SCHEDULES
F1SCHEDULE 1CAnnual exempt amount in cases involving settled property
Settlements for the benefit of disabled persons
3
1
A settlement is a “settlement for the benefit of a disabled person” for a tax year if, for the whole or part of that year, settled property is held on trusts which secure that, during the lifetime of a disabled person, the property and income tests are met.
2
The property test is met if any of the property which is applied for the benefit of a beneficiary is applied for the disabled person's benefit.
3
The income test is met if either—
a
the disabled person is entitled to all of the income (if any) arising from any of the property, or
b
if any income arising from any of the property is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit.
4
A settlement is not prevented from being a settlement for the benefit of a disabled person for a tax year just because—
a
the trustees have power to apply amounts (of any nature) not exceeding the de minimis threshold for that year,
b
the trustees have the powers of advancement conferred by section 32 of the Trustee Act 1925 or section 33 of the Trustee Act (Northern Ireland) 1958,
c
the trustees have those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by—
i
proviso (a) of section 32(1) of the Trustee Act 1925, or
ii
section 33(1)(a) of the Trustee Act (Northern Ireland) 1958, or
d
the trustees have powers to the same effect as the powers mentioned in paragraph (b) or (c).
5
For the purposes of sub-paragraph (4)(a) “the de minimis threshold” means—
a
£3,000, or
b
3% of the maximum value of the settled property during the tax year,
whichever is the lower.
6
In this paragraph “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.
7
If the income from settled property is held for the benefit of a disabled person (“D”) on trusts of the kind described in section 33 of the Trustee Act 1925 (protective trusts), the reference in this paragraph to D's lifetime is to be read as a reference to the period during which the income is held on trust for D.
8
This paragraph applies for the purposes of this Schedule.
Sch. 1C inserted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 16