TSEM4573 - Settlements legislation: taxing income on settlor

ITTOIA/S619

The tax chargeable on the settlor depends on the source of income arising under the settlement and the period when it arises or in the case of income paid to the settlor’s minor child (who is neither married nor in a civil partnership), when it is paid to that child.

ITTOIA/S619(2) provides that income arising to the trustee retains its character in the hands of the settlor.

Income is chargeable to income tax in the same way as would have been the case had the income arisen directly to the settlor. It is therefore chargeable at that person’s marginal rates and carries a credit for the tax paid by the trustees.

ITTOIA/S619(2) applies to income arising or treated as arising to the settlor’s minor child (who is neither married nor in a civil partnership), when it is paid to that child.