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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income and gains: vulnerable beneficiaries: definition of qualifying trusts: relevant minor - trusts established by will or by the CICS

The conditions to be met in respect of trusts established either by the will of a deceased parent or under the Criminal Injuries Compensation Scheme are designed to mirror those of the statutory trusts where a parent dies without having made a will. They are not met where the child becomes entitled to the capital only at a greater age, for example 25. Similarly, they are not met unless the property held for the benefit of the relevant minor is ring fenced. This is relevant where there is more than one beneficiary. If that is the case, the property held for the benefit of the disabled person must be held in a separate fund or in some other defined part of the settled property. If the property can be applied for the benefit of anyone else, in any circumstances (other than mentioned in the last paragraph below) or if anyone else is entitled to the income arising from it the trusts on which it is held will not be qualifying trusts.

A ring-fenced fund for a disabled minor within a trust is not a separate trust for tax purposes.

The statutory powers that trustees have of making payments of income to a parent or guardian or otherwise for the child’s benefit do not prevent the trusts from qualifying. Similarly, trustees have, in certain circumstances (see TSEM3431), a statutory power to advance up to one half of the capital to which the relevant minor will or may become entitled. This fact will also not prevent the trusts on which property is held from being qualifying trusts.