SCHEDULES

SCHEDULE 17Settlements: liability of settlor

Part IIMinor and consequential amendments of the Taxes Act 1988

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1

Section 687 of the Taxes Act 1988 (payments under discretionary trusts) is amended as follows.

2

For subsection (1) (cases in which the section applies) substitute—

1

Where in any year of assessment trustees make a payment to any person in the exercise of a discretion, whether a discretion exercisable by them or by any other person, then if the payment—

a

is for all the purposes of the Income Tax Acts income of the person to whom it is made (but would not be his income if it were not made to him), or

b

is treated for those purposes as the income of the settlor by virtue of section 660B,

the following provisions of this section apply with respect to the payment in lieu of section 348 or 349(1).

3

In subsection (2)(a) (person credited with having paid tax) after “to whom the payment is made” insert “or, as the case may be, the settlor”.

4

After subsection (4) add—

5

References in this section to payments include payments in money or money’s worth.