Income Tax (Trading and Other Income) Act 2005 section 626

Exception for outright gifts between spouses or civil partners

Section 626 provides an exception to the settlements anti-avoidance rules, so that income from an outright gift of property between spouses or civil partners is taxed on the recipient rather than being treated as the settlor's income.

• An outright gift of income-producing property between spouses or civil partners is exempt from the settlor-retains-interest rule in section 624, provided two conditions are met
• Condition A requires that the gift carries with it the right to the whole of the income from the property, and Condition B requires that the property itself is not wholly or substantially just a right to income
• A gift does not qualify as "outright" if it is subject to conditions, or if there is any possibility that the property or any related property could be returned to the giver or applied for the giver's benefit
• "Related property" has the same meaning as in section 625, which deals with the definition of a settlor's retained interest