Income Tax Act 2007 section 512

Charge to tax on some settlements

Section 512 sets out the circumstances (cases A to D) in which income tax is charged on income arising to the trustees of a heritage maintenance settlement.

• Income tax is charged when settlement property is used other than for property maintenance purposes or for the benefit of a heritage body (Case A), or when property leaving the settlement passes to a non-heritage body (Case B)
• A charge also arises if the heritage direction ceases to have effect for the settlement (Case C)
• An anti-avoidance charge applies where property leaves the settlement to a heritage body, but a heritage body has paid monetary consideration for an interest under the settlement (Case D)
• No charge arises under this section if the settlor has already been taxed on the income as trust income under section 517, meaning this charge can only apply where an election under section 508 has been made