Settlor interested trust meaning

See Q&A: D died without a will, and his widow together with his two daughters executed a deed of variation establishing a discretionary trust. How should the trust be treated for both income tax and capital gains tax if, thereafter, the trustees later confer upon the widow a revocable life interest?...

The pre-owned asset tax (POAT) is an inheritance tax (IHT) counter-avoidance provision, brought in by Schedule 15 to the Finance Act 2004 (FA 2004), and was intended to penalise users of IHT avoidance arrangements, though its reach goes wider than such planning in practice. POAT operates as a standalone yearly income tax charge on particular individuals, termed ‘chargeable persons’, specifically in respect of advantages they obtain as a former owner of property, or of assets traced from that property. The advantage may, for example, consist of occupying land, using or holding chattels, or having the ability to draw income or capital from a settlor-interested trust that contains intangible property. The statutory wording can be somewhat unclear at points. Nonetheless, as FA 2004, Sch 15 is designed to defeat structures under which a taxpayer enjoys assets that no longer form part of their estate for IHT, any doubtful points ought to be interpreted with that objective in view and context. Background Before 17 March 1986, a...

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, legislates to end the remittance basis and introduce a residence-based regime from 6 April 2025. FA 2025 also makes residence, rather than domicile, the principal criterion for inheritance tax exposure. Other amendments include: Changes to the rules defining excluded property status Abolition of protected settlements status for offshore trusts Revisions to overseas workday relief For details on these measures, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. This Practice Note examines the effect of TCGA 1992, s 86 and Sch 5, which attribute the gains of a non-resident settlor-interested trust to the settlor. Before 1991, neither income nor gains of any settlement were attributed...