(1) This section applies to settled property (including property settled before 22nd March 2006) if—
(a) it is held on statutory trusts for the benefit of a bereaved minor under sections 46 and 47(1) of the Administration of Estates Act 1925 (succession on intestacy and statutory trusts in favour of issue of intestate), or
(b) it is held on trusts for the benefit of a bereaved minor and subsection (2) below applies to the trusts,
but this section does not apply to property in which a disabled person's interest subsists.
(2) This subsection applies to trusts—
(a) established under the will of a deceased parent of the bereaved minor, or
(b) established under the Criminal Injuries Compensation Scheme, or
(c) established under the Victims of Overseas Terrorism Compensation Scheme,
which secure that the conditions in subsection (3) below are met.
(3) Those conditions are—
(a) that the bereaved minor, if he has not done so before attaining the age of 18, will on attaining that age become absolutely entitled to—
(i) the settled property,
(ii) any income arising from it, and
(iii) any income that has arisen from the property held on the trusts for his benefit and been accumulated before that time,
(b) that, for so long as the bereaved minor is living and under the age of 18, if any of the settled property is applied for the benefit of a beneficiary, it is applied for the benefit of the bereaved minor, and
(c) that, for so long as the bereaved minor is living and under the age of 18, either—
(i) the bereaved minor is entitled to all of the income (if there is any) arising from any of the settled property, or
(ii) if any of the income arising from any of the settled property is applied for the benefit of a beneficiary, it is applied for the benefit of the bereaved minor.
(4) Trusts such as are mentioned in paragraph (a) , (b) or (c) of subsection (2) above are not to be treated as failing to secure that the conditions in subsection (3) above are met by reason only of—
(za) the trustees' having powers that enable them to apply otherwise than for the benefit of the bereaved minor amounts (whether consisting of income or capital, or both) not exceeding the annual limit,
(a) the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),
(b) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by proviso (a) of subsection (1) of that section,
(c) the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision for Northern Ireland),
(d) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by subsection (1)(a) of that section, or
(e) the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (a) to (d) above.
(4A) For the purposes of this section and section 71B, the “annual limit” is whichever is the lower of the following amounts—
(a) £3,000, and
(b) 3% of the amount that is the maximum value of the settled property during the period in question.
(4B) For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.
(4C) The Treasury may by order made by statutory instrument—
(a) specify circumstances in which subsection (4)(za) is, or is not, to apply in relation to a trust, and
(b) amend the definition of “the annual limit” in subsection (4A).
(4D) An order under subsection (4C) may—
(a) make different provision for different cases, and
(b) contain transitional and saving provision.
(4E) A statutory instrument containing an order under subsection (4C) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(5) In this section “the Criminal Injuries Compensation Scheme” means—
(a) the schemes established by arrangements made under the Criminal Injuries Compensation Act 1995,
(b) arrangements made by the Secretary of State for compensation for criminal injuries in operation before the commencement of those schemes, and
(c) the scheme established under the Criminal Injuries Compensation (Northern Ireland) Order 2002.
(6) The preceding provisions of this section apply in relation to Scotland as if, in subsection (2) above, before “which” there were inserted the purposes of.
71B Charge to tax on property to which section 71A applies
(1) Subject to subsections (2) , (2B) and (3) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which section 71A above applies, and
(b) in a case where paragraph (a) above does not apply, where the trustees make a disposition as a result of which the value of settled property to which section 71A above applies is less than it would be but for the disposition.
(2) Tax is not charged under this section where settled property ceases to be property to which section 71A applies as a result of—
(a) the bereaved minor attaining the age of 18 or becoming, under that age, absolutely entitled as mentioned in section 71A(3)(a) above, or
(b) the death under that age of the bereaved minor, or
(c) being paid or applied for the advancement or benefit of the bereaved minor.
(2A) Subsection (2B) applies in a case in which—
(a) an amount is paid or applied otherwise than for the benefit of the bereaved minor, and
(b) the exemptions provided by subsection (2) of this section and subsections (3) and (4) of section 70 do not apply.
(2B) In such a case, tax is not charged under this section in respect of whichever is the lower of the following amounts—
(a) the amount paid or applied, and
(b) the annual limit.
(3) Subsections (3) to (8) and (10) of section 70 above apply for the purposes of this section as they apply for the purposes of that section, but—
(a) with the substitution of a reference to subsection (1)(b) above for the reference in subsection (4) of section 70 above to subsection (2)(b) of that section,
(b) with the substitution of a reference to property to which section 71A above applies for each of the references in subsections (3), (5) and (8) of section 70 above to property to which that section applies,
(c) as if, for the purposes of section 70(8) above as applied by this subsection, property—
(i) which is property to which section 71A above applies,
(ii) which, immediately before it became property to which section 71A above applies, was property to which section 71 above applied, and
(iii) which, by the operation of section 71(1B) above, ceased on that occasion to be property to which section 71 above applied,
had become property to which section 71A above applies not on that occasion but on the occasion (or last occasion) before then when it became property to which section 71 above applied, and
(d) as if, for the purposes of section 70(8) above as applied by this subsection, property—
(i) which is property to which section 71A above applies,
(ii) which, immediately before it became property to which section 71A above applies, was property to which section 71D below applied, and
(iii) which, by the operation of section 71D(5)(a) below, ceased on that occasion (“the 71D-to-71A occasion”) to be property to which section 71D below applied,
had become property to which section 71A above applies not on the 71D-to-71A occasion but on the relevant earlier occasion.
(4) In subsection (3)(d) above—
(a) “the relevant earlier occasion” means the occasion (or last occasion) before the 71D-to-71A occasion when the property became property to which section 71D below applied, but
(b) if the property, when it became property to which section 71D below applied, ceased at the same time to be property to which section 71 above applied without ceasing to be settled property, “the relevant earlier occasion” means the occasion (or last occasion) when the property became property to which section 71 above applied.
71C Sections 71A and 71B: meaning of “bereaved minor”
In sections 71A and 71B above “bereaved minor” means a person—
(a) who has not yet attained the age of 18, and
(b) at least one of whose parents has died.
(1) This section applies to settled property (including property settled before 22nd March 2006), but subject to subsection (5) below, if—
(a) the property is held on trusts for the benefit of a person who has not yet attained the age of 25,
(b) at least one of the person's parents has died, and
(c) subsection (2) below applies to the trusts.
(2) This subsection applies to trusts—
(a) established under the will of a deceased parent of the person mentioned in subsection (1)(a) above, or
(b) established under the Criminal Injuries Compensation Scheme, or
(c) established under the Victims of Overseas Terrorism Compensation Scheme,
which secure that the conditions in subsection (6) below are met.
(3) Subsection (4) has effect where—
(a) at any time on or after 22nd March 2006 but before 6th April 2008, or on the coming into force of paragraph 3(1) of Schedule 20 to the Finance Act 2006, any property ceases to be property to which section 71 above applies without ceasing to be settled property, and
(b) immediately after the property ceases to be property to which section 71 above applies—
(i) it is held on trusts for the benefit of a person who has not yet attained the age of 25, and
(ii) the trusts secure that the conditions in subsection (6) below are met.
(4) From the time when the property ceases to be property to which section 71 above applies, but subject to subsection (5) below, this section applies to the property (if it would not apply to the property by virtue of subsection (1) above) for so long as—
(a) the property continues to be settled property held on trusts such as are mentioned in subsection (3)(b)(i) above, and
(b) the trusts continue to secure that the conditions in subsection (6) below are met.
(5) This section does not apply—
(a) to property to which section 71A above applies,
(b) to property to which section 71 above, or section 89 below, applies, or
(c) to settled property if a person is beneficially entitled to an interest in possession in the settled property and—
(i) the person became beneficially entitled to the interest in possession before 22nd March 2006, or
(ii) the interest in possession is an immediate post-death interest, or a transitional serial interest, and the person became beneficially entitled to it on or after 22nd March 2006.
(6) Those conditions are—
(a) that the person mentioned in subsection (1)(a) or (3)(b)(i) above (“B”), if he has not done so before attaining the age of 25, will on attaining that age become absolutely entitled to—
(i) the settled property,
(ii) any income arising from it, and
(iii) any income that has arisen from the property held on the trusts for his benefit and been accumulated before that time,
(b) that, for so long as B is living and under the age of 25, if any of the settled property is applied for the benefit of a beneficiary, it is applied for the benefit of B, and
(c) that, for so long as B is living and under the age of 25, either—
(i) B is entitled to all of the income (if there is any) arising from any of the settled property, or
(ii) if any of the income arising from any of the settled property is applied for the benefit of a beneficiary, it is applied for the benefit of B.
(6A) Where the income arising from the settled property is held on trusts of the kind described in section 33 of the Trustee Act 1925 (protective trusts), paragraphs (b) and (c) of subsection (6) have effect as if for “living and under the age of 25,” there were substituted “under the age of 25 and the income arising from the settled property is held on trust for B,
(7) For the purposes of this section, trusts are not to be treated as failing to secure that the conditions in subsection (6) above are met by reason only of—
(za) the trustees' having powers that enable them to apply otherwise than for the benefit of B amounts (whether consisting of income or capital, or both) not exceeding the annual limit,
(a) the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),
(b) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by proviso (a) of subsection (1) of that section,
(c) the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision for Northern Ireland),
(d) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by subsection (1)(a) of that section, or
(e) the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (a) to (d) above.
(7A) For the purposes of this section and section 71E, the “annual limit” is whichever is the lower of the following amounts—
(a) £3,000, and
(b) 3% of the amount that is the maximum value of the settled property during the period in question.
(7B) For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.
(7C) The Treasury may by order made by statutory instrument—
(a) specify circumstances in which subsection (7)(za) is, or is not, to apply in relation to a trust, and
(b) amend the definition of “the annual limit” in subsection (7A).
(7D) An order under subsection (7C) may—
(a) make different provision for different cases, and
(b) contain transitional and saving provision.
(7E) A statutory instrument containing an order under subsection (7C) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(8) In this section “the Criminal Injuries Compensation Scheme” means—
(a) the schemes established by arrangements made under the Criminal Injuries Compensation Act 1995,
(b) arrangements made by the Secretary of State for compensation for criminal injuries in operation before the commencement of those schemes, and
(c) the scheme established under the Criminal Injuries Compensation (Northern Ireland) Order 2002.
(9) The preceding provisions of this section apply in relation to Scotland—
(a) as if, in subsection (2) above, before “which” there were inserted the purposes of, and
(b) as if, in subsections (3)(b)(ii) and (4)(b) above, before “trusts” there were inserted purposes of the.
71E Charge to tax on property to which section 71D applies
(1) Subject to subsections (2) to (4A) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which section 71D above applies, or
(b) in a case where paragraph (a) above does not apply, where the trustees make a disposition as a result of which the value of the settled property to which section 71D above applies is less than it would be but for the disposition.
(2) Tax is not charged under this section where settled property ceases to be property to which section 71D above applies as a result of—
(a) B becoming, at or under the age of 18, absolutely entitled as mentioned in section 71D(6)(a) above,
(b) the death, under the age of 18, of B,
(c) becoming, at a time when B is living and under the age of 18, property to which section 71A above applies, or
(d) being paid or applied for the advancement or benefit of B—
(i) at a time when B is living and under the age of 18, or
(ii) on B's attaining the age of 18.
(3) Tax is not charged under this section in respect of—
(a) a payment of costs or expenses (so far as they are fairly attributable to property to which section 71D above applies), or
(b) a payment which is (or will be) income of any person for any of the purposes of income tax or would for any of those purposes be income of a person not resident in the United Kingdom if he were so resident,
or in respect of a liability to make such a payment.
(4) Tax is not charged under this section by virtue of subsection (1)(b) above if the disposition is such that, were the trustees beneficially entitled to the settled property, section 10 or section 16 above would prevent the disposition from being a transfer of value.
(4A) If an amount is paid or applied otherwise than for the benefit of B and the exemptions provided by subsections (2) to (4) do not apply, tax is not charged under this section in respect of whichever is the lower of the following amounts—
(a) the amount paid or applied, and
(b) the annual limit.
(5) For the purposes of this section the trustees shall be treated as making a disposition if they omit to exercise a right (unless it is shown that the omission was not deliberate) and the disposition shall be treated as made at the time or latest time when they could have exercised the right.
71F Calculation of tax charged under section 71E in certain cases
(1) Where—
(a) tax is charged under section 71E above by reason of the happening of an event within subsection (2) below, and
(b) that event happens after B has attained the age of 18,
the tax is calculated in accordance with this section.
(2) Those events are—
(a) B becoming absolutely entitled as mentioned in section 71D(6)(a) above,
(b) the death of B, and
(c) property being paid or applied for the advancement or benefit of B.
(3) The amount of the tax is given by—
Chargeableamount×Relevantfraction×Settlement rate
(4) For the purposes of subsection (3) above, the “Chargeable amount” is—
(a) the amount by which the value of property which is comprised in the settlement and to which section 71D above applies is less immediately after the event giving rise to the charge than it would be but for the event, or
(b) where the tax is payable out of settled property to which section 71D above applies immediately after the event, the amount which, after deducting the tax, is equal to the amount on which tax would be charged by virtue of paragraph (a) above.
(5) For the purposes of subsection (3) above, the “Relevant fraction” is three tenths multiplied by so many fortieths as there are complete successive quarters in the period—
(a) beginning with the day on which B attained the age of 18 or, if later, the day on which the property became property to which section 71D above applies, and
(b) ending with the day before the occasion of the charge.
(6) Where the whole or part of the Chargeable amount is attributable to property that was excluded property at any time during the period mentioned in subsection (5) above then, in determining the “Relevant fraction” in relation to that amount or part, no quarter throughout which that property was excluded property shall be counted.
(7) For the purposes of subsection (3) above, the “Settlement rate” is the effective rate (that is to say, the rate found by expressing the tax chargeable as a percentage of the amount on which it is charged) at which tax would be charged on the value transferred by a chargeable transfer of the description specified in subsection (8) below.
(8) The chargeable transfer postulated in subsection (7) above is one—
(a) the value transferred by which is equal to an amount determined in accordance with subsection (9) below,
(b) which is made at the time of the charge to tax under section 71E above by a transferor who has in the period of seven years ending with the day of the occasion of the charge made chargeable transfers having an aggregate value equal to that of any chargeable transfers made by the settlor in the period of seven years ending with the day on which the settlement commenced, disregarding transfers made on that day, and
(c) on which tax is charged in accordance with section 7(2) above.
(9) The amount referred to in subsection (8)(a) above is equal to the aggregate of—
(a) the value, immediately after the settlement commenced, of the property then comprised in it,
(b) the value, immediately afer a related settlement commenced, of the property then comprised in it which was property to which section 71D above applied , and
(c) the value, immediately after it became comprised in the settlement, of any property which became so comprised after the settlement commenced and before the occasion of the charge under section 71E above (whether or not it has remained so comprised).
71G Calculation of tax charged under section 71E in all other cases
(1) Where—
(a) tax is charged under section 71E above, and
(b) the tax does not fall to be calculated in accordance with section 71F above,
the tax is calculated in accordance with this section.
(2) The amount on which the tax is charged is—
(a) the amount by which the value of property which is comprised in the settlement and to which section 71D above applies is less immediately after the event giving rise to the charge than it would be but for the event, or
(b) where the tax is payable out of settled property to which section 71D above applies immediately after the event, the amount which, after deducting the tax, is equal to the amount on which tax would be charged by virtue of paragraph (a) above.
(3) The rate at which the tax is charged is the rate that would be given by subsections (6) to (8) of section 70 above—
(a) if the reference to section 70 above in subsection (8)(a) of that section were a reference to section 71D above,
(b) if the other references in those subsections to section 70 above were references to section 71E above, and
(c) if, for the purposes of section 70(8) above, property—
(i) which is property to which section 71D above applies,
(ii) which, immediately before it became property to which section 71D above applies, was property to which section 71 applied, and
(iii) which ceased on that occasion to be property to which section 71 above applied without ceasing to be settled property,
had become property to which section 71D above applies not on that occasion but on the occasion (or last occasion) before then when it became property to which section 71 above applied.
(1) In sections 71A to 71G above “parent” includes step-parent.
(2) For the purposes of sections 71A to 71G above, a deceased individual (“D”) shall be taken to have been a parent of another individual (“Y”) if, immediately before D died, D had—
(a) parental responsibility for Y under the law of England and Wales,
(b) parental responsibilities in relation to Y under the law of Scotland, or
(c) parental responsibility for Y under the law of Northern Ireland.
(3) In subsection (2)(a) above “parental responsibility” has the same meaning as in the Children Act 1989.
(4) In subsection (2)(b) above “parental responsibilities” has the meaning given by section 1(3) of the Children (Scotland) Act 1995.
(5) In subsection (2)(c) above “parental responsibility” has the same meaning as in the Children (Northern Ireland) Order 1995.
72 Property leaving employee trusts and newspaper trusts.
(1) This section applies to settled property to which section 86 below applies if—
(a) no interest in possession subsists in it to which an individual is beneficially entitled, and
(b) no company-purchased interest in possession subsists in it.
(1A) For the purposes of subsection (1)(b) above, an interest in possession is “company-purchased” if—
(a) a company is beneficially entitled to the interest in possession,
(b) the business of the company consists wholly or mainly in the acquisition of interests in settled property, and
(c) the company has acquired the interest in possession for full consideration in money or money's worth from an individual who was beneficially entitled to it.
(1B) Section 59(3) and (4) above apply for the purposes of subsection (1A)(c) above as for those of section 59(2)(b) above, but as if the references to the condition set out in section 59(2)(a) above were to the condition set out in subsection (1A)(b) above.
(2) Subject to subsections (3A), (4) , (4A) and (5) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which this section applies, otherwise than by virtue of a payment out of the settled property, and
(b) where a payment is made out of settled property to which this section applies for the benefit of a person within subsection (3) below, or a person connected with such a person, and
(c) in a case which paragraphs (a) and (b) above do not apply, where the trustees make a disposition (otherwise than by way of a payment out of the settled property) as a result of which the value of settled property to which this section applies is less than it would be but for the disposition.
(3) A person is within this subsection if—
(a) he has directly or indirectly provided any of the settled property otherwise than by additions not exceeding in value £1,000 in any one year; or
(b) in a case where the employment in question is employment by a close company, he is a participator in relation to that company and either—
(i) is beneficially entitled to, or to rights entitling him to acquire, not less than 5 per cent. of, or of any class of the shares comprised in, its issued share capital, or
(ii) would, on a winding-up of the company, be entitled to not less than 5 per cent. of its assets; or
(c) he has acquired an interest in the settled property for a consideration in money or money’s worth.
(3A) Where settled property ceases to be property to which this section applies because paragraph (d) of section 86(3) no longer applies, tax is not chargeable under this section by virtue of subsection (2)(a) if the only reason that paragraph no longer applies is that one or both of the trading requirement and the controlling interest requirement mentioned in that paragraph are no longer met with respect to the company so mentioned.
(4) If the trusts are those of a profit sharing scheme approved in accordance with Schedule 9 to the Taxes Act 1988, tax shall not be chargeable under this section by virtue of subsection (3)(b) above on an appropriation of shares in pursuance of the scheme.
(4A) If the trusts are those of a share incentive plan approved under Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003, tax shall not be chargeable under this section by virtue of subsection (3)(b) above on an appropriation of shares to, or acquisition of shares on behalf of, an individual under the plan.
(5) Subsections (3) to (10) of section 70 above shall apply for the purposes of this section as they apply for the purposes of that section (with the substitution of a reference to subsection (2)(c) above for the reference in section 70(4) to section 70(2)(b)).
(6) In this section—
(a) “close company” and “participator” have the same meanings as in Part IV of this Act; and
(b) “year” means the period beginning with 26th March 1974 and ending with 5th April 1974, and any subsequent period of twelve months ending with 5th April;
and a person shall be treated for the purposes of this section as acquiring an interest for a consideration in money or money’s worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that interest or of other property.
(1) This section applies to settled property which is held on trusts to the like effect as those specified in section 33(1)(ii) of the Trustee Act 1925 and which became held on those trusts on the failure or determination before 12th April 1978 of trusts to the like effect as those specified in section 33(1)(i).
(2) Subject to subsection (3) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which this section applies, otherwise than by virtue of a payment out of the settled property for the benefit of the principal beneficiary within the meaning of section 33 of the Trustee Act 1925, and
(b) in a case which paragraph (a) above does not apply, where the trustees make a disposition (otherwise than by way of such a payment) as a result of which the value of settled property to which this section applies is less than it would be but for the disposition.
(3) Subsections (3) to (10) of section 70 above shall apply for the purposes of this section as they apply for the purposes of that section.
(1) This section applies to settled property transferred into settlement before 10th March 1981 and held on trusts under which, during the life of a disabled person, no interest in possession in the settled property subsists, and which secure that any of the settled property which is applied during his life is applied only or mainly for his benefit.
(2) Subject to subsection (3) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which this section applies, otherwise than by virtue of a payment out of the settled property for the benefit of the person mentioned in subsection (1) above, and
(b) in a case in which paragraph (a) above does not apply, where the trustees make a disposition (otherwise than by way of such a payment) as a result of which the value of settled property to which this section applies is less than it would be but for the disposition.
(3) Subsections (3) to (10) of section 70 above shall apply for the purposes of this section as they apply for the purposes of that section.
(4) In this section “disabled person” means a person who—
(a) is by reason of mental disorder (within the meaning of the Mental Health Act 1983) incapable of administering his property or managing his affairs, or
(b) is in receipt of an attendance allowance under section 64 of the Social Security Contributions and Benefits Act 1992 or section 64 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 , or
(c) is in receipt of a disability living allowance under section 71 of the Social Security Contributions and Benefits Act 1992 or section 71 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 by virtue of entitlement to the care component at the highest or middle rate , or
(d) is in receipt of pension age disability payment which is a category of disability assistance specifically for older people given in accordance with regulations made under section 31 of the Social Security (Scotland) Act 2018 , or
(e) is in receipt of Scottish adult disability living allowance, which is a category of disability assistance specifically for adults which takes the form of a living allowance given in accordance with regulations made under section 31 of the Social Security (Scotland) Act 2018 by virtue of entitlement to the care component at the highest or middle rate.
74A Arrangements involving acquisition of interest in settled property etc
(1) This section applies where—
(a) one or more persons enter into arrangements,
(b) in the course of the arrangements—
(i) an individual (“the individual”) ... acquires or becomes able to acquire (directly or indirectly) an interest in property comprised in a settlement ( “ the relevant settled property ”), and
(ii) consideration in money or money's worth is given by one or more of the persons mentioned in paragraph (a) (whether or not in connection with the acquisition of that interest or the individual becoming able to acquire it),
(ba) the individual—
(i) is a long-term UK resident at any time on or after 6 April 2025 during the course of the arrangements, or
(ii) acquired the interest, or became able to acquire it, at a time before 6 April 2025 while domiciled in the United Kingdom,
(c) there is a relevant reduction in the value of the individual's estate, and
(d) condition A or condition B is met.
(2) Condition A is that the relevant settled property is excluded property at any time during the course of the arrangements.
Ignore for this purpose—
(a) section 48ZA(8) (as it has effect on and after 6 April 2025);
(b) section 48(3D) (as it had effect before 6 April 2025).
(3) Condition B is that—
(a) the settlor was not an individual or a close company at the time the relevant settled property became comprised in the settlement, and
(b) condition A is not met.
(4) Subsection (6) applies if all or a part of a relevant reduction (“amount A”) is attributable to the value of the individual's section 49(1) property being less than it would have been in the absence of the arrangements.
(5) “The individual's section 49(1) property” means settled property to which the individual is treated as beneficially entitled under section 49(1) by reason of the individual being beneficially entitled to an interest in possession in the property.
(6) Where this subsection applies—
(a) a part of that interest in possession is deemed, for the purposes of section 52, to come to an end at the relevant time, and
(b) that section applies in relation to the coming to an end of that part as if the reference in subsection (4)(a) of that section to a corresponding part of the whole value of the property in which the interest in possession subsists were a reference to amount A.
(7) Subsection (8) applies to so much (if any) of a relevant reduction as is not amount A (“amount B”).
(8) Tax is to be charged as if the individual had made a transfer of value at the relevant time and the value transferred by it had been equal to amount B.
(1) A transfer of value arising by virtue of section 74A is to be taken to be a transfer which is not a potentially exempt transfer.
(2) For the purposes of section 74A—
(a) when determining the value transferred by a transfer of value arising by virtue of that section, no account is to be taken of section 3(2),
(b) nothing in section 10(1) applies to prevent such a transfer, and
(c) nothing in sections 102 to 102C of the Finance Act 1986 applies in relation to such a transfer.
(3) Where, ignoring this subsection, a transfer of value would arise by virtue of section 74A (“the current transfer”), the value transferred by a relevant related transfer is to be treated as reducing the value transferred by the current transfer.
But this subsection does not apply if and to the extent that the relevant related transfer has already been applied to reduce another transfer of value arising by virtue of that section.
(4) “Relevant related transfer” means—
(a) where the arrangements consist of a series of operations, any transfer of value constituted by one or more of those operations which occur before or at the same time as the current transfer, other than a transfer of value arising by virtue of section 74A, and
(b) where the arrangements consist of a single operation, any transfer of value which arises from that operation, other than a transfer of value arising by virtue of section 74A.
(5) Section 268(3) does not apply to a transfer of value arising by virtue of section 74A.
(6) Where—
(a) a transfer of value has arisen by virtue of section 74A,
(b) in the course of the arrangements the individual acquires an interest in possession in settled property, and
(c) section 5(1B) applies to the interest in possession so that it forms part of the individual's estate,
this Act has effect as if that transfer of value had never arisen.
(1) Subsections (2) to (4) have effect for the purposes of sections 74A and 74B.
(2) An individual has an interest in property comprised in a settlement if—
(a) the property, or any derived property, is or will or may become payable to, or applicable for the benefit of—
(i) the individual,
(ii) the individual's spouse or civil partner, or
(iii) a close company in relation to which the individual or the individual's spouse or civil partner is a participator or a company which is a 51% subsidiary of such a close company,
in any circumstances whatsoever, or
(b) a person within sub-paragraph (i), (ii) or (iii) of paragraph (a) enjoys a benefit deriving (directly or indirectly) from the property or any derived property.
(3) A “relevant reduction” in the value of the individual's estate occurs—
(a) if and when the value of the individual's estate first becomes less than it would have been in the absence of the arrangements, and
(b) on each subsequent occasion when the value of that estate becomes less than it would have been in the absence of the arrangements and that difference in value is greater than the sum of any previous relevant reductions.
(4) The amount of a relevant reduction is—
(a) in the case of a reduction within subsection (3)(a), the difference between the value of the estate and its value in the absence of the arrangements, and
(b) in the case of a reduction within subsection (3)(b), the amount by which the difference in value mentioned in that provision exceeds the sum of any previous relevant reductions.
(5) In sections 74A and 74B and this section—
“arrangements” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable, and any associated operations;
“close company” has the meaning given in section 102;
“derived property”, in relation to any property, means—
income from that property,
property directly or indirectly representing—
proceeds of that property, or
proceeds of income from that property, or
income from property which is derived property by virtue of paragraph (b);
“operation” includes an omission;
“participator” has the meaning given in section 102;
“the relevant time” means—
the time the relevant reduction occurs, or
if later, the time section 74A first applied;
“51% subsidiary” has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of the Corporation Tax Act 2010).
(1) Tax shall not be charged under section 65 above in respect of shares in or securities of a company which cease to be relevant property on becoming held on trusts of the description specified in section 86(1) below if the conditions in subsection (2) below are satisfied.
(2) The conditions referred to in subsection (1) above are—
(a) that the persons for whose benefit the trusts permit the settled property to be applied include all or most of the persons employed by or holding office with the company;
(b) that, at the date when the shares or securities cease to be relevant property or at a subsequent date not more than one year thereafter, both the conditions mentioned in subsection (2) of section 28 above (read with subsections (3) and (7)) are satisfied, without taking account of shares or securities held on other trusts; and
(c) that the trusts do not permit any of the property to be applied at any time (whether during any such period as is referred to in section 86(1) below or later) for the benefit of any of the persons mentioned in subsection (4) of section 28 above (read with subsections (5) to (7)) or for the benefit of the settlor or of any person connected with him ; and
(d) the shares in or securities of the company have been comprised in the settlement mentioned in section 65(1) throughout the period of two years ending with the date on which they cease to be relevant property.
(3) In its application for the purposes of subsection (2)(c) above, section 28(4) and (6A) shall be construed as if—
(a) references to section 28(1) were references to subsection (2) above, and
(b) references to the time of the transfer of value were references to the time when the property ceases to be relevant property.
(4) A reference in subsection (2)(d) to shares in or securities of a company includes, in a case in which a reorganisation of share capital has occurred, the original shares to which the new holding relates.
(5) In subsection (4)—
(a) “reorganisation of share capital” means a transaction to which section 127 of the 1992 Act (equation of original shares and new holding) applies or would apply but for section 134 of that Act;
(b) “the original shares” and “the new holding” have the meaning given by section 126(1) of the 1992 Act.
75A Property becoming subject to employee-ownership trust
(1) Tax is not charged under section 65 in respect of shares in or securities of a company (“C”) which cease to be relevant property on becoming held on trusts of the description specified in section 86(1) if the conditions in subsection (2) are satisfied.
(2) The conditions referred to in subsection (1) are—
(a) that C meets the trading requirement,
(b) that the trusts are of a settlement which meets the all-employee benefit requirement, and
(c) that the settlement does not meet the controlling interest requirement immediately before the beginning of the tax year in which the shares or securities cease to be relevant property but does meet it at the end of that year.
(3) Sections 236I, 236J, 236K, 236M and 236T (but not 236L) of the 1992 Act apply to determine whether—
(a) C meets the trading requirement;
(b) the settlement meets the all-employee benefit requirement;
(c) the settlement meets the controlling interest requirement;
with references in those sections to “C” being read accordingly.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75B Cap on charges for pre-30 October 2024 excluded property
(1) This section applies if (ignoring this section) tax is charged under section 64 (ten-year anniversary charge) or 65 (exit charge) by reference to the value of property—
(a) that became comprised in the settlement in question before 30 October 2024,
(b) that immediately before 30 October 2024 was excluded property by virtue of section 48(3) or (3A) (as it had effect at that time), and
(c) that immediately before the occasion of the charge—
(i) is situated outside the United Kingdom and is not property to which paragraph 2 or 3 of Schedule A1 applies, or
(ii) is a holding in an authorised unit trust or a share in an open-ended investment company.
(2) The amount of tax charged by reference to the value of the property is, if it would otherwise be greater, to be reduced (but not below zero) to the difference between—
(a) the applicable cap in relation to the relevant period in which the occasion of the charge falls, and
(b) any amount of tax already charged under section 65 in relation to the settlement, earlier in that relevant period, by reference to the value of property meeting the conditions in subsection (1).
(3) In this section—
“the applicable cap” means—
in relation to the first relevant period, £125,000 multiplied by the number of whole successive quarters in the period;
in relation to a subsequent relevant period, £5 million;
“relevant period” means—
the period beginning with 6 April 2025 and ending with the first ten-year anniversary falling after that date, and
each subsequent period of ten years.
76 Property becoming held for charitable purposes, etc.
(1) Tax shall not be charged under this Chapter (apart from section 79 below) in respect of property which ceases to be relevant property, or ceases to be property to which section 70, 71, 71A, 71D, 72, 73 or 74 above or paragraph 8 of Schedule 4 to this Act applies, on becoming—
(a) property held for charitable purposes only without limit of time (defined by a date or otherwise);
(b) the property of a political party qualifying for exemption under section 24 above; or
(c) the property of a body within Schedule 3 to this Act;. . .
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) If the amount on which tax would be charged apart from this section in respect of any property exceeds the value of the property immediately after it becomes property of a description specified in paragraphs (a) to (c) of subsection (1) above (less the amount of any consideration for its transfer received by the trustees), that subsection shall not apply but the amount on which tax is charged shall be equal to the excess.
(4) The reference in subsection (3) above to the amount on which tax would be charged is a reference to the amount on which it would be charged—
(a) assuming (if it is not in fact so) that the tax is not paid out of settled property, and
(b) apart from Chapters I and II of Part V of this Act;
and the reference in that subsection to the amount on which tax is charged is a reference to the amount on which it would be charged on that assumption and apart from those Chapters.
(5) Subsection (1) above shall not apply in relation to any property if the disposition by which it becomes property of the relevant description is defeasible; but for this purpose a disposition which has not been defeated at a time twelve months after the property concerned becomes property of the relevant description and is not defeasible after that time shall be treated as not being defeasible, whether or not it was capable of being defeated before that time.
(6) Subsection (1) above shall not apply in relation to any property if it or any part of it may become applicable for purposes other than charitable purposes or purposes of a body mentioned in subsection (1)(b), or (c) above.
(7) Subsection (1) shall not apply in relation to any property if, at or before the time when it becomes property of the relevant description, an interest under the settlement is or has been acquired for a consideration in money or money’s worth by an exempt body otherwise than from a charity or a body mentioned in subsection (1)(b) or (c) above.
(8) In subsection (7) above “exempt body” means a charity or a body mentioned in subsection (1)(b), or (c) above; and for the purposes of subsection (7) above a body shall be treated as acquiring an interest for a consideration in money or money’s worth if it becomes entitled to the interest as a result of transactions which include a disposition for such consideration (whether to that body or to another person) of that interest or of other property.
(1) A transfer of property or other event shall not constitute an occasion on which tax is chargeable under any provision of this Chapter other than section 64 if the property in respect of which the charge would have been made has been comprised in the settlement throughout the six years ending with the transfer or event, and—
(a) the property is, on a claim made for the purpose, designated by the Treasury under section 31 above, and
(b) the requisite undertaking described in that section is given with respect to the property by such person as the Treasury think appropriate in the circumstances of the case or (where the property is an area of land within subsection (1)(d) of that section) the requisite undertakings described in that section are given with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case.
(1A) A claim under subsection (1) above must be made no more than two years after the date of the transfer or other event in question or within such longer period as the Board may allow.
(2) References in this Chapter to a conditionally exempt occasion are to—
(a) a transfer or event which by virtue of subsection (1) above does not constitute an occasion on which tax is chargeable under this Chapter;
(b) a transfer or event which, by virtue of section 81(1) of the Finance Act 1976, did not constitute an occasion on which tax was chargeable under Chapter II of Part IV of the Finance Act 1982;
(c) a conditionally exempt distribution within the meaning given by section 81(2) of the Finance Act 1976 as it had effect in relation to events before 9th March 1982.
(3) Where there has been a conditionally exempt occasion in respect of any property, sections 32, 32A, 33(1), 33(2ZA) to (7) and 35(2) above shall have effect (and tax shall accordingly be chargeable under section 32 or 32A) as if—
(a) references to a conditionally exempt transfer and to such a transfer of property included references respectively to a conditionally exempt occasion and to such an occasion in respect of property;
(b) references to a disposal otherwise than by sale included references to any occasion on which tax is chargeable under any provision of this Chapter other than section 64;
(c) references to an undertaking given under section 30 above included references to an undertaking given under this section;
and the references in section 33(5) above to the person who made a conditionally exempt transfer shall have effect in relation to a conditionally exempt occasion as references to the person who is the settlor of the settlement in respect of which the occasion occurred (or if there is more than one such person, whichever of them the Board may select).
(4) Where by virtue of subsection (3) above the relevant person for the purposes of section 33 above is the settlor of a settlement, the rate (or each of the rates) mentioned in section 33(1)(b)(i) or (ii)—
(a) shall, if the occasion occurred before the first ten-year anniversary to fall after the property became comprised in the settlement concerned, be 30 per cent. of what it would be apart from this subsection, and
(b) shall, if the occasion occurred after the first and before the second ten-year anniversary to fall after the property became so comprised, be 60 per cent. of what it would be apart from this subsection;
and the appropriate provision of section 7 for the purposes of section 33(1)(b)(ii) is, if the settlement was created on his death, subsection (1) and, if not, subsection (2).
(5) Where by virtue of subsection (3) above the relevant person for the purposes of section 33 above is the settlor of a settlement and that settlor died before 13th March 1975, section 33(1)(b) above shall have effect (subject to subsection (4) above) with the substitution for sub-paragraph (ii) of the following sub-paragraph:—
(ii) the rate or rates that would have applied to that amount (“the chargeable amount”) in accordance with the appropriate provision of section 7 above if the relevant person had died when the chargeable event occurred, the value transferred on his death had been equal to the amount on which estate duty was chargeable when he in fact died, and the chargeable amount had been added to that value and had formed the highest part of it.
(6) Section 34 above shall not apply to a chargeable event in respect of property if the last conditionally exempt transfer of the property has been followed by a conditionally exempt occasion in respect of it.
(1) Where property is comprised in a settlement and there has been a conditionally exempt transfer of the property on or before the occasion on which it became comprised in the settlement, section 64 above shall not have effect in relation to the property on any ten-year anniversary falling before the first occurrence after the transfer of a chargeable event with respect to the property.
(2) Where property is comprised in a settlement and there has been, on or before the occasion on which it became comprised in the settlement, a disposal of the property in relation to which subsection (4) of section 258 of the 1992 Act (capital gains tax relief for works of art etc.) had effect, section 64 above shall not have effect in relation to the property on any ten-year anniversary falling before the first occurrence after the disposal of an event on the happening of which the property is treated as sold under subsection (5) of the said section 258.
(3) Where property is comprised in a settlement and there has been no such transfer or disposal of the property as is mentioned in subsection (1) or (2) above on or before the occasion on which it became comprised in the settlement, subsection (3A) below applies if —
(a) the property has, on a claim made for the purpose, been designated by the Treasury under section 31 above,
(aa) that claim is made during the period beginning with the date of a ten-year anniversary of the settlement (“the relevant ten-year anniversary”) and ending—
(i) two years after that date, or
(ii) on such later date as the Board may allow,
(b) the requisite undertaking described in section 31 is given with respect to the property by such person as the Treasury think appropriate in the circumstances of the case, or (where the property is an area of land within subsection (1)(d) of that section) the requisite undertakings described in that section are given with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case, and
(c) the property is relevant property,
...
(3A) Tax is not chargeable under section 64 above in relation to the property by reference to the relevant ten-year anniversary concerned or any subsequent ten-year anniversaries; but on the first occurrence of an event which, if there had been a conditionally exempt transfer of the property immediately before that relevant ten-year anniversary, would be a chargeable event with respect to the property—
(a) there is a charge to tax under this subsection, and
(b) on any ten-year anniversary falling after that event, tax is chargeable under section 64 above in relation to the property.
(4) Tax shall not be charged under subsection (3A) above in respect of property if, after the occasion mentioned in subsection (3) above and before the occurrence mentioned in subsection (3A) , there has been a conditionally exempt occasion in respect of the property.
(5) The amount on which tax is charged under subsection (3A) above shall be an amount equal to the value of the property at the time of the event.
(5A) Where the event giving rise to a charge to tax under subsection (3A) above is a disposal on sale, and the sale—
(a) was not intended to confer any gratuitous benefit on any person, and
(b) was either a transaction at arm's length between persons not connected with each other or a transaction such as might be expected to be made at arm's length between persons not connected with each other,
the value of the property at the time of that event shall be taken for the purposes of subsection (5) above to be equal to the proceeds of the sale.
(6) The rate at which tax is charged under subsection (3A) above shall be the aggregate of the following percentages—
(a) 0·25 per cent. for each of the first forty complete successive quarters in the relevant period,
(b) 0·20 per cent. for each of the next forty,
(c) 0·15 per cent. for each of the next forty,
(d) 0·10 per cent. for each of the next forty, and
(e) 0·5 per cent. for each of the next forty.
(7) In subsection (6) above “the relevant period” means the period given by subsection (7A) below or, if shorter, the period given by subsection (7B) below.
(7A) The period given by this subsection is the period beginning with the latest of—
(a) the day on which the settlement commenced,
(b) the date of the last ten-year anniversary of the settlement to fall before the day on which the property became comprised in the settlement,
(c) the date of the last ten-year anniversary of the settlement to fall before the relevant ten-year anniversary , and
(d) 13th March 1975,
and ending with the day before the event giving rise to the charge.
(7B) The period given by this subsection is the period equal in length to the number of relevant-property days in the period—
(a) beginning with the day that is the latest of those referred to in paragraphs (a) to (d) of subsection (7A) above, and
(b) ending with the day before the event giving rise to the charge.
(7C) For the purposes of subsection (7B) above, a day is a “relevant-property day” if at any time on that day the property was relevant property.
(8) Subsection (9) below shall have effect where—
(a) by virtue of subsection (3A) above, section 64 does not have effect in relation to property by reference to the relevant ten-year anniversary of the settlement ,
(b) on that anniversary a charge to tax falls to be made in respect of the settlement under section 64, and
(c) the property became comprised in the settlement... within the period of ten years ending with that anniversary.
(9A) Subsection (9B) below applies where the same event gives rise—
(a) to a charge under subsection (3A) above in relation to any property, and
(b) to a charge under section 32 or 32A above in relation to that property.
(9B) If the amount of each of the charges is the same, each charge shall have effect as a charge for one half of the amount that would be charged apart from this subsection; otherwise, whichever of the charges is lower in amount shall have effect as if it were a charge the amount of which is nil.
(9) In calculating the rate at which tax is charged under section 64 above, the value of the consideration given for the property on its becoming comprised in the settlement shall be treated for the purposes of section 66(5)(b) above as if it were an amount on which a charge to tax was imposed in respect of the settlement under section 65 above at the time of the property becoming so comprised.
(10) In subsection (1) above, the reference to a conditionally exempt transfer of any property includes a reference to a transfer of value in relation to which the value of any property has been left out of account under the provisions of sections 31 to 34 of the Finance Act 1975 and, in relation to such property, the reference to a chargeable event includes a reference to an event on the occurrence of which tax becomes chargeable under Schedule 5 to this Act.
(1) An undertaking given under section 78 or 79 above may be varied from time to time by agreement between the Board and the person bound by the undertaking.
(2) Where the tribunal is satisfied that—
(a) the Board have made a proposal for the variation of such an undertaking to the person bound by the undertaking,
(b) that person has failed to agree to the proposed variation within six months after the date on which the proposal was made, and
(c) it is just and reasonable, in all the circumstances, to require the proposed variation to be made,
the tribunal may direct that the undertaking is to have effect from a specified date as if the proposed variation had been agreed to by the person bound by the undertaking.
(3) The date specified by the tribunal must not be less than sixty days after the date of the tribunal's direction.
(4) A direction under this section shall not take effect if, before the date specified by the tribunal, a variation different from that to which the direction relates is agreed between the Board and the person bound by the undertaking.
80 Initial interest of settlor or spouse or civil partner.
(1) Where a settlor or his spouse or civil partner is beneficially entitled to a qualifying interest in possession in property immediately after it becomes comprised in the settlement, the property shall for the purposes of this Chapter (including sections 48 and 48ZA (excluded property) as they apply for the purposes of this Chapter) be treated as not having become comprised in the settlement on that occasion; but when the property or any part of it becomes held on trusts under which neither of those persons is beneficially entitled to a qualifying interest in possession , the property or part shall for those purposes be treated as becoming comprised in a separate settlement made by that one of them who ceased (or last ceased) to be beneficially entitled to a qualifying interest in possession in it.
(2) References in subsection (1) above to the spouse or civil partner of a settlor include references to the widow or widower or surviving civil partner of a settlor.
(3) This section shall not apply if the occasion first referred to in subsection (1) above occurred before 27th March 1974.
(4) Where the occasion first referred to in subsection (1) above occurs on or after 22nd March 2006, this section applies—
(a) as though for “ a qualifying interest in possession ” in each place where that appears in subsection (1) above there were substituted a postponing interest, and
(b) as though, for the purposes of that subsection, each of the following were a “postponing interest”—
(i) an immediate post-death interest;
(ii) a disabled person's interest.
(1) Where property which ceases to be comprised in one settlement becomes comprised in another then, unless in the meantime any person becomes beneficially entitled to the property (and not merely to an interest in possession in the property), it shall for the purposes of this Chapter (including sections 48 and 48ZA (excluded property) as they apply for the purposes of this Chapter) be treated as remaining comprised in the first settlement (but held on the trusts of the second).
(1A) Subsection (1) applies for the purposes of Chapters 1 to 2A of Part 5 as it applies for the purposes of this Chapter.
(2) Subsection (1) above shall not apply where the property ceased to be comprised in the first settlement before 10th December 1981; but where property ceased to be comprised in one settlement before 10th December 1981 and after 26th March 1974 and, by the same disposition, became comprised in another settlement, it shall for the purposes of this Chapter be treated as remaining comprised in the first settlement.
(3) Subsection (1) above shall not apply where a reversionary interest in the property expectant on the termination of a qualifying interest in possession subsisting under the first settlement was settled on the trusts of the other settlement before 10th December 1981.
(1) Where a reversionary interest in relevant property to which—
(a) a person who acquired it for a consideration in money or money's worth, or
(b) the settlor or the spouse or civil partner of the settlor,
(a “relevant reversioner”) is beneficially entitled comes to an end by reason of the relevant reversioner becoming entitled to an interest in possession in the relevant property, the relevant reversioner is to be treated as having made a disposition of the reversionary interest at that time.
(2) A transfer of value of a reversionary interest in relevant property to which a relevant reversioner is beneficially entitled is to be taken to be a transfer which is not a potentially exempt transfer.
81B Excluded property: property to which section 80 applies
(1) This section applies where—
(a) property is treated under section 80(1) as becoming comprised in a settlement, and
(b) the property would, apart from this section, be excluded property by virtue of meeting the condition in any of subsections (2) to (4) of section 48ZA (excluded property: long-term residence and domicile tests).
(2) For the purposes of this Chapter, except sections 78 and 79, the property is excluded property only if the condition in any of those subsections (whether or not the same one) is met by reference to the actual settlor and the actual settlement.
(3) Section 65(8) (no exit charge where property invested in Treasury securities thereby becomes excluded property) applies in relation to the property only if the condition in section 65(8ZA) is met by reference to the actual settlor.
(4) In this section, “the actual settlor” means the person who is the settlor of the property in relation to the settlement first mentioned in section 80(1); and “the actual settlement” means that settlement.
(5) This section does not apply in relation to property that is a holding in an authorised unit trust or a share in an open-ended investment company if the occasion first referred to in section 80(1) occurred before 22 July 2020.
Property which becomes comprised in a settlement in pursuance of a will or intestacy shall for the purposes of this Chapter be taken to have become comprised in it on the death of the testator or intestate (whether it occurred before or after the passing of this Act).
For the purposes of this Chapter (except sections 78 and 79) where the trusts on which settled property is held require part of the income of the property to be applied for charitable purposes, a corresponding part of the settled property shall be regarded as held for charitable purposes.
85 Credit for annual charges under Finance Act 1975.
Any tax charged under paragraph 12(2) of Schedule 5 to the Finance Act 1975 and not already allowed as a credit under paragraph 12(3) of that Schedule or under section 125 of the Finance Act 1982 or under this section shall be allowed as a credit against tax chargeable under this Chapter (apart from section 79) in respect of the settled property or part concerned.
(1) Where settled property is held on trusts which, either indefinitely or until the end of a period (whether defined by a date or in some other way) do not permit any of the settled property to be applied otherwise than for the benefit of—
(a) persons of a class defined by reference to employment in a particular trade or profession, or employment by, or office with, a body carrying on a trade, profession or undertaking, or
(b) persons of a class defined by reference to marriage to or civil partnership with, or relationship to, or dependence on, persons of a class defined as mentioned in paragraph (a) above,
then, subject to subsection (3) below, this section applies to that settled property or, as the case may be, applies to it during that period.
(2) Where settled property is held on trusts permitting the property to be applied for the benefit of persons within paragraph (a) or (b) of subsection (1) above, those trusts shall not be regarded as outside the description specified in that subsection by reason only that they also permit the settled property to be applied for charitable purposes.
(3) Where any class mentioned in subsection (1) above is defined by reference to employment by or office with a particular body, this section applies to the settled property only if—
(a) the class comprises all or most of the persons employed by or holding office with the body concerned, or
(b) the trusts on which the settled property is held are those of a profit sharing scheme approved in accordance with Schedule 9 to the Taxes Act 1988; or
(c) the trusts on which the settled property is held are those of a share incentive plan approved under Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003, or
(d) the settled property consists of or includes ordinary share capital of a company which meets the trading requirement and the trusts on which the settled property is held are those of a settlement which—
(i) meets the controlling interest requirement with respect to the company, and
(ii) meets the all-employee benefit requirement with respect to the company.
(3A) For the purpose of determining whether subsection (3)(d) is satisfied in relation to settled property which consists of or includes ordinary share capital of a company—
(a) section 236I of the 1992 Act applies to determine whether the company meets the trading requirement (with references to “C” being read as references to that company),
(b) sections 236J, 236K, 236M and 236T (but not 236L) of the 1992 Act apply to determine whether the settlement meets the all-employee benefit requirement and the controlling interest requirement (with references in those sections to “C” being read as references to that company), and
(c) “ordinary share capital” has the meaning given by section 1119 of the Corporation Tax Act 2010.
(4) Where this section applies to any settled property—
(a) the property shall be treated as comprised in one settlement, whether or not it would fall to be so treated apart from this section, and
(b) an interest in possession in any part of the settled property shall be disregarded for the purposes of this Act (except section 55) if that part is less than 5 per cent. of the whole.
(5) Where any property to which this section applies ceases to be comprised in a settlement and, either immediately or not more than one month later, the whole of it becomes comprised in another settlement, then, if this section again applies to it when it becomes comprised in the second settlement, it shall be treated for all the purposes of this Act as if it had remained comprised in the first settlement.
(1) In relation to property comprised in a settlement to which this section applies, section 86 above shall have effect as if newspaper publishing companies were included among the persons within paragraphs (a) and (b) of subsection (1) of that section.
(2) This section applies to a settlement if shares in a newspaper publishing company or a newspaper holding company are the only or principal property comprised in the settlement.
(3) In this section—
“newspaper publishing company” means a company whose business consists wholly or mainly in the publication of newspapers in the United Kingdom;
“newspaper holding company” means a company which—
has as its only or principal asset shares in a newspaper publishing company, and
has powers of voting on all or most questions affecting the publishing company as a whole which if exercised would yield a majority of the votes capable of being exercised on them;
and for the purposes of this section shares shall be treated as the principal property comprised in a settlement or the principal asset of a company if the remaining property comprised in the settlement or the remaining assets of the company are such as may be reasonably required to enable the trustees or the company to secure the operation of the newspaper publishing company concerned.
(1) This section applies to settled property (other than property to which section 73 above applies) which is held on trusts to the like effect as those specified in section 33(1) of the Trustee Act 1925; and in this section “the principal beneficiary” and “the trust period” have the same meanings as in that section.
(2) For the purposes of this Act—
(a) there shall be disregarded the failure or determination, before the end of the trust period, of trusts to the like effect as those specified in paragraph (i) of the said section 33(1), and
(b) the principal beneficiary shall be treated as beneficially entitled to an interest in possession in any property which is for the time being held on trusts to the like effect as those specified in paragraph (ii) of the said section 33(1).
(3) Where—
(a) settled property became held before 22nd March 2006 on trusts to the like effect as those specified in section 33(1)(i) of the Trustee Act 1925, and
(b) as a result of the failure or determination of those trusts on or after 22nd March 2006, the principal beneficiary is treated by subsection (2)(b) above as beneficially entitled to an interest in possession,
this Act shall apply in relation to that interest in possession as if the principal beneficiary became beneficially entitled to that interest in possession before 22nd March 2006.
(4) Subsection (5) below applies where—
(a) settled property becomes held on or after 22nd March 2006 on trusts to the like effect as those specified in section 33(1)(i) of the Trustee Act 1925,
(b) the interest of the principal beneficiary under those trusts is—
(i) an immediate post-death interest,
(ii) a disabled person's interest within section 89B(1)(c) or (d) below, or
(iii) a transitional serial interest, and
(c) as a result of the failure or determination of those trusts, the principal beneficiary is treated by subsection (2)(b) above as beneficially entitled to an interest in possession.
(5) This Act shall apply—
(a) as if that interest in possession were a continuation of the immediate post-death interest, disabled person's interest or transitional serial interest, and
(b) as if the immediate post-death interest, or disabled person's interest or transitional serial interest, had not come to an end on the failure or determination of the trusts.
(6) Subsection (2) above does not apply in a case where—
(a) settled property becomes held on or after 22nd March 2006 on trusts to the like effect as those specified in section 33(1)(i) of the Trustee Act 1925, and
(b) the interest of the principal beneficiary under those trusts is—
(i) not an immediate post-death interest,
(ii) not a disabled person's interest within section 89B(1)(c) or (d) below, and
(iii) not a transitional serial interest.
(1) This section applies to settled property transferred into settlement after 9th March 1981 and held on trusts—
(a) under which, during the life of a disabled person, no interest in possession in the settled property subsists, and
(b) which secure that, if any of the settled property or income arising from it is applied during the disabled person's life for the benefit of a beneficiary, it is applied for the benefit of the disabled person.
(2) For the purposes of this Act the person mentioned in subsection (1) above shall be treated as beneficially entitled to an interest in possession in the settled property.
(3) The trusts on which the settled property is held are not to be treated as falling outside subsection (1) by reason only of—
(a) the trustees' having powers that enable them to apply otherwise than for the benefit of the disabled person amounts (whether consisting of income or capital, or both) not exceeding the annual limit,
(b) the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),
(c) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by proviso (a) of subsection (1) of that section,
(d) the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision for Northern Ireland),
(e) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by subsection (1)(a) of that section, or
(f) the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).
(3A) For the purposes of this section, the “annual limit” is whichever is the lower of the following amounts—
(a) £3,000, and
(b) 3% of the amount that is the maximum value of the settled property during the period in question.
(3B) For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.
(3C) The Treasury may by order made by statutory instrument—
(a) specify circumstances in which subsection (3)(a) is, or is not, to apply in relation to a trust, and
(b) amend the definition of “the annual limit” in subsection (3A).
(3D) An order under subsection (3C) may—
(a) make different provision for different cases, and
(b) contain transitional and saving provision.
(3E) A statutory instrument containing an order under subsection (3C) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(4) The reference in subsection (1) above to a disabled person is, in relation to any settled property, a reference to a person who, when the property was transferred into settlement, was a disabled person.
(4A) In this section “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.
89A Self-settlement by person expected to fall within the definition of “disabled person”
(1) This section applies to property transferred by a person (“A”) into settlement on or after 22nd March 2006 if—
(a) A was beneficially entitled to the property immediately before transferring it into settlement,
(b) A satisfies the Commissioners for Her Majesty's Revenue and Customs that, when the property was transferred into settlement, A had a condition that it was at that time reasonable to expect would have such effects on A as to lead to A becoming a person falling within any paragraph of the definition of “disabled person” in paragraph 1 of Schedule 1A to the Finance Act 2005.
(c) the property is held on trusts—
(i) under which, during the life of A, no interest in possession in the settled property subsists, and
(ii) which secure that Conditions 1 and 2 are met.
(2) Condition 1 is that if any of the settled property or income arising from it is applied during A's life for the benefit of a beneficiary, it is applied for the benefit of A.
(3) Condition 2 is that any power to bring the trusts mentioned in subsection (1)(c) above to an end during A's life is such that, in the event of the power being exercised during A's life, either—
(a) A or another person will, on the trusts being brought to an end, be absolutely entitled to the settled property, or
(b) on the trusts being brought to an end, a disabled person's interest within section 89B(1)(a) or (c) below will subsist in the settled property.
(4) If this section applies to settled property transferred into settlement by a person, the person shall be treated as beneficially entitled to an interest in possession in the settled property.
(5) For the purposes of subsection (1)(b), assume—
(a) that A will meet any conditions as to residence or presence that are required to establish entitlement to the allowance, disability assistance, payment or increased pension in question,
(b) that there will be no provision made by regulations under any of the following—
(i) sections 67(1) and (2), 72(8), 104(3) and 113(2) of SSCBA 1992,
(ii) sections 67(1) and (2), 72(8), 104(3) and 113(2) of SSCB(NI)A 1992, and
(iii) sections 85 and 86 of WRA 2012 and the corresponding provision having effect in Northern Ireland, ...
(c) that A will not be prevented from receiving the allowance, payment or increased pension in question by any of the following—
(i) section 113(1) of SSCBA 1992,
(ii) section 113(1) of SSCB(NI)A 1992,
(iii) section 87 of WRA 2012 and the corresponding provision having effect in Northern Ireland,
(iv) articles 61 and 64 of the Personal Injuries (Civilians) Scheme 1983 (S.I. 1983/686),
(v) article 53 of the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 2006 (S.I. 2006/606), and
(vi) article 42 of the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 (S.I. 2011/517) , ...
(d) that there will be no provision made by regulations under section 31 of the SS(S)A 2018 for the reduction of the value of a payment of disability assistance to £0 when the person is—
(i) resident in a care home,
(ii) resident in an educational establishment,
(iii) undergoing medical or other treatment as an in-patient in a hospital or similar institution, or
(iv) undergoing imprisonment or detention in legal custody. , and
(e) that there will be no provision made by regulations under section 31 of the SS(S)A 2018 for the non-satisfaction of eligibility criteria for pension age disability payment or Scottish adult disability living allowance in respect of any period when A is undergoing treatment for renal failure in a hospital or similar institution otherwise than as an in-patient.
(6A) The trusts on which the settled property is held are not to be treated as falling outside subsection (2) by reason only of—
(a) the trustees' having powers that enable them to apply otherwise than for the benefit of the disabled person amounts (whether consisting of income or capital, or both) not exceeding the annual limit,
(b) the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),
(c) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by proviso (a) of subsection (1) of that section,
(d) the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision for Northern Ireland),
(e) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by subsection (1)(a) of that section, or
(f) the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).
(6B) For the purposes of this section, the “annual limit” is whichever is the lower of the following amounts—
(a) £3,000, and
(b) 3% of the amount that is the maximum value of the settled property during the period in question.
(6C) For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.
(6D) The Treasury may by order made by statutory instrument—
(a) specify circumstances in which subsection (6A)(a) is, or is not, to apply in relation to a trust, and
(b) amend the definition of “the annual limit” in subsection (6B).
(6E) An order under subsection (6D) may—
(a) make different provision for different cases, and
(b) contain transitional and saving provision.
(6F) A statutory instrument containing an order under subsection (6D) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(7) For the purposes of subsection (3) above, ignore—
(a) power to give directions as to the settled property that is exercisable jointly by the persons who between them are entitled to the entire beneficial interest in the property, and
(b) anything that could occur as a result of exercise of any such power.
(8) In this section—
“disability assistance” means disability assistance given in accordance with regulations made under section 31 of the SS(S)A 2018,
“pension age disability payment” means a category of disability assistance specifically for older people,
“Scottish adult disability living allowance” means a category of disability assistance specifically for adults which takes the form of a living allowance,
“SSCBA 1992” means the Social Security Contributions and Benefits Act 1992,
“SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992, ...
“SS(S)A 2018” means the Social Security (Scotland) Act 2018, and
“WRA 2012” means the Welfare Reform Act 2012.
(1) In this Act “disabled person's interest” means—
(a) an interest in possession to which a person is under section 89(2) above treated as beneficially entitled,
(b) an interest in possession to which a person is under section 89A(4) above treated as beneficially entitled,
(c) an interest in possession in settled property (other than an interest within paragraph (a) or (b) above) to which a disabled person becomes beneficially entitled on or after 22nd March 2006 if the trusts on which the settled property is held secure that, if any of the settled property is applied during the disabled person's life for the benefit of a beneficiary, it is applied for the benefit of the disabled person, or
(d) an interest in possession in settled property (other than an interest within paragraph (a) or (b) above) to which a person (“A”) is beneficially entitled if—
(i) A is the settlor,
(ii) A was beneficially entitled to the property immediately before transferring it into settlement,
(iii) A satisfies Her Majesty's Commissioners for Revenue and Customs as mentioned in section 89A(1)(b) above,
(iv) the settled property was transferred into settlement on or after 22nd March 2006, and
(v) the trusts on which the settled property is held secure that, if any of the settled property is applied during A's life for the benefit of a beneficiary, it is applied for the benefit of A.
(2) In subsection (1)(c) “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.
(2A) Where the income arising from the settled property is held on trusts of the kind described in section 33 of the Trustee Act 1925 (protective trusts), subsection (1)(d)(v) has effect as if for “A's life” there were substituted “the period during which the income from the property is held on trust for A”.
(3) Section 71D above does not apply to property in which there subsists a disabled person's interest within subsection (1)(c) above (but see also section 71D(5) above).
89C Disabled person's interest: powers of advancement etc
(1) The trusts on which settled property is held are not to be treated for the purposes of section 89B(1)(c) or (d) (meaning of “disabled person's interest”: cases involving an interest in possession) as failing to secure that the settled property is applied for the benefit of a beneficiary by reason only of—
(a) the trustees' having powers that enable them to apply otherwise than for the benefit of the beneficiary amounts (whether consisting of income or capital, or both) not exceeding the annual limit,
(b) the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),
(c) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by proviso (a) of subsection (1) of that section,
(d) the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision for Northern Ireland),
(e) the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by subsection (1)(a) of that section, or
(f) the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).
(2) For the purposes of this section, the “annual limit” is whichever is the lower of the following amounts—
(a) £3,000, and
(b) 3% of the amount that is the maximum value of the settled property during the period in question.
(3) For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.
(4) The Treasury may by order made by statutory instrument—
(a) specify circumstances in which subsection (1)(a) is, or is not, to apply in relation to a trust, and
(b) amend the definition of “the annual limit” in subsection (2).
(5) An order under subsection (4) may—
(a) make different provision for different cases, and
(b) contain transitional and saving provision.
(6) A statutory instrument containing an order under subsection (4) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
Where under the terms of a settlement a person is entitled by way of remuneration for his services as trustee to an interest in possession in property comprised in the settlement, then, except to the extent that the interest represents more than a reasonable amount of remuneration,—
(a) the interest shall be left out of account in determining for the purposes of this Act the value of his estate immediately before his death, and
(b) tax shall not be charged under section 52 above when the interest comes to an end.
(1) Where a person would have been entitled to an interest in possession in the whole or part of the residue of the estate of a deceased person had the administration of that estate been completed, the same consequences shall follow under this Act as if he had become entitled to an interest in possession in the unadministered estate and in the property (if any) representing ascertained residue, or in a corresponding part of it, on the date as from which the whole or part of the income of the residue would have been attributable to his interest had the residue been ascertained immediately after the death of the deceased person.
(2) In this section—
(a) “unadministered estate” means all the property for the time being held by personal representatives as such, excluding property devolving on them otherwise than as assets for the payment of debts and excluding property that is the subject of a specific disposition, and making due allowance for outstanding charges on residue and for any adjustments between capital and income remaining to be made in due course of administration;
(b) “ascertained residue” means property which, having ceased to be held by the personal representatives as such, is held as part of the residue;
(c) subject to subsection (3) below, “charges on residue” means, in relation to the estate of a deceased person, the following liabilities properly payable out of the estate and interest payable in respect of those liabilities—
(i) funeral, testamentary and administration expenses and debts,
(ii) general legacies, demonstrative legacies, annuities and any sum payable out of the residue of the estate to which a person is entitled under the law of intestacy of any part of the United Kingdom or any other country, and
(iii) any other liabilities of the deceased person's personal representatives as such,
(d) “specific disposition” has the meaning given in section 947(6) of the Corporation Tax Act 2009, and
(e) the reference to the completion of the administration of the estate shall be construed as if it were in Chapter 3 of Part 10 of that Act.
(3) If, as between—
(a) persons interested under a specific disposition or in a general or demonstrative legacy or in an annuity, and
(b) persons interested in the residue of an estate,
any such liabilities as are mentioned in paragraph (c) of subsection (2) above fall exclusively or primarily on the property that is the subject of the specific disposition or on the legacy or annuity, only such part (if any) of those liabilities as falls ultimately on the residue shall be treated as charges on residue.
(4) In the application of this section to Scotland, “charges on residue” shall include, in addition to the liabilities specified in subsection (2)(c), any sums required to meet—
(a) claims in respect of prior rights or legal rights by a surviving spouse or civil partner, or
(b) claims in respect of legal rights by children.