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Finance (No. 2) BillPage 480

(3B) For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.

(3C) The Treasury may by order made by statutory instrument—

(a) specify circumstances in which subsection (3)(a) is, or is not,
5to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in subsection (3A).

(3D) An order under subsection (3C) may—

(a) make different provision for different cases, and

(b) contain transitional and saving provision.

(3E) 10A statutory instrument containing an order under subsection (3C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.

(4) In subsection (4), for the words following “into settlement,” substitute “was
a disabled person”.

(5) 15For subsections (5) and (6) substitute—

(4A) In this section “disabled person” has the meaning given by Schedule
1A to the Finance Act 2005.

7 (1) Section 89A (self-settlement by person with condition expected to lead to
disability) is amended as follows.

(2) 20In subsection (1)(b), for the words following “A becoming” substitute “a
person falling within any paragraph of the definition of “disabled person” in
paragraph 1 of Schedule 1A to the Finance Act 2005”.

(3) In subsection (2), after “settled property” insert “or income arising from it”.

(4) For subsections (5) and (6) substitute—

(5) 25For the purposes of subsection (1)(b), assume—

(a) that A will meet any conditions as to residence or presence
that are required to establish entitlement to the allowance or
payment in question,

(b) that there will be no provision made by regulations under
30any of the following—

(i) sections 67(1) and (2), 72(8) and 113(2) of SSCBA 1992,

(ii) sections 67(1) and (2), 72(8) and 113(2) of SSCB(NI)A
1992, and

(iii) sections 85 and 86 of WRA 2012 and the
35corresponding provision having effect in Northern
Ireland, and

(c) that A will not be prevented from receiving the allowance or
payment in question by any of the following—

(i) section 113(1) of SSCBA 1992,

(ii) 40section 113(1) of SSCB(NI)A 1992, and

(iii) section 87 of WRA 2012 and the corresponding
provision having effect in Northern Ireland.

Finance (No. 2) BillPage 481

(5) Before subsection (7) insert—

(6A) The trusts on which the settled property is held are not to be treated
as falling outside subsection (2) by reason only of—

(a) the trustees’ having powers that enable them to apply
5otherwise than for the benefit of the disabled person amounts
(whether consisting of income or capital, or both) not
exceeding the annual limit,

(b) the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),

(c) 10the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,

(d) the trustees’ having the powers conferred by section 33 of the
Trustee Act (Northern Ireland) 1958 (corresponding
15provision for Northern Ireland),

(e) the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or

(f) the trustees’ having powers to the like effect as the powers
20mentioned in any of paragraphs (b) to (e).

(6B) For the purposes of this section, the “annual limit” is whichever is the
lower of the following amounts—

(a) £3,000, and

(b) 3% of the amount that is the maximum value of the settled
25property during the period in question.

(6C) For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.

(6D) The Treasury may by order made by statutory instrument—

(a) specify circumstances in which subsection (6A)(a) is, or is
30not, to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in subsection (6B).

(6E) An order under subsection (6D) may—

(a) make different provision for different cases, and

(b) contain transitional and saving provision.

(6F) 35A statutory instrument containing an order under subsection (6D)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.

(6) For subsection (8) substitute—

(8) In this section—

8 (1) 45Section 89B (meaning of “disabled person’s interest”) is amended as follows.

Finance (No. 2) BillPage 482

(2) For subsection (2) substitute—

(2) In subsection (1)(c) “disabled person” has the meaning given by
Schedule 1A to the Finance Act 2005.

(3) After that subsection insert—

(2A) 5Where the income arising from the settled property is held on trusts
of the kind described in section 33 of the Trustee Act 1925 (protective
trusts), subsection (1)(d)(v) has effect as if for “A’s life” there were
substituted “the period during which the income from the property
is held on trust for A”.

9 (1) 10The amendments made by paragraphs 2 to 8 have effect in relation to
property transferred into settlement on or after 8 April 2013.

(2) Nothing in paragraphs 6 to 8 is to be read as preventing property transferred
into a relevant settlement on or after 8 April 2013 from being property to
which section 89 or 89A of IHTA 1984 applies.

15Taxation of Chargeable Gains Act 1992

10 TCGA 1992 is amended as follows.

11 (1) Section 169D (exceptions to rules on gifts to settlor-interested settlements
etc) is amended as follows.

(2) For subsection (3) substitute—

(3) 20The first condition is that, immediately after the making of the
disposal, the settled property is held on trusts which secure that,
during the lifetime of a disabled person—

(a) if any of the property is applied for the benefit of a
beneficiary, it is applied for the disabled person’s benefit, and

(b) 25either—

(i) the disabled person is entitled to all of the income (if
there is any) arising from any of the property, or

(ii) if any such income is applied for the benefit of a
beneficiary, it is applied for the disabled person’s
30benefit.

(3) After subsection (4) insert—

(4A) Where the income arising from the settled property is held on trusts
of the kind described in section 33 of the Trustee Act 1925 (protective
trusts), subsection (3) has effect as if the reference to the lifetime of a
35disabled person were a reference to the period during which the
income is held on trust for the disabled person.

(4B) The trusts on which the settled property is held are not to be treated
as falling outside subsection (3) by reason only of—

(a) the trustees’ having powers that enable them to apply in any
40tax year otherwise than for the benefit of the disabled person
amounts (whether consisting of income or capital, or both)
not exceeding the annual limit,

(b) the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),

Finance (No. 2) BillPage 483

(c) the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,

(d) the trustees’ having the powers conferred by section 33 of the
5Trustee Act (Northern Ireland) 1958 (corresponding
provision for Northern Ireland),

(e) the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or

(f) 10the trustees’ having powers to the like effect as the powers
mentioned in any of paragraphs (b) to (e).

(4C) For the purposes of this section, the “annual limit” for a tax year is
whichever is the lower of the following amounts—

(a) £3,000, and

(b) 153% of the amount that is the maximum value of the settled
property during the tax year in question.

(4D) The Treasury may by order—

(a) specify circumstances in which subsection (4B)(a) is, or is not,
to apply in relation to a trust, and

(b) 20amend the definition of “the annual limit” in subsection (4C).

(4E) An order under subsection (4D) may—

(a) make different provision for different cases, and

(b) contain transitional and saving provision.

(4F) A statutory instrument containing an order under subsection (4D)
25may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.

(4) For subsections (7) to (9) substitute—

(7) In this section “disabled person” has the meaning given by Schedule
1A to the Finance Act 2005.

(5) 30Omit subsection (10).

(6) The amendments made by this paragraph have effect in relation to disposals
to the trustees of a settlement on or after 8 April 2013.

(7) But if the settlement is a relevant settlement, nothing in this paragraph is to
be read as preventing section 169D(2) of TCGA 1992 from applying in
35relation to the disposal.

12 (1) Paragraph 1 of Schedule 1 (application of exempt amount and reporting
limits in cases involving settled property) is amended as follows.

(2) In sub-paragraph (1)—

(a) for “mentally disabled person or a person in receipt of attendance
40allowance or of a disability living allowance by virtue of entitlement
to the care component at the highest or middle rate” substitute
“disabled person”, and

(b) for paragraphs (a) and (b) substitute—

(a) if any of the property is applied for the benefit of a
45beneficiary, it is applied for the disabled person’s
benefit, and

Finance (No. 2) BillPage 484

(b) either—

(i) the disabled person is entitled to all of the
income (if there is any) arising from any of
the property, or

(ii) 5if any such income is applied for the benefit
of a beneficiary, it is applied for the
disabled person’s benefit,.

(3) After that sub-paragraph insert—

(1A) The trusts on which settled property is held are not to be treated
10as falling outside sub-paragraph (1) by reason only of—

(a) the trustees’ having powers that enable them to apply in
any tax year otherwise than for the benefit of the disabled
person amounts (whether consisting of income or capital,
or both) not exceeding the annual limit,

(b) 15the trustees’ having the powers conferred by section 32 of
the Trustee Act 1925 (powers of advancement),

(c) the trustees’ having those powers but free from, or subject
to a less restrictive limitation than, the limitation imposed
by proviso (a) of subsection (1) of that section,

(d) 20the trustees’ having the powers conferred by section 33 of
the Trustee Act (Northern Ireland) 1958 (corresponding
provision for Northern Ireland),

(e) the trustees’ having those powers but free from, or subject
to a less restrictive limitation than, the limitation imposed
25by subsection (1)(a) of that section, or

(f) the trustees’ having powers to the like effect as the powers
mentioned in any of paragraphs (b) to (e).

(1B) For the purposes of this paragraph, the “annual limit” for a tax
year is whichever is the lower of the following amounts—

(a) 30£3,000, and

(b) 3% of the amount that is the maximum value of the settled
property during the tax year in question.

(1C) The Treasury may by order—

(a) specify circumstances in which sub-paragraph (1A)(a) is,
35or is not, to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in sub-
paragraph (1B).

(1D) An order under sub-paragraph (1C) may—

(a) make different provision for different cases, and

(b) 40contain transitional and saving provision.

(1E) A statutory instrument containing an order under sub-paragraph
(1C) may not be made unless a draft of the instrument has been
laid before, and approved by a resolution of, the House of
Commons.

(4) 45In sub-paragraph (2), for the words from the beginning to “that sub-
paragraph” substitute “The reference in sub-paragraph (1)”.

(5) In sub-paragraph (6), for the definitions of “mentally disabled person”,

Finance (No. 2) BillPage 485

“attendance allowance” and “disability living allowance” substitute—

(6) The amendments made by this paragraph have effect in relation to the tax
5year 2013-14 and subsequent tax years.

(7) But if the settlement is a relevant settlement, nothing in this paragraph is to
be read as preventing sections 3(1) to (5C) and 3A of TCGA 1992 from
applying in relation to the settlement as provided by paragraph 1(1) of
Schedule 1 to that Act.

10Finance Act 2005

13 FA 2005 is amended as follows.

14 (1) Section 34 (disabled persons) is amended as follows.

(2) In subsection (2), for paragraph (b) substitute—

(b) either—

(i) 15that the disabled person is entitled to all the income (if
there is any) arising from any of the property, or

(ii) if any such income is applied for the benefit of a
beneficiary, it is applied for the benefit of the disabled
person.

(3) 20For subsection (3) substitute—

(3) The trusts on which property is held are not to be treated as failing to
secure that the conditions in subsection (2) are met by reason only
of—

(a) the trustees’ having powers that enable them to apply in any
25tax year otherwise than for the benefit of the disabled person
amounts (whether consisting of income or capital, or both)
not exceeding the annual limit,

(b) the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),

(c) 30the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,

(d) the trustees’ having the powers conferred by section 33 of the
Trustee Act (Northern Ireland) 1958 (corresponding
35provision for Northern Ireland),

(e) the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or

(f) the trustees’ having powers to the like effect as the powers
40mentioned in any of paragraphs (b) to (e).

(3B) For the purposes of this section, the “annual limit” for a tax year is
whichever is the lower of the following amounts—

(a) £3,000, and

(b) 3% of the amount that is the maximum value of the settled
45property during the tax year in question.

(3C) The Treasury may by order made by statutory instrument—

Finance (No. 2) BillPage 486

(a) specify circumstances in which subsection (3)(a) is, or is not,
to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in subsection (3B).

(3D) An order under subsection (3C) may—

(a) 5make different provision for different cases, and

(b) contain transitional and saving provision.

(3E) A statutory instrument containing an order under subsection (3C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.

15 (1) 10Section 35 (relevant minors) is amended as follows.

(2) For subsection (3)(c)(ii) substitute—

(ii) if any such income is applied for the benefit of a beneficiary,
it is applied for the benefit of the relevant minor.

(3) For subsection (4) substitute—

(4) 15Trusts to which subsection (2) applies are not to be treated as failing
to secure that the conditions in subsection (3) are met by reason only
of—

(a) the trustees’ having powers that enable them to apply in any
tax year otherwise than for the benefit of the relevant minor
20amounts (whether consisting of income or capital, or both)
not exceeding the annual limit,

(b) the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),

(c) the trustees’ having those powers but free from, or subject to
25a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,

(d) the trustees’ having the powers conferred by section 33 of the
Trustee Act (Northern Ireland) 1958 (corresponding
provision for Northern Ireland),

(e) 30the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or

(f) the trustees’ having powers to the like effect as the powers
mentioned in any of paragraphs (b) to (e).

(4B) 35For the purposes of this section, the “annual limit” for a tax year is
whichever is the lower of the following amounts—

(a) £3,000, and

(b) 3% of the amount that is the maximum value of the settled
property during the tax year in question.

(4C) 40The Treasury may by order made by statutory instrument—

(a) specify circumstances in which subsection (4)(a) is, or is not,
to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in subsection (4B).

(4D) An order under subsection (4C) may—

(a) 45make different provision for different cases, and

(b) contain transitional and saving provision.

Finance (No. 2) BillPage 487

(4E) A statutory instrument containing an order under subsection (4C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.

16 For section 38 substitute—

38 5Meaning of “disabled person”

In this Chapter “disabled person” has the meaning given by
Schedule 1A.

17 The amendments made by paragraphs 14 to 16 have effect for the tax year
2013-14 and subsequent tax years.

18 10After Schedule 1 insert—

Section 38

Schedule 1A Meaning of “disabled person”

“Disabled person”

1 “Disabled person” means—

(a) a person who by reason of mental disorder within the
15meaning of the Mental Health Act 1983 is incapable of
administering his or her property or managing his or her
affairs,

(b) a person in receipt of attendance allowance,

(c) a person in receipt of a disability living allowance by virtue
20of entitlement to the care component at the highest or
middle rate,

(d) a person in receipt of personal independence payment by
virtue of entitlement to the daily living component,

(e) a person in receipt of constant attendance allowance, or

(f) 25a person in receipt of armed forces independence
payment.

Attendance allowance

2 A person is to be treated as a disabled person under paragraph
1(b) if he or she satisfies HMRC that if he or she were to meet the
30prescribed conditions as to residence and presence under section
64(1) of SSCBA 1992 or section 64(1) of SSCB(NI)A 1992 he or she
would be entitled to receive attendance allowance.

3 A person who is (or is treated as) a disabled person under
paragraph 1(b) is not to cease to be (or to be treated as) such a
35disabled person by reason only of—

(a) provision made by regulations under section 67(1) or (2) of
SSCBA 1992 or section 67(1) or (2) of SSCB(NI)A 1992 (non-
satisfaction of conditions for attendance allowance where
person is undergoing treatment for renal failure in hospital
40or is provided with certain accommodation), or

(b) section 113(1) of SSCBA 1992 or section 113(1) of
SSCB(NI)A 1992 or provision made by regulations under
section 113(2) of SSCBA 1992 or section 113(2) of

Finance (No. 2) BillPage 488

SSCB(NI)A 1992 (general provisions as to disqualification
and suspension).

Disability living allowance

4 A person is to be treated as a disabled person under paragraph 1(c)
5if he or she satisfies HMRC that if he or she were to meet the
prescribed conditions as to residence and presence under section
71(6) of SSCBA 1992 or section 71(6) of SSCB(NI)A 1992 he or she
would be entitled to receive a disability living allowance by virtue
of entitlement to the care component at the highest or middle rate.

5 10A person who is (or is treated as) a disabled person under
paragraph 1(c) is not to cease to be (or to be treated as) such a
disabled person by reason only of—

(a) provision made by regulations under section 72(8) of
SSCBA 1992 or section 72(8) of SSCB(NI)A 1992 (no
15payment of disability allowance for persons for whom
certain accommodation is provided), or

(b) section 113(1) of SSCBA 1992 or section 113(1) of
SSCB(NI)A 1992 or provision made by regulations under
section 113(2) of SSCBA 1992 or section 113(2) of
20SSCB(NI)A 1992 (general provisions as to disqualification
and suspension).

Personal independence payment

6 A person is to be treated as a disabled person under paragraph
1(d) if he or she satisfies HMRC that if he or she were to meet the
25prescribed conditions as to residence and presence under section
77(3) of WRA 2012 or the corresponding provision having effect in
Northern Ireland he or she would be entitled to receive personal
independence payment entitlement by virtue of entitlement to the
daily living component.

7 30A person who is (or is treated as) a disabled person under
paragraph 1(d) is not to cease to be (or to be treated as) such a
disabled person by reason only of—

(a) provision made by regulations under section 85 of WRA
2012 (exclusion of certain care home residents) or the
35corresponding provision having effect in Northern
Ireland,

(b) provision made by regulations under section 86 of WRA
2012 (exclusion of certain hospital in-patients) or the
corresponding provision having effect in Northern
40Ireland, or

(c) section 87 of WRA 2012 (exclusion of prisoners and
detainees) or the corresponding provision having effect in
Northern Ireland.

Interpretation

8 45In this Schedule—

Interpretation: relevant settlement

19 25In this Schedule, “relevant settlement” means—

(a) a settlement created before 8 April 2013 the trusts of which have not
been altered on or after that date, or

(b) a settlement arising after 8 April 2013 under a will executed before
that date which has not been altered on or after that date.

Section 215

30SCHEDULE 43 Statutory residence test

Part 1 The rules

Introduction

1 (1) 35This Part of this Schedule sets out the rules for determining for the purposes
of relevant tax whether individuals are resident or not resident in the UK.

(2) The rules are referred to collectively as “the statutory residence test”.

(3) The rules do not apply in determining for the purposes of relevant tax
whether individuals are resident or not resident in England, Wales, Scotland
40or Northern Ireland specifically (rather than in the UK as a whole).

(4) “Relevant tax” means—

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