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Taxation of Chargeable Gains Act 1992

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Test whether settlor has interest

2(1)For the purposes of section 86(1)(d) a settlor has an interest in a settlement if—

(a)any relevant property which is or may at any time be comprised in the settlement is, or will or may become, applicable for the benefit of or payable to a defined person in any circumstances whatever,

(b)any relevant income which arises or may arise under the settlement is, or will or may become, applicable for the benefit of or payable to a defined person in any circumstances whatever, or

(c)any defined person enjoys a benefit directly or indirectly from any relevant property which is comprised in the settlement or any relevant income arising under the settlement;

but this sub-paragraph is subject to sub-paragraphs (4) to (6) below.

(2)For the purposes of sub-paragraph (1) above—

(a)relevant property is property originating from the settlor,

(b)relevant income is income originating from the settlor.

(3)For the purposes of sub-paragraph (1) above each of the following is a defined person—

(a)the settlor,

(b)the settlor’s spouse;

(c)any child of the settlor or of the settlor’s spouse;

(d)the spouse of any such child;

(e)a company controlled by a person or persons falling within paragraphs (a) to (d) above;

(f)a company associated with a company falling within paragraph (e) above.

(4)A settlor does not have an interest in a settlement by virtue of paragraph (a) of sub-paragraph (1) above at any time when none of the property concerned can become applicable or payable as mentioned in that paragraph except in the event of—

(a)the bankruptcy of some person who is or may become beneficially entitled to the property,

(b)any assignment of or charge on the property being made or given by some such person,

(c)in the case of a marriage settlement, the death of both parties to the marriage and of all or any of the children of the marriage, or

(d)the death under the age of 25 or some lower age of some person who would be beneficially entitled to the property on attaining that age.

(5)A settlor does not have an interest in a settlement by virtue of paragraph (a) of sub-paragraph (1) above at any time when some person is alive and under the age of 25 if during that person’s life none of the property concerned can become applicable or payable as mentioned in that paragraph except in the event of that person becoming bankrupt or assigning or charging his interest in the property concerned.

(6)Sub-paragraphs (4) and (5) above apply for the purposes of paragraph (b) of sub-paragraph (1) above as they apply for the purposes of paragraph (a), reading “income” for “property”.

(7)In sub-paragraph (3) above “child” includes a step-child.

(8)For the purposes of sub-paragraph (3) above the question whether a company is controlled by a person or persons shall be construed in accordance with section 416 of the Taxes Act; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company.

(9)For the purposes of sub-paragraph (3) above the question whether a company is associated with another shall be construed in accordance with section 416 of the Taxes Act; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company.

(10)In sub-paragraphs (8) and (9) “participator” has the meaning given by section 417(1) of the Taxes Act.

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