Commentary

I5.1137 Capital sums—calculating the income

IHT, trusts and estates

I5.1137 Capital sums—calculating the income

I5.1137 Capital sums—calculating the income

In deciding how much of a capital sum paid to a settlor in a tax year is to be regarded as his income for that year, it is necessary to determine the amount of settlement income available up to the end of that year1.

This is2 A – B – C where:

  1.  

    (A)     is the total amount of unprotected income arising under the settlement (see I5.1123) for the tax year concerned and for all previous years

  2.  

    (B)     is the total amount of that income for each of those years which has been distributed (see below), and

  3.  

    (C)     is the total of:

    1.  

      (a)     any amount of the income within (A) that has been taken into account as a capital sum under these provisions (in respect of the current or a previous payment) for previous years

    2.  

      (b)     any income treated as income of the settlor under ITTOIA 2005, s 624 (settlor retaining an interest in the settlement—see I5.1125) or ITTOIA 2005, s 629 (payments to settlor's children—see I5.1130)

    3.  

      (c)     an amount equal to

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