Income Tax Act 2007 section 517

Exemption for income treated as income of settlor

Section 517 provides that where trust income from a heritage maintenance settlement is already taxed as the settlor's own income, it is exempt from the separate charge that would otherwise apply under section 512.

• Income already treated as the settlor's income under the settlements legislation (ITTOIA 2005 sections 624 or 629) is not subject to the heritage maintenance settlement charge under section 512.
• This prevents the same income from being taxed twice — once as the settlor's and again under the heritage maintenance rules.
• Where such exempt income arises in a tax year, any sums applied for property maintenance purposes or for the benefit of a heritage body are treated as paid first out of the settlor-taxed income.
• Only where the amounts applied for those purposes exceed the settlor-taxed income are they treated as coming from other trust income that would be subject to the section 512 charge.