Commentary

I5.1121 Meaning of deemed settlor for income tax

IHT, trusts and estates

I5.1121 Meaning of deemed settlor for income tax

I5.1121 Meaning of deemed settlor for income tax

The basic definition of a settlor, in relation to a settlement, is any person by whom the settlement was made1. A more extended meaning is given by providing that the following persons are deemed to have made a settlement2:

  1.  

    •     a person who has made or entered into the settlement directly or indirectly

  2.  

    •     a person who has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement

  3.  

    •     a person who has made with any other person a reciprocal arrangement for that other person to make or enter into a settlement

It would appear that a person with a prior life interest or other prior interest in a settlement who assigns that interest may be the settlor of another settlement. Also, a person who consents to an advance to a beneficiary (either in accordance with the powers under the trust or under the Trustee Act 1925, s 32) may be a settlor, see I5.1128.

In Crossland3, a company was formed to exploit the acting talents of H. All the shares in the company were held by trustees for the benefit of H's children under a settlement by H's father-in-law. After paying H a modest salary for his services, the

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial