2(1)For the purposes of section 86(1)(d) a settlor has an interest in a settlement if—U.K.
(a)any relevant property which is or may at any time be comprised in the settlement is, or will or may become, applicable for the benefit of or payable to a defined person in any circumstances whatever,
(b)any relevant income which arises or may arise under the settlement is, or will or may become, applicable for the benefit of or payable to a defined person in any circumstances whatever, or
(c)any defined person enjoys a benefit directly or indirectly from any relevant property which is comprised in the settlement or any relevant income arising under the settlement;
but this sub-paragraph is subject to sub-paragraphs (4) to (6) [F1and paragraph 2A] below.
(2)For the purposes of sub-paragraph (1) above—
(a)relevant property is property originating from the settlor,
(b)relevant income is income originating from the settlor.
(3)For the purposes of sub-paragraph (1) above each of the following is a defined person—
(a)the settlor,
(b)the settlor’s spouse [F2or civil partner];
(c)any child of the settlor or of the settlor’s spouse [F2or civil partner];
(d)the spouse [F2or civil partner] of any such child;
[F3(da)any grandchild of the settlor or of the settlor’s spouse [F2or civil partner];
(db)the spouse [F2or civil partner] of any such grandchild;]
(e)a company controlled by a person or persons falling within paragraphs (a) to [F4(db)] above;
(f)a company associated with a company falling within paragraph (e) above.
(4)A settlor does not have an interest in a settlement by virtue of paragraph (a) of sub-paragraph (1) above at any time when none of the property concerned can become applicable or payable as mentioned in that paragraph except in the event of—
(a)the bankruptcy of some person who is or may become beneficially entitled to the property,
(b)any assignment of or charge on the property being made or given by some such person,
[F5(c)in the case of a marriage settlement or civil partnership settlement, the death of both parties to the marriage or civil partnership and of all or any of the children of the family of the parties to the marriage or civil partnership, or]
(d)the death under the age of 25 or some lower age of some person who would be beneficially entitled to the property on attaining that age.
[F6(4A)In sub-paragraph (4) “child of the family”, in relation to parties to a marriage or civil partner, means a child of one or both of them.]
(5)A settlor does not have an interest in a settlement by virtue of paragraph (a) of sub-paragraph (1) above at any time when some person is alive and under the age of 25 if during that person’s life none of the property concerned can become applicable or payable as mentioned in that paragraph except in the event of that person becoming bankrupt or assigning or charging his interest in the property concerned.
(6)Sub-paragraphs (4) and (5) above apply for the purposes of paragraph (b) of sub-paragraph (1) above as they apply for the purposes of paragraph (a), reading “ income ” for “property".
[F7(7)In this paragraph—
“child” includes a stepchild; and
“grandchild” means a child of a child.]
(8)For the purposes of sub-paragraph (3) above the question whether a company is controlled by a person or persons shall be construed in accordance with [F8sections 450 and 451 of CTA 2010]; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under [F9section 451(4) to (6) of CTA 2010] if he is not a participator in the company.
(9)For the purposes of sub-paragraph (3) above the question whether a company is associated with another shall be construed in accordance with [F10section 449 of CTA 2010]; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under [F11section 451(4) to (6) of CTA 2010] if he is not a participator in the company.
(10)In sub-paragraphs (8) and (9) “participator” has the meaning given by [F12section 454 of CTA 2010].
Textual Amendments
F1Words in Sch. 5 para. 2(1) inserted (with effect in accordance with s. 131(4) of the amending Act) by Finance Act 1998 (c. 36), Sch. 22 para. 2(1)
F2Words in Sch. 5 para. 2(3) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 126(2)(a)
F3Sch. 5 para. 2(3)(da)(db) inserted (with effect in accordance with s. 131(4) of the amending Act) by Finance Act 1998 (c. 36), s. 131(1)(a)
F4Word in Sch. 5 para. 2(3)(e) substituted (with effect in accordance with s. 131(4) of the amending Act) by Finance Act 1998 (c. 36), s. 131(1)(b)
F5Sch. 5 para. 2(4)(c) substituted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 126(2)(b)
F6Sch. 5 para. 2(4A) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 126(2)(c)
F7Sch. 5 para. 2(7) substituted (with effect in accordance with s. 131(4) of the amending Act) by Finance Act 1998 (c. 36), s. 131(2)
F8Words in Sch. 5 para. 2(8) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 266(2)(a)(i) (with Sch. 2)
F9Words in Sch. 5 para. 2(8) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 266(2)(a)(ii) (with Sch. 2)
F10Words in Sch. 5 para. 2(9) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 266(2)(b)(i) (with Sch. 2)
F11Words in Sch. 5 para. 2(9) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 266(2)(b)(ii) (with Sch. 2)
F12Words in Sch. 5 para. 2(10) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 266(2)(c) (with Sch. 2)