CTM61050 - Close companies: capital payments to settlors: introduction
ITTOIA/S633
ITTOIA/S619 (1)(c) together with Section 633 prevents certain arrangements that allow a settlor to enjoy the income of a settlement without attracting further tax liability.
Where there is available undistributed income in a settlement and a capital sum is paid directly or indirectly for the benefit of the settlor or spouse by the trustees, the payment is treated as the income of the settlor. »Ê¹ÚÌåÓýapp amount treated as the income of the settlor is restricted to the amount of the available undistributed income in the settlement.
‘Capital sum� includes a loan or repayment of a loan or any other sum (other than income) which is not paid for full consideration. See TSEM4400 for an example.
If you have a case in which Section 633 appears to apply, refer to Trusts Technical TSEM11100.
For guidance on ITTOIA/S641, which extends the provisions of Section 633, see CTM61060.