Part 5Miscellaneous income

Chapter 5Settlements: amounts treated as income of settlor

Capital sums treated as income of settlor: trustees' payments

634Meaning of “capital sum” and “sums paid to settlor”

1

In this Chapter “capital sum” means—

a

any sum paid by way of loan or repayment of a loan, and

b

any other sum which—

i

is paid otherwise than as income, and

ii

is not paid for full consideration in money or money’s worth.

2

But this is subject to subsections (3) to (6).

3

It does not include any sum which could not have become payable to the settlor except—

a

in one of the circumstances mentioned in subsection (2) of section 625, or

b

on the death under the age of 25 of any person of the kind mentioned in subsection (3) of that section.

4

It does include a sum treated as a capital sum by subsection (5) below.

5

Any sum which—

a

is paid by the trustees of a settlement to a third party—

i

at the settlor’s direction, or

ii

as a result of the assignment by the settlor of the settlor’s right to receive the sum, or

b

is otherwise paid, or applied by, the trustees for the benefit of the settlor,

is treated as a capital sum paid to the settlor by the trustees.

6

Subsection (5) does not apply to any sum which would, apart from that subsection, be treated as a capital sum paid to the settlor.

7

References in sections 633 to 638 to sums paid to the settlor include references to sums paid to—

a

the spouse of the settlor, or

b

the settlor (or the spouse of the settlor) jointly with another person.