Commentary

I5.1244 Attribution of settlement gains—capital payments not charged on original beneficiary

IHT, trusts and estates

I5.1244 Attribution of settlement gains—capital payments not charged on original beneficiary

I5.1244 Attribution of settlement gains—capital payments not charged on original beneficiary

Capital payments not charged on original beneficiary—overview

From 2018/19, there are a number of situations where a capital payment is not taxed on the original recipient, but instead treated as received by another beneficiary or even the settlor. These are when capital payments are:

  1.  

    •     made to a UK resident settlor's close family member1

  2.  

    •     made to the original beneficiary who intends to pass it on to a UK resident person ('onward payments')2

Capital payments to UK resident settlor's close family member

From 2018/19, a capital payment is treated as received by the settlor of the settlement if the beneficiary who receives the payment is a close family member (CFM) of the settlor, and the settlor is UK resident in the tax year of payment3. The residence status of the CFM is irrelevant for the purpose of this provision.

For this purpose a CFM is4:

  1.  

    •     the settlor's spouse or civil partner, or

  2.  

    •     a child of the

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