The Child Trust Funds Regulations 2004

Exemption from tax of account income and gains U.K.

24.  Subject to compliance with these Regulations (and in particular regulation 9)—

(a) no tax shall be chargeable on the account provider or his nominee, or on the named child or registered contact (on his behalf)—

(i) in respect of interest, dividends, distributions or gains in respect of account investments [F1 (excluding any building society bonus)],

[F2 (ia) in respect of alternative finance return or profit share return paid by a financial institution (within the meanings in Chapter 5 of Part 2 of the Finance Act 2005);]

[F3 (ib) in respect of a payment under a building society bonus scheme, so far as the payment is calculated by reference to account investments (and if paid directly by the society into the account, the payment shall not count towards the subscription limit in regulation 9);]

(ii) on any annual profits or gains treated by section 714(2) of the Taxes Act M1 as having been received by any of them in respect of account investments,

(iii) on an offshore income gain to which a disposal made by any of them of an account investment gives rise, which is treated by section 761(1) of the Taxes Act as constituting profits or gains,

(iv) on a profit realised by any of them from the discount on a relevant discounted security within the meaning of Schedule 13 to the Finance Act 1996 M2 , which is held as an account investment, or

(v) in respect of gains treated by section 541 of the Taxes Act as arising in connection with a policy of life insurance which is an account investment;

(b) losses accruing on any disposal of account investments shall be disregarded for the purposes of capital gains tax;

[F4 (ba) any gain or loss accruing on and attributable to a payment within paragraph (ib) of sub-paragraph (a) shall not be a chargeable gain or allowable loss for capital gains tax purposes;]

(c) section 349B(4) of the Taxes Act shall apply with the following modifications—

(i) for references to a plan manager, substitute references to an account provider,

(ii) for references to a plan, substitute references to an account, and

(iii) for the reference to [F5 Chapter 3 of Part 6 of ITTOIA 2005], substitute a reference to the Act;

(d) a corresponding deficiency occurring at the end of the final year, within the meaning of section 549(1) of the Taxes Act, so far as it relates to a policy of life insurance which is an account investment, shall not be allowable as a deduction from the total income of the named child;

(e) relief in respect of tax shall be given in the manner and to the extent provided by these Regulations; and

(f) income arising from account investments shall not be regarded as income for any income tax purposes (including [F6 section 629 of ITTOIA 2005]).

Textual Amendments

F1 Words in reg. 24(a)(i) added (1.1.2007) by The Child Trust Funds (Amendment No. 3) Regulations 2006 (S.I. 2006/3195), regs. 1, 4(a)

F2 Reg. 24(a)(ia) inserted (27.12.2005) by The Child Trust Funds (Amendment No. 3) Regulations 2005 (S.I. 2005/3349), regs. 1, 7(a)

F3 Reg. 24(a)(ib) inserted (1.1.2007) by The Child Trust Funds (Amendment No. 3) Regulations 2006 (S.I. 2006/3195), regs. 1, 4(b)

F4 Reg. 24(ba) inserted (1.1.2007) by The Child Trust Funds (Amendment No. 3) Regulations 2006 (S.I. 2006/3195), regs. 1, 5

F5 Words in reg. 24(c)(iii) substituted (27.12.2005) by The Child Trust Funds (Amendment No. 3) Regulations 2005 (S.I. 2005/3349), regs. 1, 7(b)

F6 Words in reg. 24(f) substituted (27.12.2005) by The Child Trust Funds (Amendment No. 3) Regulations 2005 (S.I. 2005/3349), regs. 1, 7(c)

Marginal Citations

M1 1988 c. 1.

M2 1996 c. 8; paragraph 3 was substituted by section 65 of the Finance Act 1999 (c. 16).