Vol. 430 No. 8
105 Mr. O'Malley asked the Minister for Finance if, in view of the onerous probate tax burden which could arise on the transfer of family businesses as a result of the very low tax free threshold, he is prepared to review the threshold value at which estates become liable for such taxation.
The purpose of the probate tax is to increase the yield from capital taxation by applying a relatively modest charge on a wide base to estates passing on inheritance, of which only a small proportion attract a Capital Acquisitions Tax (CAT) charge. To increase the exemption threshold beyond the £10,000 provided for in the Finance Bill would undermine this purpose and would necessitate a higher rate of tax to achieve the same Exchequer yield. Having regard to the fact that the rate of tax is only 2 per cent, that probate tax will be regarded as an expense of the estate for CAT purposes, and the payment arrangements which cater for illiquid estates, I am satisfied that the provisions of the probate tax strike a reasonable balance between the wider objectives of its introduction, particularly to increase revenues by broadening the base for capital taxation, and the desirability of avoiding an onerous charge on the transfer of businesses.
