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HMRC internal manual

Business Income Manual

Historic houses: heritage maintenance settlements: reimbursement of settlor

S507-S515 Income Tax Act 2007 (ITA 2007)

Where the owner of an historic house settles property in a heritage maintenance settlement for the upkeep of the house, the income of the trust is treated as the owner’s income under the settlement legislation, unless an election is made under S508 ITA 2007. In a particular year, it may be advantageous not to make such an election.

If the trustees of a heritage maintenance settlement use the income to reimburse the owner for expenditure incurred in maintaining the property and the owner is carrying on a trade of opening the house to the public, the reimbursement would normally have to be taken into account in computing the taxable profits of the trade. S511 ITA 2007 provides that where income of a heritage maintenance settlement has been treated as that of the settlor, any of that income used to reimburse the settlor will not again be taken into account in the trade profits computation, either as a trading receipt or as reducing the maintenance expenditure deductible in computing the profits.