Taxation of Chargeable Gains Act 1992 Schedule 1C paragraphs 6–7

Special rules for qualifying UK settlements comprised in groups

Section 6–7 of Schedule 1C sets out how the annual exempt amount for trustees is reduced when a settlement belongs to a group of qualifying UK settlements created by the same settlor, and defines what constitutes a qualifying UK settlement.

• Where the same person has created two or more qualifying UK settlements, those settlements form a group and each settlement's annual exempt amount is reduced by dividing the relevant amount by the number of settlements in the group, subject to a floor of one-tenth of an individual's annual exempt amount.
• Disabled person settlements receive a more generous allowance: the individual's full annual exempt amount is divided by the number of settlements in the group, whereas other settlements divide only half the individual's amount by the group size.
• A qualifying UK settlement is one whose trustees are UK-resident during any part of the tax year and whose property is not held exclusively for charitable or pensions purposes — but settlements made before 10 March 1981 (disabled person settlements) or before 6 June 1978 (all others) are generally excluded from this definition.
• Where a settlement has two or more settlors and consequently falls into more than one group of different sizes, the reduction is calculated by reference to the largest group, producing the smallest per-settlement allowance.