Section 63: Heritage Maintenance Settlements
Summary
1.Section 63 amends existing anti-avoidance provisions to remove an anomaly. Settlors of certain types of heritage maintenance funds (HMFs) (also known as heritage maintenance settlements) are currently only eligible for a targeted relief from capital gains tax in respect of transfers of property into the trust if the trustees make an election under a statutory procedure. This can result in payments by the trust effectively being charged to income tax twice. The amendment made by the section prevents this happening.
Details of the Section
2.Subsection (1) amends section 169D(1) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992). Section 169D(1) TCGA 1992specifies the circumstances where anti-avoidance provisions at sections 169B and 169C do not apply. The effect of the amendment is to extend the circumstances specified by section 169D(1) TCGA 1992, to include not only those cases where trustees have made an election under section 508 of the Income Tax Act 2007, for that year, but also any case where the trustees could have made such an election, irrespective of whether they in fact did so.
Background
3.HMFs are a statutory device enabling property to be held in trust so that the income from that property can be used for the repair and maintenance of historic buildings which are open to the public. Subject to a number of prescribed conditions being met, there is relief from capital gains tax on transfers of such property into an HMF.
4.The relief is subject to a number of anti-avoidance provisions. One of these limits eligibility to those trusts that have elected that income from trust property is to be treated as accruing to the trust rather than the settler (“the election”); however the effect of the election is that payments to a settlor for use on the upkeep of the historic property triggers a further charge to tax upon the settlor.
5.The amendment made by this section retains a restriction upon eligibility for the relief; however, so long as the trust satisfies the conditions for making the election, the requirement that it actually have done so is removed.
