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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Settlements legislation: settlement for unmarried minor child: settlements made before 9 March 1999

Before 9 March 1999, only payments made to or for the benefit of the child were caught. So any income arising to a bare trustee which was retained and not paid out was not assessable on the parent.

Example 17 - bare trust for a minor child - pre 9 March 1999

A parent creates a bare trust (see TSEM1563) for a minor unmarried child on 1 January 1999. No payments are made out, and the trustees retain all the income.

As no income is paid to or for the benefit of the child, the settlements legislation does not apply and the income remains that of the child for tax purposes.

If however additional funds are added on or after 9 March 1999 to the pre-existing settlement we would treat the income arising from those additional funds as that of the parent (see example 16 in TSEM4300), subject to the £100 limit explained in TSEM4310.