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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income and gains: vulnerable beneficiaries: definition of qualifying trusts - parts of assets

Where part of a particular asset is held on trusts for the benefit of a vulnerable person and they are entitled to any income arising from that part of the asset it is treated as if it were a separate asset. Therefore if it is possible to identify the relevant part of the asset concerned, and the income arising from that part, then it is treated as ring fenced for the purposes of determining whether the trusts on which the part is held are qualifying trusts. On the basis of Pexton v Bell 51TC457 this could apply to a person entitled to a fractional share of the income, that is an undivided part of the income as opposed to income arising from an identifiable and exclusive part of the property. However it might well be difficult for the trust to meet the capital test in TSEM3430 and 3435 that the property can be applied only for the benefit of the vulnerable person.