Budget 2010 – Settlors and trustees
New rules are to be introduced for individuals who are taxed on the income of a trust they have set up (a settlor-interested trust). In certain circumstances settlers may receive repayments of tax on trust income if they are liable to income tax at a lower rate than the trustees.
The new rules will require settlors to pay any such repayments of tax they receive to the trustees. The repayment will not constitute a chargeable transfer for inheritance tax purposes.
The new rules will take effect from 6 April 2010.