Who qualifies as an associate under section 381 of the Income Tax Act 2007?

Under section 381, an associate includes any relative (spouse, civil partner, ancestor or lineal descendant) or business partner of the person. Trustees of settlements where the person or their relatives are settlors also qualify, as do trustees or personal representatives holding company shares or obligations in which the person has an interest.

Does the definition of 'relative' in section 381 include siblings, uncles or cousins?

No. The definition of 'relative' in section 381 is narrowly drawn and includes only a spouse or civil partner, an ancestor such as a parent or grandparent, and a lineal descendant such as a child or grandchild. It does not extend to siblings, uncles, aunts or cousins under United Kingdom law.

Why does the associate definition matter for community investment tax relief?

The definition matters because the community investment tax relief provisions in sections 366 and 367 need to identify connected parties when determining eligibility. Knowing who qualifies as an associate helps establish whether certain relationships exist that could affect a person's entitlement to the relief under United Kingdom tax law.

How are trustees treated as associates when company shares are held in a trust or estate?

Where a person holds an interest in shares or obligations of a company held within a trust or forming part of a deceased person's estate, the trustees or personal representatives are treated as associates. If the person holding the interest is a company, any other company sharing an interest in those same shares or obligations is also an associate.

Income Tax Act 2007 section 381

Meaning of "associate"

Section 381 defines who counts as an "associate" of a person for the purposes of the community investment tax relief rules in sections 366 and 367.

An associate includes any relative (spouse, civil partner, ancestor or lineal descendant) or business partner of the person.
Trustees of any settlement where the person, or any of their relatives (living or dead), is or was the settlor are also associates.
Where the person has an interest in company shares or obligations held in a trust or deceased's estate, the trustees or personal representatives are associates.
Where the person is a company with such an interest, any other company sharing an interest in those same shares or obligations is also an associate.

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member