Trusts (Capital and Income) Act 2013
| Year | 2013 |
Trusts (Capital and Income) Act 2013
2013 CHAPTER 1
An Act to amend the law relating to capital and income in trusts.
[31st January 2013]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-
1 Disapplication of apportionment etc. rules
(1) Any entitlement to income under a new trust is to income as it arises (and accordingly section 2 of the Apportionment Act 1870, which provides for income to accrue from day to day, does not apply in relation to the trust).
(2) The following do not apply in relation to a new trust-
(a) the first part of the rule known as the rule in Howe v. Earl of Dartmouth (which requires certain residuary personal estate to be sold);
(b) the second part of that rule (which withholds from a life tenant income arising from certain investments and compensates the life tenant with payments of interest);
(c) the rule known as the rule in Re Earl of Chesterfield's Trusts (which requires the proceeds of the conversion of certain investments to be apportioned between capital and income);
(d) the rule known as the rule in Allhusen v. Whittell (which requires a contribution to be made from income for the purpose of paying a deceased person's debts, legacies and annuities).
(3) Trustees have power to sell any property which (but for subsection (2)(a)) they would have been under a duty to sell.
(4) Subsections (1) to (3) have effect subject to any contrary intention that appears-
(a) in any trust instrument of the trust, and
(b) in any power under which the trust is created or arises.
(5) In this section "new trust" means a trust created or arising on or after the day on which this section comes into force (and includes a trust created or arising on or after that day under a power conferred before that day).
2 Classification of certain corporate distributions as capital
(1) A receipt consisting of a tax-exempt corporate distribution is to be treated for the purposes of any trust to which this section applies as a receipt of capital (even if it would otherwise be treated for those purposes as a receipt of income).
(2) Subsection (1) has effect subject to any contrary intention that appears-
(a) in any trust instrument of the trust, and
(b) in any power under which the trust is created or arises.
(3) The following are tax-exempt corporate distributions for the purposes of this section and section 3-
(a) a distribution that is an exempt distribution by virtue of section 1076, 1077 or 1078 of the Corporation Tax Act 2010, and
(b) any other distribution of assets (in any form) by a body corporate, where the distribution is of a description specified by an order made by the Secretary of State by statutory instrument.
(4) An order under subsection (3)(b) may specify a description of distribution only if neither income tax nor capital gains tax is chargeable in respect of a distribution of that description.
(5) A statutory instrument containing an order under subsection (3)(b) is subject to annulment in pursuance of a resolution of either House of Parliament.
(6) This section applies to any trust, whether created or arising before or after this section comes into force.
3 Power to compensate income beneficiary
(1) This section applies in any case where-
(a) by virtue of section 2 a tax-exempt corporate distribution made by a body corporate is treated for the purposes of a trust to which that...
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