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HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
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DT applications and claims: Non-resident beneficiaries of non-resident trusts

What happens if the settlor of a discretionary trust is not excluded from benefit under the trust

Where the settlor of a non-resident discretionary trust is not excluded from benefit under the trust, the trust may be subject to the provisions of ICTA88/S660. In this situation the trust may be described as a ‘caught settlement’. The settlor will be chargeable on the income of the trust as their own personal income, regardless of whether the income is accumulated or distributed.

Where we have a claim or application from a beneficiary of a discretionary trust from which the settlor is not excluded from benefiting, Technical Advice Group will need to refer the papers to CAR Residency in Bootle for advice. They will also consider whether the settlor or the trustees need to make a UK tax return.

If the settlement is caught, a claim by a beneficiary will not be valid.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)