Part 5Miscellaneous income

Chapter 5Settlements: amounts treated as income of settlor F7or family

Annotations:
Amendments (Textual)
F7

Words in Pt. 5 Ch. 5 heading inserted (with effect in accordance with Sch. 10 para. 21 of the amending Act) by Finance Act 2018 (c. 3), Sch. 10 para. 3(2)

Income treated as income of settlor: retained interests

625Settlor's retained interest

1

A settlor is treated for the purposes of section 624 as having an interest in property if there are any circumstances in which the property or any related property—

a

is payable to the settlor or the settlor's spouse F1or civil partner ,

b

is applicable for the benefit of the settlor or the settlor's spouse F1or civil partner , or

c

will, or may, become so payable or applicable.

2

Subsection (1) does not apply if the only circumstances are one or more of—

a

the bankruptcy of a person who is, or may become, beneficially entitled to the property or any related property,

b

the assignment of the property or any related property by such a person,

c

the charging of (or, in Scotland, the granting of a right in security over) the property or any related property by such a person,

F2d

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, and

e

the death of a child of the settlor who had become beneficially entitled to the property or any related property at not more than 25 years old.

F32A

In subsection (2) “child of the family”, in relation to parties to a marriage or civil partnership, means a child of one or both of them.

3

Subsection (1) does not apply if—

a

there are no circumstances in which the property or any related property can become payable or applicable as mentioned in that subsection during the life of a person other than—

i

the bankruptcy of the person, or

ii

the assignment or charging of the person's interest in the property or any related property, and

b

the person is alive and under 25 years old.

4

In subsection (1) “the settlor's spouse F4or civil partner” does not include—

a

a spouse F4or civil partner from whom the settlor is separated under an order of a court or a separation agreement,

b

a spouse F4or civil partner from whom the settlor is separated where the separation is likely to be permanent,

c

the widow or widower F5or surviving civil partner of the settlor, or

d

a person to whom the settlor is not married but may later marry F6 or a person of whom the settlor is not a civil partner but of whom the settlor may later be a civil partner .

5

In this section “related property”, in relation to any property, means income from that property or any other property directly or indirectly representing proceeds of, or of income from, that property or income from it.