Schedule 25 - Capital gains tax: taper relief: business assets
Finance Bill
10:00 am
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I recognise that the hon. Gentleman was simply trying to simplify the text of part of schedule 25. Unfortunately, amendment No. 42 would knock a hole in the relief we are trying to give. If right hon. and hon. Members can bear with me, I shall touch on trust law and the differences between the law in England and Wales and in Scotland, which is pertinent to this point. I realise that the hon. Gentleman was trying to achieve a straightforward simplification, but it creates problems.
There are a variety of circumstances in real life to which the tax law must adapt. I can illustrate one reason for the complexity of much tax law, which we all criticise at times. At present individuals may claim business asset taper relief if they use assets in their own trade or in a trade carried on by a partnership, of which they are a member. Trustees of a settlement may also claim business asset taper relief on assets that they use in a trade they carry on. However, they may not claim that relief on assets that are used in a trade carried out by a partnership of which they are a member. The hon. Gentleman has accepted that. We want to extend business asset taper relief to them in those circumstances. Throughout the United Kingdom individual trustees, acting in that capacity, may be members of partnerships. Even if all the trustees are members of a partnership, they will normally be partners as individuals. In Scotland, however, the trustees of a settlement as a body may be members of a partnership. The two sub-paragraphs are designed to cover both cases. The amendment would confine the extension of the business asset taper relief to those cases in Scotland in which trustees as a body were members of a partnership, because references to the ``trustees of a settlement'' in capital gains legislation are references to the body of trustees.
That is a complicated point, but I presented it as clearly as I could. The wording covers both eventualities. I do not believe that the hon. Gentleman intended to confine relief to specific cases, and I appreciate that he was trying to undertake a simplification. I hope that he will now see that the situation is more complicated than it first seemed, and the proposed new schedule should remain intact—and I hope that he will withdraw the amendment.