Income Tax (Trading and Other Income) Act 2005 section 135

Amounts treated as income of settlor: capital sums paid to settlor by body connected with settlement

Section 135 modifies the rules in section 641 for capital sums paid to a settlor before the 1995-96 tax year by a body corporate connected with the settlement, by introducing a presumption about associated payments from the trustees.

• Applies only to capital sums paid to the settlor before the 1995-96 tax year
• Where a connected body corporate pays a capital sum to the settlor, it is presumed that the settlement trustees made an associated payment to that body of at least the same amount
• This presumption is rebuttable — it applies unless the contrary is shown
• The body corporate must be connected with the settlement in the same tax year in which the capital sum is paid