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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Trust income and gains: vulnerable beneficiaries: definition of qualifying trusts: relevant minor - statutory trusts

The statutory trusts mentioned in TSEM3435 are those that are established under the intestacy laws in England and Wales. Where a parent dies without making a will, some or all of the property is held on ‘statutory trusts’ for any children under the age of 18. Therefore property held on such trusts will be held on qualifying trusts for the purpose of the special tax treatment.

Where under the rules of intestacy property is held on statutory trusts in equal shares for the benefit of two or more children, the settled property held in these equal shares will be held on qualifying trusts for the purposes of the new regime.

The intestacy rules currently in force in Northern Ireland and Scotland are different, and where trusts are established for children who have lost a parent, the terms of those trusts will be such that they will be treated as bare trusts for tax purposes. Where property is held for the benefit of children on bare trusts, the income and chargeable gains are regarded as belonging to the child. However a Northern Irish or Scottish will trust may qualify under the new regime provided its terms meet the relevant conditions in TSEM3435.