Income Tax (Trading and Other Income) Act 2005 section 457

Trustees

Section 457 sets out how profits from the disposal of deeply discounted securities by trustees are treated for income tax purposes, particularly in relation to settlements and unauthorised unit trusts.

• The section applies whenever trustees dispose of a deeply discounted security at a profit
• Such profits are treated as income arising under the settlement, which means they may be taxable on the settlor under the settlements legislation
• The person liable for any tax on the disposal is the person making the disposal (i.e. the trustees)
• An exception applies for unauthorised unit trusts: profits shown in the scheme's accounts as income available for payment to unit holders or for investment are not treated as settlement income