Income Tax (Trading and Other Income) Act 2005 section 625

Settlor's retained interest

Section 625 defines when a settlor is treated as retaining an interest in settled property for the purposes of section 624, and sets out the exceptions where a retained interest will not apply.

• A settlor has a retained interest if the settled property (or related property) is or could become payable to, or applicable for the benefit of, the settlor or their spouse or civil partner.
• Exceptions apply where the only route back to the settlor arises from events largely outside the settlor's control, such as a beneficiary's bankruptcy, assignment, or charging of the property, or the death of both parties and children under a marriage or civil partnership settlement.
• No retained interest arises where a person under 25 is alive during whose lifetime the property cannot revert to the settlor except through that person's bankruptcy or assignment or charging of their interest.
• A separated, deceased, or future spouse or civil partner of the settlor is excluded from the definition, so their potential entitlement does not create a retained interest.