Paragraph 5 C1

For any year of assessment during the whole or part of which settled property is held on trusts which secure that, during the lifetime of a mentally disabled person or a person in receipt of attendance allowance,

F2subsections (1), (4) and (5) shall apply to the trustees of the settlement as they apply to an individual.

The trusts on which settled property is held shall not be treated as falling outside sub-paragraph (1) above by reason only of the powers conferred on the trustees by section 32 of the Trustee Act 1925 or section 33 of the Trustee Act (Northern Ireland) 1958 (powers of advancement); and the reference in that sub-paragraph to the life-time of a person shall, where the income from the settled property is held for his benefit on trusts of the kind described in section 33 of the Trustee Act 1925 (protective trusts), be construed as a reference to the period during which the income is held on trust for him.

In relation to a settlement which is one of two or more qualifying settlements comprised in a group, this paragraph shall have effect as if for the references in section 5 of this Act to F4the exempt amount for the year there were substituted references to one tenth of that exempt amount or, if it is more, to such amount as results from dividing the exempt amount for the year by the number of settlements in the group.

For the purposes of sub-paragraph (1B) above—

If, in consequence of two or more persons being settlors in relation to it, a settlement is comprised in two or more groups comprising different numbers of settlements, sub-paragraph (1B) above shall apply to it as if the number by which F5the exempt amount for the year is to be divided were the number of settlements in the largest group.

In this paragraph “mentally disabled person” means a person who by reason of mental disorder within the meaning of the F6Mental Health Act 1983 is incapable of administering his property or managing his affairs and “attendance allowance” means an allowance under section 35 of the M1Social Security Act 1975 or the M2Social Security (Northern Ireland) Act 1975 F7; and “settlor” and “excluded settlement” have the same meanings as in paragraph 6 below.

An inspector may by notice in writing require any person, being a party to a settlement, to furnish him within such time as he may direct (not being less than twenty-eight days) with such particulars as he thinks necessary for the purposes of this paragraph.