Trusts for particular purposes: the Thalidomide Trust - payments to beneficiaries from 5 August 2004
During the tax year 2004-05 the Paymaster General approved a Treasury Order bringingthe Thalidomide Trust within the ‘structured settlements’ legislation. The‘Thalidomide Children’s Trust (Application of Section 329AA of the Income andCorporation Taxes Act 1988) Order 2004’ came into effect on 5 August 2004.
From 5 August 2004 income payments made by the Trust to beneficiaries are no longersubject to tax and no longer count as income for tax credits purposes.
Any other taxable income received – from employment, for instance – is subjectto tax in the normal way.
The change does not apply retrospectively, and the tax treatment set out in TSEM5954 remains for payments made up to 4 August 2004.