Commentary

I5.1130 Payments to children of the settlor

IHT, trusts and estates

I5.1130 Payments to children of the settlor

Settlements on children

I5.1130 Payments to children of the settlor

Income of a settlement which is paid in any year (during the life of the settlor) to or for the benefit of a relevant child of the settlor, which would otherwise be treated as income of that child, is treated as income of the settlor for that year and not as the income of any other person1.

A relevant child is a minor child who is unmarried and not in a civil partnership2. As regards payment to a relevant child out of accumulated income, see I5.1131.

This provision does not apply to income under a settlement in which the settlor retains an interest, such income being chargeable under ITTOIA 2005, s 624(1), see I5.11253.

It was previously the case4 that any income that was treated under the above rules as that of the settlor alone, was not to be treated as income of any company for corporation tax purposes. This is an anti-avoidance measure to end the practice of companies exploiting the provision by entering into arrangements that would fall to be treated as settlements. The repeal has effect for accounting periods ending on or after 6 March 2007. Income arising in accounting periods beginning before 6 March 2007 is also chargeable to

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