Taxes Consolidation Act 1997 section 795

Income settled on children

Section 795 provides that income arising from a settlement and paid to or for the benefit of a minor during the settlor's lifetime is treated for income tax purposes as the settlor's income rather than the child's.

• Income paid under a settlement to or for the benefit of a person who is a minor at the time of payment is taxed as the settlor's income, provided the settlor is still alive
• Income accumulated under a settlement that will or may become payable to a person in the future (whether on a condition, contingency, exercise of a discretion, or otherwise) is deemed to have been paid to that person at the time it is accumulated
• Where accumulated income is not required to be allocated to any particular person at the time it is dealt with, it is deemed to be paid in equal shares to all persons who may potentially benefit
• These deemed payment rules are subject to section 796, which provides an exception for irrevocable settlements