Income and Corporation Taxes Act 1988

Children’s settlements: irrevocable dispositions made before 22nd April 1936

10 (1) Sub-paragraph (2) below applies to any disposition which—

(a) was made, directly or indirectly, by any person (“the settlor”) after 5th April 1914 and before 22nd April 1936, and

(b) immediately before 22nd April 1936, was an irrevocable settlement within the meaning of Chapter II of Part XV.

(2) Subject to the provisions of this paragraph, any income which, by virtue or in consequence of any disposition to which this sub-paragraph applies, is payable to or applicable for the benefit of a child of the settlor for some period less than the life of the child, shall, if and so long as the child is an infant and unmarried, be deemed for all purposes of the Income Tax Acts to be the income of the settlor, if living and not to be the income of any other person.

(3) Sub-paragraph (2) above shall not apply as regards any income—

(a) which is derived from capital which, at the end of the period during which that income is payable to or applicable for the benefit of the child, is required by the disposition to be held on trust absolutely for, or to be transferred to, the child; or

(b) which is payable to or applicable for the benefit of a child during the whole period of the life of the settlor.

(4) Income shall not be deemed, for the purposes of this paragraph, to be payable to or applicable for the benefit of a child for some period less than its life by reason only that the disposition contains a provision for the payment to some other person of the income in the event of the bankruptcy of the child, or of an assignment thereof, or a charge thereon, being executed by the child.

(5) In this paragraph, unless the context otherwise requires—

• “child” includes a step-child or an illegitimate child, and

• “disposition” includes any trust, covenant, agreement or arrangement.

(6) Sections 661 and 662 shall apply as if this paragraph were contained in Chapter I of Part XV, and this paragraph, notwithstanding that it is referred to in Chapter II of that Part, shall not be construed as one with that Chapter.