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HMRC internal manual

Capital Gains Manual

Annual exempt amount: settlements: disabled persons: mixed settlements

It is possible that only part of a settlement may fulfil the qualifying conditions. For example, the trust may secure that during the lifetime of the disabled person the income and any capital applied of a specified fund is to be applied as described above. If the fund itself meets the conditions, then the trustees of the settlement are entitled to the main exemption. Paragraph 1 (1) refers to ‘settled property’ and not to ‘all the settled property comprised in the settlement.’

By way of contrast if the disabled beneficiary is entitled to an undivided share of the property, as in the example in CG18064, then the tests are to be applied to the whole of the settled property. So if there are three life tenants, each entitled to one-third of the income, and one is disabled, the conditions are not met.