ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change has no implications for the amount of tax due, who pays it or when. It affects (in principle but not in practice) only administrative matters.
Change 80: Gifts of land to charities: qualifying interests in land held jointly: sections 442 and 443 and Schedule 1 (sections 587BA and 587C(2) and (3) of ICTA)
This change makes it clear that, in cases where land is held by owners as joint tenants or as tenants in common, the fact that one or more owners may not be eligible for relief does not deny relief to other eligible owners. In doing so it clears up a misunderstanding that could arise from section 587C(2) and (3) of ICTA.
Section 587C(2) of ICTA reads as follows:
“Where two or more persons-(a)are jointly beneficially entitled to the qualifying interest in land, or(b)are, taken together, beneficially entitled in common to the qualifying interest in land,section 587B applies only if each of those persons disposes of the whole of his beneficial interest in the qualifying interest in land to the charity.”
And section 587C(3) of ICTA begins with the words:
“Relief under section 587B shall be available to each of the persons referred to in subsection (2) above…”
Taken together, this means that, if relief is to be given to any person in respect of the disposal, the land that is to be given to the charity must be owned only by individuals and companies that are not charities. This is not in accordance with the policy of section 587C. The intention is to give relief in such situations to those persons that are eligible, provided that all owners (whether eligible for relief or not) dispose of the whole of their beneficial interests in the land.
This change also clarifies how the relevant formula in section 434(1) or (2) of this Act (as appropriate) is to be applied. The relievable amount is first calculated under section 443(2) of this Act as if all owners (whether eligible for relief or not) were a single individual. The various amounts required by the appropriate formula, including incidental costs, benefits and notional consideration for the purposes of chargeable gains, are pooled. The share of any non-eligible person is then carved out, so that the relievable amount for the disposal does not include that share. It is then for the eligible donors to agree the allocation of that relievable amount between them.