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![handle is hein.journals/britaxrv2007 and id is 316 raw text is:
Death and Taxes
JOHN TILEY
Abstract
As a preface to further work on the history on inheritance tax, this article provides a brief
introduction to some of the repealed taxes on death. These taxes are not only part of our
intellectual heritage but in the case of two of them, legacy duty (1780-1949) and succession
duty (1853-1949), are useful reminders of some of the problems encountered if one has a
donee-based tax on death. Current debates about donee-based taxes usually fail to make any
mention ofthis past experience. Mention will also be made ofthe duty usually known by its brief
title as probate duty (1690-1894) but also covering administration and inventory.
TODAY'S inheritance tax (IHT), introduced in 1986, superseded capital transfer tax (CTT,
1974-1986) which in its turn had superseded estate duty (1894-1974). Some of the features
of today's IHT can be traced back to estate duty, e.g. the potentially exempt transfer.
Others can be traced back to CTT, not surprisingly since the primary inheritance tax
legislation for the 1986 tax is technically the inheritance tax of 1984, renamed in 1986 and
which had begun life as the consolidated Capital Transfer Tax Act of 1984. These features
include not only the concept of the transfer of value but also the regime for discretionary
trusts. Older readers of this review will recall that the discretionary trust regime of 1974
was much fiercer than today's. All three have in common the characteristic that they are
based on the circumstances of the donor as opposed to those of the donee.]
Our older taxes were more varied. These were, in order of creation:
(1) Probate/inventory/administration duty 1690-1894
(2) Legacy duty 1780-1949
(3) Succession duty 1853-1949
(4) The (short-lived) account duty 1881-1894
(5) Estate duty 1894-1974
(6) Settlement estate duty 1894-1914 and
(7) Temporary estate duty (1889-1894)
Of these, only legacy duty and succession duty were donee-based and so it is on these
that this article will concentrate. It will, however, be appropriate to say a brief word about
(1) and a very brief word on (4). There is no doubting the role death taxes played in the
nineteenth century and beyond. As Martin Daunton points out: in 1871-75 death taxes
raised 8.2 per cent of central government revenue while income taxes raised 10.3 per cent;
the percentages for 1891-95 were 12.7 per cent and 17.2 per cent; and for 1910-1914 they
were 17 per cent and 27 per cent.2
For an effort to revive interest in donee-based taxes see the Green Paper, Taxation of Capital on
Death: A possible Inheritance Tax in place of Estate Duty March 1972 Cmnd 4930. For one very
different response based on a cumulative accessions tax, see C.T. Sandford, J.R. 1. Willis and D.J.
Ironside, An -1ccessions Tax (Institute for Fiscal Studies, London, 1973).
2 M. Daunton, Trusting Leviathan (CUP, Cambridge, 2001) at 35 and 225.
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