Taxation of Chargeable Gains Act 1992

1 (1) For any year of assessment during the whole or part of which settled property is held on trusts which secure that, during the lifetime of a mentally disabled person or a person in receipt of attendance allowance or of a disability living allowance by virtue of entitlement to the care component at the highest or middle rate— U.K.

(a) not less than half of the property which is applied is applied for the benefit of that person, and

(b) that person is entitled to not less than half of the income arising from the property, or no such income may be applied for the benefit of any other person,

section 3(1) to (6) shall apply to the trustees of the settlement as they apply to an individual [F1 , but with the modifications specified in this paragraph].

(2) The trusts on which settled property is held shall not be treated as falling outside sub-paragraph (1) above by reason only of the powers conferred on the trustees by section 32 of the M1 Trustee Act 1925 or section 33 of the M2 Trustee Act (Northern Ireland) 1958 (powers of advancement); and the reference in that sub-paragraph to the lifetime of a person shall, where the income from the settled property is held for his benefit on trusts of the kind described in section 33 of the M3 Trustee Act 1925 (protective trusts), be construed as a reference to the period during which the income is held on trust for him.

[F2 (2A) As they apply by virtue of sub-paragraph (1) above—

(a) section 3(5A) has effect with the omission of paragraph (b), and

(b) section 3(5B) has effect with the omission of the words “or (b)”.]

(3) In relation to a settlement which is one of 2 or more qualifying settlements comprised in a group, this paragraph shall have effect as if for the references in section 3 to the exempt amount for the year [F3 (except the one in section 3(2))] there were substituted references to one-tenth of that exempt amount or, if it is more, to such amount as results from dividing the exempt amount for the year by the number of settlements in the group.

(4) For the purposes of sub-paragraph (3) above—

(a) a qualifying settlement is any settlement (other than an excluded settlement) which is made on or after 10th March 1981 and to the trustees of which this paragraph applies for the year of assessment; and

(b) all qualifying settlements in relation to which the same person is the settlor constitute a group.

(5) If, in consequence of 2 or more persons being settlors in relation to it, a settlement is comprised in 2 or more groups comprising different numbers of settlements, sub-paragraph (3) above shall apply to it as if the number by which the exempt amount for the year is to be divided were the number of settlements in the largest group.

(6) In this paragraph—

• “mentally disabled person” means a person who by reason of mental disorder within the meaning of the M4 Mental Health Act 1983 is incapable of administering his property or managing his affairs;

• “attendance allowance” means an allowance under section 64 of the M5 Social Security Contributions and Benefits Act 1992 or section 64 of the M6 Social Security Contributions and Benefits (Northern Ireland) Act 1992;

• “disability living allowance” means a disability living allowance under section 71 of the M7 Social Security Contributions and Benefits Act 1992 or section 71 of the M8 Social Security Contributions and Benefits (Northern Ireland) Act 1992; and

• “settlor” and “excluded settlement” have the same meanings as in paragraph 2 below.

(7) An inspector may by notice require any person, being a party to a settlement, to furnish him within such time as he may direct (not being less than 28 days) with such particulars as he thinks necessary for the purposes of this paragraph.

Textual Amendments

F1 Words in Sch. 1 para. 1(1) inserted (retrospectively) by Finance Act 2003 (c. 14), Sch. 28 paras. 4(2)(b), 8

F2 Sch. 1 para. 1(2A) inserted (retrospectively) by Finance Act 2003 (c. 14), Sch. 28 paras. 4(3), 8

F3 Words in Sch. 1 para. 1(3) inserted (retrospectively) by Finance Act 2003 (c. 14), Sch. 28 paras. 4(4)(b), 8

Marginal Citations

M1 1925 c. 19.

M2 1958 c. 23 (N.I.).

M3 1925 c. 19.

M4 1983 c. 20.

M5 1992 c. 6.

M6 1992 c. 9.

M7 1992 c. 4.

M8 1992 c. 7.