Income Tax Act 2007 section 735AE

Settlor liable in place of close family member

Section 735AE redirects the tax charge on benefits received by certain close family members of a settlor back to the settlor, where the family member is non-UK resident or a qualifying new resident and the settlor is UK resident.

• Where a benefit from a transfer of assets abroad is provided to a close family member who is non-UK resident (or a qualifying new resident), and the settlor is UK resident, the benefit is treated as having been provided to the settlor instead.
• Close family members are defined as the settlor's spouse or civil partner, or any child of the settlor (or of their spouse or civil partner) who is under 18, including cohabiting partners treated as spouses.
• Where the settlor pays tax as a result of this redirection, they have a legal right to recover the amount of that tax from the family member who actually received the benefit.
• To support recovery, the settlor can require HMRC to issue a certificate confirming the tax year, the amount of income treated as arising, and the tax paid — and this certificate serves as conclusive evidence.