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