sect. 17, the rate payable is 11. per cent. when the principal value (being over 100l.) does not exceed 500l.; 21. per cent. when the principal value (being over 5001.) does not exceed 1,000l.; there (y) Att.-Gen. v. Beech, [1899] A. C. 53; and see Finance Act, 1900, s. 11. (2) In re Parker-Jervis, [1898] 2 Ch. 643. after 31. per cent. up to a principal value of 10,000l.; 4l. per cent. up to a principal value of 25,000l.; 41. per cent. up to a principal value of 50,000l.; 5l. per cent. up to a principal value of 75,000l.; 531. per cent. up to a principal value of 100,000l.; 6l. per cent. up to a principal value of 150,000l.; 631. per cent. up to a principal value of 250,000l.; 71. per cent. up to a principal value of 500,000l. ; 731. per cent. up to a principal value of 1,000,000l. ; and 81. per cent. on the principal value of every estate the principal value of which exceeds 1,000,000l. Thus, for example, an estate of the principal value of 300,000l. would pay an estate duty of 21,000l., while an estate of the principal value of 3,000,000l. would pay an estate duty of 240,000l. The latter amount of duty is 30,000l. larger than ten times the former amount of duty, although the principal value of the latter estate is only ten times more than the principal value of the former estate; this difference showing the principle of what is called a graduated death duty. T In order to ascertain the percentage payable, all the property which passes, or is deemed to pass, on the death is thrown together, and forms what is called an aggregate estate (sect. 4). Subject to the exemptions set out later, the property which passes, or is deemed to pass, includes not only all the deceased's own property, but, by sect. 2, all property which at the time of his death he was competent to dispose of, and all property in which he had an interest ceasing on his death, to the extent of the benefit which accrues by the cesser of such interest. It also includes all property which (being personal estate) would have been subject to the old account duty, or which (being real estate) would, if it had been personal estate, have also been subject to the last-mentioned duty (a). It includes also, of course, any access of interest accruing on the death, by, e.g., the cesser of an annuity or the like. It matters not in the general case whether the (a) Earl Grey v. Att.-Gen., [1900] A. C. 124. property is situate out of the United Kingdom or not; but any duty payable, by the lex situs, on property abroad, is to be deducted from the principal value of the property subject to estate duty (sect. 7, sub-sect. 4). Of course, the estate duty does not attach to property passing on the death of the deceased, of which he was but a trustee for third parties or strangers, without having therein any continuing beneficial interest of his own (sect. 2, sub-sect. 3); but trust property held by him, under trusts created by himself, must be at least a year old (that is to say, the trust-dispositions must be at least a year old) at his death, and must be absolute alienations of the property comprised therein, if they are to escape liability to duty (sect. 2, sub-sect. 3). Moreover, the same principle is now applied to surrenders by a life tenant of settled property of his life interest to the remainder man; such surrenders, whether for value or not, must be made at least a year before the surrenderor's death, and bona fide possession must be assumed by the remainderman to the entire exclusion of the life tenant, in order to prevent the property being deemed to pass on the death of the life tenant (Finance Act, 1900, s. 11). Bonâ fide purchasers for full consideration are exempt (sect. 3), although their purchases should have left a life estate outstanding in the deceased (their vendor), an exemption which is manifestly not intended to extend to the purchaser, from the reversioner or remainderman, of his reversion or remainder falling into possession on the death of the deceased (see sect. 21, sub-sect. 3) (b). Annuities and pensions granted by the Government of British India, and payable to the widows and children of deceased officers of that Government, are expressly exempted (sect. 15). An advowson is only to be aggregated with the other property passing on the death of the deceased, if it be (in effect) sold, and then only the net sale proceeds are to be aggregated (sect. 15). The (b) In re Vernon, [1901] 1 K. B. 297. |