40Individual investment plans for childrenE+W+S+N.I.
(1)Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) is amended in accordance with subsections (2) to (5).
(2)In section 694 (income from individual investment plans), after subsection (1) insert—
“(1A)In subsection (1) “income of an individual from investments under a plan” includes income from investments which is treated as the individual's income by virtue of section 629 (income paid to relevant children of settlor).”
(3)After section 695 insert—
“695AInvestment plans for children
(1)This section applies where investment plan regulations provide that income of a child from investments under a plan (a “child plan”) is exempt from income tax (either wholly or to such extent as is specified in the regulations).
(2)In addition to any provision which may be made by virtue of any other provision of this Chapter, investment plan regulations may—
(a)specify descriptions of persons by whom investments may be made for a child,
(b)provide that withdrawals may be made only in the circumstances specified in the regulations, and
(c)provide that, in the case of a child who is under 16, the plan managers may act only on the direction of a person of a description specified in the regulations.
(3)They may also provide—
(a)that any assignment of, or agreement to assign, investments under a child plan, and any charge on or agreement to charge any such investments, is void,
(b)that, on the bankruptcy of a child with investments under a child plan, the entitlement to those investments does not pass to any trustee or other person acting on behalf of the child's creditors, and
(c)that, where a contract is entered into by or on behalf of a child who is 16 or over in connection with a child plan under which investments are held—
(i)by the child, or
(ii)by another child in relation to whom the child has parental responsibility,
the contract has effect as if the child had been 18 or over when it was entered into.
(4)Where, by virtue of provision made in investment plan regulations under subsection (2)(a), investments are made for a child under a child plan, for the purposes of this Chapter the child is treated as having made those investments.
(5)In this section—
“assignment” includes assignation, and “assign” is to be construed accordingly;
“bankruptcy”, in relation to a child, includes the sequestration of the child's estate;
“charge on or agreement to charge” includes a right in security over or an agreement to create a right in security over;
“child” means an individual under 18;
“parental responsibility” means—(a)
parental responsibility within the meaning of the Children Act 1989 or the Children (Northern Ireland) Order 1995, or(b)
parental responsibilities within the meaning of the Children (Scotland) Act 1995;
and any reference to investments being held by a child includes a reference to investments being held by plan managers on behalf of the child by virtue of section 696(1).”
(4)In section 699 (non-entitlement to exemption), at the end insert—
“(9)In this section references to an investor include an individual entitled to an exemption given by investment plan regulations by virtue of section 694(1A).”
(5)In section 701 (general and supplementary powers), at the end insert—
“(6)In this section references to an investor include an individual entitled to an exemption given by investment plan regulations by virtue of section 694(1A).”
(6)In section 151 of TCGA 1992 (personal equity plans), in subsection (2)—
(a)for “section 694(1) and (2)” substitute “ section 694(1) to (2) ”, and
(b)for the words from “but with” to the end substitute “but with the following modifications—
(a)any reference to income tax is to be read as a reference to capital gains tax,
(b)the reference in section 695A(1) to the case where regulations provide that income of a child from investments under a plan is exempt from income tax is to be read as a reference to the case where regulations provide that a child who invests under a plan is entitled to relief from capital gains tax in respect of the investments,
(c)the reference in section 695A(4) to that Chapter is to be read as a reference to this section, and
(d)that Chapter has effect as if sections 699(9) and 701(6) were omitted.”