Trusts (Capital and Income) Act 2013

3 Power to compensate income beneficiary

(1) This section applies in any case where—

(a) by virtue of section 2 a tax-exempt corporate distribution made by a body corporate is treated for the purposes of a trust to which that section applies as a receipt of capital, and

(b) the trustees are satisfied that it is likely that, but for the distribution, there would have been a receipt from the body corporate that would have been a receipt of income for the purposes of the trust.

(2) The trustees may make a payment out of the capital funds of the trust, or transfer any property of the trust, to an income beneficiary for the purpose set out in subsection (3) (and any such payment or transfer is to be treated as a payment or transfer of capital).

(3) The purpose is placing the income beneficiary (so far as practicable) in the position in which the trustees consider that the beneficiary would have been had there been the receipt of income mentioned in subsection (1)(b).

(4) In this section “income beneficiary”, in relation to a trust, means a person entitled to income arising under the trust, or for whose benefit such income may be applied.