795 Income settled on children

Summary

This section provides that income settled on minors (that is, persons aged under 18 years who are not or have not been married) is to remain, for income tax purposes, the income of the settlor, if living.

Details

(1) Income which, during the life of the settlor, is paid under a settlement in a year of assessment to or for the benefit of a person is to be treated for income tax purposes as income of the settlor (and not of any other person) for that year if at the time of the payment the person to or for whom the income is paid is a minor.

(2) Except in the case of an irrevocable instrument (see section 796), income which is accumulated under a settlement so that it, or assets which it represents, will or may be paid to or for the benefit of a person in the future – whether on the fulfilment of a condition, the happening of a contingency, the exercise of a power or discretion or for any other reason – is deemed to be paid to or for the benefit of the person (at the time it is accumulated). If a settlement does not require income to be allocated to any particular person or persons at the time it is accumulated, the income is deemed to be paid in equal shares to each of the persons to or for the benefit of whom or any of whom it, or assets representing it, will or may become payable or applicable.

Relevant Date: Finance Act 2021