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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Settlements legislation: definition of settlor


Settlor means any person by whom the settlement was made.

A person is a settlor if he or she has provided (or has undertaken to provide) property or funds directly or indirectly for the settlement (ITTOIA/S620(3)).It is sometimes difficult to establish the true settlor. You should establish the amount and source of all the funds within a settlement to identify any indirect settlement or disguised settlor.

Example 1 - indirect settlor

X is the director and owns all the 150 issued ordinary £1 shares of X Ltd. X Ltd issues 100 new ordinary £1 shares which are acquired for £100 by the X Family Trust. The trust has been established for the benefit of X’s family by his father, X Senior, who created the trust by settling cash of £100. Shortly after the issue of the new shares, a dividend of £100 per share is declared and paid and the trust receives dividends of £10,000. X controlled the arrangement for the issue of the shares at par followed by the dividend. X is therefore the true settlor of the settlement from which income of £10,000 arose. The original settlement of £100 by X Senior is usually disregarded on de minimis grounds.