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HMRC internal manual

Trusts, Settlements and Estates Manual

Legal background to trusts & estates: accumulation limits

There are rules to stop trustees from accumulating income for an excessive time. These prevent trustees using the accumulations to hold additional trust property for a longer period than Parliament thinks appropriate.

Law of England & Wales

In England & Wales Section 13 of the Perpetuities and Accumulations Act 2009 came into force on 5 April 2010. Income of a non-charitable trust created by instruments which take effect after that date can be accumulated for the whole of the trust’s life.

Previously Section 164 Law of Property Act 1925, as extended by Section 13 Perpetuities and Accumulations Act 1964 essentially limited a person creating a trust to selecting one of the following periods for accumulation

  • the lifetime of the settlor
  • 21 years from the death of the settlor/testator
  • 21 years from the making of the gift
  • the respective minorities of the beneficiaries

Scots law

The position for Scots law trusts is as set out in S164 LPA 1925 (see above) by virtue of Section 5 Trusts (Scotland) Act 1961, as extended by Section 6 Law Reform (Miscellaneous Provisions) (Scotland) Act 1966.

Law of Northern Ireland

Northern Ireland has no similar legislation dealing with accumulations. But Section 32 Trustee Act (Northern Ireland) 1958 does not permit accumulation during the infancy (minority) of a beneficiary.

Advice on accumulation

Refer any questions about accumulation to HMRC Trusts & Estates Technical Edinburgh.