Income Tax Act 2007 section 733A

Settlor liable for section 731 charge on closely-related beneficiary

Section 733A makes the settlor of a non-UK resident trust liable for tax on income that would otherwise be charged on a closely-related beneficiary, where the beneficiary is either non-UK resident or is taxed on the remittance basis and does not remit the income to the UK.

• Where a beneficiary who is a close family member of the settlor is charged to tax under section 732, and the trust has no UK-resident trustees but the settlor is UK resident (though not UK domiciled or deemed domiciled), the settlor becomes liable for the tax instead
• The settlor bears the tax charge if the beneficiary is non-UK resident or is on the remittance basis and has not remitted the income; if part of the income is remitted by the beneficiary, the settlor is liable only on the unremitted portion
• The settlor has a statutory right to recover any tax paid from the beneficiary and can request a certificate from HMRC confirming the amount of income and tax involved
• Close family members for this purpose are the settlor's spouse or civil partner (including unmarried partners who live together as spouses or civil partners) and any child of the settlor or their spouse or civil partner who is under 18