Modernisation of Trusts

Modernisation of Trusts

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Following the amendments to Schedule 12 and 13 of the Finance Bill 2006 a common definition of "Settlor" applies to both CGT and Income Tax.

My understanding is that it is clear this means that parental settlements with minor, unmarried children (generally an A&M trust/settlement), the Settlor (parent) is assessable on any/all capital disposals of the trust, which is in line with normal Settlor-interested trusts/settlements. This was confirmed when Standing Committee A met on Tuesday 6th June, earlier this month.

What was not discussed at length in the Standing Committee was that this will also mean the all of the income will now also be assessable on the Settlor (parent) whereas before, income was only assessed on the parent to the extent that it was distributed e.g. for school fees.

Is this correct?

(It will affect quite a number of the A&M trusts I deal with.)
HG

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