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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
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Settlements legislation: Inheritance Tax implications of adjustments under ITTOIA/S646(6A)

Since ITTOIA/S646(1) gives a settlor the right to recover from the trustees (or any other person to whom income is payable in connection with the settlement) any income tax chargeable under ITTOIA/S624 and 629, any such payment made to the settlor is not a chargeable occasion for IHT purposes.

Similarly, there is no transfer of value when a settlor makes any payment to the trustees (or any other person to whom income is payable by virtue of or as a result of the settlement) of a repayment of income tax under ITTOIA/S646(5) - see IHTM04250. External customers can see this guidance at http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM04250.htm.