Q&As

Is the non-UK resident trustee of a non-UK resident trust that is settlor-interested (with the settlor now being regarded as both UK resident and UK domiciled and thus reporting all of the trust’s income in any event) able to claim basic rate relief on UK source investment income under section 399 of the Income Tax (Trading and Other Income) Act 2005?

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Published on LexisPSL on 07/10/2019

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • Is the non-UK resident trustee of a non-UK resident trust that is settlor-interested (with the settlor now being regarded as both UK resident and UK domiciled and thus reporting all of the trust’s income in any event) able to claim basic rate relief on UK source investment income under section 399 of the Income Tax (Trading and Other Income) Act 2005?

For the purposes of this Q&A, we have assumed that the settlor’s interest under the trust is an interest under a discretionary trust.

The rules relating to settlor interested trusts are anti-avoidance rules, aimed at ensuring that a settlor cannot avoid tax on assets of which they are not fully divested.

The general rule relating to income that may be treated as the settlor’s own income is contained in section 624 of Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005), which is part of what HMRC refers to as the ‘settlements legislation’ (and is also known as the ‘settlements code’ or ‘settlor code’). It is subject to certain exceptions.

ITTOIA 2005, s 624 provides that income ‘a

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