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 [F1 disabled person]— U.K.

[F2 (a) if any of the property is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit, and

(b) either—

(i) the disabled person is entitled to all of the income (if there is any) arising from any of the property, or

(ii) if any such income is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit,]

[F3 sections 3(1) to [F4 (5D)] and 3A] shall apply to the trustees of the settlement as they apply to an individual[F5 , but with the modifications specified in this paragraph].

[F6 (1A) The trusts on which settled property is held are not to be treated as falling outside sub-paragraph (1) by reason only of—

(a) the trustees' having powers that enable them to apply in any tax year otherwise than for the benefit of the disabled person amounts (whether consisting of income or capital, or both) not exceeding the annual limit,

(b) the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),

(c) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by proviso (a) of subsection (1) of that section,

(d) the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision for Northern Ireland),

(e) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by subsection (1)(a) of that section, or

(f) the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).

(1B) For the purposes of this paragraph, the “annual limit” for a tax year is whichever is the lower of the following amounts—

(a) £3,000, and

(b) 3% of the amount that is the maximum value of the settled property during the tax year in question.

(1C) The Treasury may by order—

(a) specify circumstances in which sub-paragraph (1A)(a) is, or is not, to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in sub-paragraph (1B).

(1D) An order under sub-paragraph (1C) may—

(a) make different provision for different cases, and

(b) contain transitional and saving provision.

(1E) A statutory instrument containing an order under sub-paragraph (1C) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.]

(2) [F7 The reference in sub-paragraph (1)] 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 M1 Trustee Act 1925 (protective trusts), be construed as a reference to the period during which the income is held on trust for him.

[F8 (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 [F9 sections 3 and 3A(1)(a)] to the exempt amount for the year [F10 (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.

[F11 (5A) In its application to the trustees of a settlement, section 3A(1) has effect with the substitution for the reference to section 8 of the Management Act of a reference to section 8A of that Act.]

(6) In this paragraph—

• [F12 “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005; and]

• [F13 “excluded settlement” has the same meaning] as in paragraph 2 below.

F14 (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in Sch. 1 para. 1(1) substituted (with effect in accordance with Sch. 44 para. 13(6)(7) of the amending Act) by Finance Act 2013 (c. 29), Sch. 44 para. 13(2)(a)

F2 Sch. 1 para. 1(1)(a)(b) substituted (with effect in accordance with Sch. 44 para. 13(6)(7) of the amending Act) by Finance Act 2013 (c. 29), Sch. 44 para. 13(2)(b)

F3 Words in Sch. 1 para. 1(1) substituted (with application in accordance with Sch. 28 para. 7 of the amending Act) by Finance Act 2003 (c. 14), Sch. 28 para. 4(2)(a)

F4 Word in Sch. 1 para. 1(1) substituted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 35(2)

F5 Words in Sch. 1 para. 1(1) inserted (retrospectively) by Finance Act 2003 (c. 14), Sch. 28 paras. 4(2)(b), 8

F6 Sch. 1 para. 1(1A)-(1E) inserted (with effect in accordance with Sch. 44 para. 13(6)(7) of the amending Act) by Finance Act 2013 (c. 29), Sch. 44 para. 13(3)

F7 Words in Sch. 1 para. 1(2) substituted (with effect in accordance with Sch. 44 para. 13(6)(7) of the amending Act) by Finance Act 2013 (c. 29), Sch. 44 para. 13(4)

F8 Sch. 1 para. 1(2A) inserted (retrospectively) by Finance Act 2003 (c. 14), Sch. 28 paras. 4(3), 8

F9 Words in Sch. 1 para. 1(3) substituted (with application in accordance with Sch. 28 para. 7 of the amending Act) by Finance Act 2003 (c. 14), Sch. 28 para. 4(4)(a)

F10 Words in Sch. 1 para. 1(3) inserted (retrospectively) by Finance Act 2003 (c. 14), Sch. 28 paras. 4(4)(b), 8

F11 Sch. 1 para. 1(5A) inserted (with application in accordance with Sch. 28 para. 7 of the amending Act) by Finance Act 2003 (c. 14), Sch. 28 para. 2(2)

F12 Words in Sch. 1 para. 1(6) substituted (with effect in accordance with Sch. 44 para. 13(6)(7) of the amending Act) by Finance Act 2013 (c. 29), Sch. 44 para. 13(5)

F13 Words in Sch. 1 para. 1(6) substituted (with effect in accordance with Sch. 12 para. 28(3) of the amending Act) by Finance Act 2006 (c. 25), Sch. 12 para. 28(1)

F14 Sch. 1 para. 1(7) omitted (13.8.2009) by virtue of The Finance Act 2009, Schedule 47 (Consequential Amendments) Order 2009 (S.I. 2009/2035), art. 1, Sch. para. 33

Marginal Citations

M1 1925 c. 19.