Property passing on Death.-The first section of the Finance Act, 1894, contains the pith and substance of the enactment, and, subject to certain exceptions or savings (2), it imposes estate duty upon the principal value of all property settled or not settled which passes on death.

Under this general provision is included the case of the death of the tenant for life of settled property whether or not the tenant for life has assigned his interest during his lifetime. But if the tenant for life has surrendered his interest to the remainderman, or if tenant for life and remainderman in fee combine to sell the settled property, there is no property passing on the death of the tenant for life (a). On the same principle, if the property is settled subject to an existing mortgage, or if tenant for life and remainderman combine to mortgage the fee, all that passes on the death of the tenant for life is the equity of redemption (b).

Property deemed to pass on Death.-In addition to property which literally passes on the death of the deceased (c), s. 2 (1) of the Finance Act, 1894 (which is subsidiary and supplemental to the first section, although classes (A) and (B) do to a certain

(2) The principal exceptions are to be found in s. 2 (3) (as to trustees), ss. 3, 5 (3), and see also Finance Act, 1896, s. 15 (1).

(a) Att.-Gen. v. Beech, [1899] A. C. 53; Earl Cowley v. Inland Revenue Commissioners, [1899] A. C., at p. 219.

(b) Att.-Gen. v. Montagu, [1904] A. C., at p. 319.

(c) Passing on the death in s. 1 means "changing hands" on the death, [1899] A. C. 211; Inland Revenue Commissioners v. Priestley, [1901] A. C. 213. It is difficult to reconcile this with s. 22 (1) (1).

extent overlap it), and s. 11 of the Finance Act, 1900, add certain classes of property which for the purposes of the Finance Acts are to be deemed to pass on the death.

These classes are five in number, viz. :

A. "Property of which the deceased was at the time of his death competent to dispose" (d). This clause provides for the case of general powers of appointment whether such powers. are exercised by the deceased or not (e). So, too, if property is limited to A. for life, with remainder to B. for life, and after the death of the survivor for such persons as B. shall by deed or will appoint, on the death of B. in the lifetime of A., estate duty is payable under this sub-section (ƒ), for the property is deemed to pass although it does not actually change hands until the death of A.

B. "Property in which the deceased or any other

person had an interest ceasing on the death of the deceased to the extent to which a benefit accrues or arises by the cesser of such interest" (g). This clause is intended primarily to provide for the case of determinable charges (h), but the Act contemplates the contingeney of the interest

(d) 57 & 58 Vict. c. 30, s. 2 (1) (a).

(e) Earl Cowley v. Inland Revenue Commissioners, [1899] A. C., at p. 213; see also Re Scott, [1900] 1 Q. B. 372.

(f) Inland Revenue Commissioners v. Priestley, [1901] A. C. 208.

(g) 57 & 58 Vict. c. 30, s. 2 (1) (b). (h) [1899] A. C., at pp. 214, 221.

extending to the whole income of the property (i). Where there was a mortgage by the tenant for life and remainderman, and an arrangement made whereby the remainderman relieved the tenant for life from bearing any of the burden of the mortgage, it was held that so much of the income of the property as was applicable to payment of interest on the mortgage was an interest ceasing on the death of the tenant for life ().

C. Property which would be liable to account duty, if the statutory provisions relating to account duty (1) extended to real as well as personal property, and were not restricted. to voluntary settlements. This last class includes (i) property disposed of by the deceased by way of gift, however effected, or by marriage settlement, within twelve months of his death, or at any time if possession and enjoyment shall not have been assumed by the donee immediately upon the gift, and thenceforward retained to the entire exclusion of the donor, or of any benefit to him by contract or otherwise (m); (ii) property formerly belonging to the deceased, which he has transferred to himself and some other person, so that on the death of the deceased it passes by

(i) Section 7 (7)(a).

(k) Att.-Gen. v. Montagu, [1904] A. C. 316.

(1) 44 & 45 Vict. c. 12, s. 38.

(m) Cf. 57 & 58 Vict. c. 30, s. 2 (3); Earl Grey v. Att.-Gen.,

[1900] A. C. 124.

survivorship to such other person; and (iii) property settled by the deceased in such a way that an interest for any period determinable by reference to death, or a power of revocation, is reserved to the settlor. D. "Any annuity or other interest purchased or provided by the deceased either by himself alone or in concert or by arrangement with any other person to the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased" (n). The purpose of this sub-section is to prevent a man escaping duty by abstracting from his means during life moneys or money's worth which when he dies are to reappear in the form of a beneficial interest accruing or arising on his death (0).

E. An estate or interest surrendered to the person entitled in remainder or reversion unless the surrender was made twelve months before the death of the deceased, and bonâ fide possession and enjoyment of the property was assumed thereunder immediately upon the surrender, to the entire exclusion of the

person who had the estate or interest (p).

Rate of Duty.-The rate of estate duty increases from one up to 10 (formerly 8) per cent., according to the value of the estate (q). For determining

(n) 57 & 58 Vict. c. 30, s. 2(1)(d).

(0) Lethbridge v. Att.-Gen., [1907] A. C. 19.

(p) 63 Vict. c. 7, s. 11. This only applies in the case of deaths after March 31st, 1900, and is intended to meet the decision in Att.-Gen. v. De Preville, [1900] 1 Q. B. 223.

(g) 57 & 58 Vict. c. 30, s. 17; 7 Edw. 7, c. 13, s. 12.

this rate all property existing at the death of the deceased, in respect of which estate duty is leviable, is aggregated so as to form one estate on the principal value of which the duty is levied. The exceptions to the rule as to aggregation are :

Non-aggregable Property.-(1) Property in which the deceased never had an interest (r).

(2) When the net value of the real and personal property in respect of which estate duty is payable on the death of the deceased, exclusive of property settled otherwise than his will, does not exceed £1,000, that real and personal property is not aggregated (s). (3) Scientific or artistic collections of public interest (t).

(4) Prior to the Finance Act, 1900 (u), there was also an exception as to property which, under a disposition not made by the deceased, passed on his death to some person other than wife, husband, lineal ancestor or descendant, e.g., where the deceased was tenant for life of an estate with remainder to his brother. This exception was abolished by the Finance Act, 1900, except as against bonâ fide purchasers of the estate in remainder prior to April 9th, 1900, but has been revived by the Finance Act, 1907 (v), in the case of persons dying after April 19th, 1907.

(r) 57 & 58 Vict. c. 30, s. 4.
(t) 59 & 60 Vict. c. 28, s. 20.
(u) 63 Vict. c. 7, s. 12.

(8) Ibid., s. 16 (3).

(v) 7 Edw. 7, c. 13.