Taxation of Chargeable Gains Act 1992 Schedule 1C paragraphs 2–4

Settlements for the benefit of disabled persons

Schedule 1C paragraphs 2–4 set out when a settlement qualifies as one for the benefit of a disabled person, thereby entitling its trustees to claim the full individual CGT annual exempt amount rather than the reduced trust rate.

• Trustees of a qualifying disabled person's settlement receive the same CGT annual exempt amount as an individual, rather than the lower trust allowance.
• To qualify, the trust must meet both a property test and an income test throughout all or part of the tax year during the disabled person's lifetime.
• The settlement does not lose its qualifying status merely because the trustees have power to apply small amounts below a de minimis threshold (the lower of £3,000 or 3% of the peak value of the settled property in the year) or hold standard powers of advancement.
• The Treasury has the power to amend the de minimis threshold and to specify when the small payments exception does or does not apply, subject to House of Commons approval where any change would reduce the annual exempt amount.