Income Tax (Trading and Other Income) Act 2005 section 628

Exception for gifts to charities

Section 628 provides an exception to the settlor interest rules, so that qualifying trust income given to or earmarked for charities is not taxed on the settlor.

• Where qualifying income from a UK settlement is given to a charity in the tax year it arises, or a charity is entitled to it under the trust terms, the income is not treated as the settlor's under section 624
• Qualifying income means income that must be accumulated, income payable at the discretion of trustees or another person, or income belonging to someone other than the trustees before distribution
• Where qualifying income from different sources exceeds the total given to charity (or falling within the section 630 exception for relevant children of the settlor), the charitable portion is rateably apportioned across those sources
• For these purposes, "charity" also includes the Trustees of the National Heritage Memorial Fund and the Historic Buildings and Monuments Commission for England, and a "UK settlement" is one whose trustees are resident in the United Kingdom