798 Transfer of interest in trade to children

Summary

This section deems the transfer of a trade or of an interest in a trade by an individual to one or more of his/her children or one or more children of his/her civil partner to constitute a settlement for the purposes of this Chapter.

Details

(1) If a trade, which was formerly carried on by a person solely or in partnership, becomes a trade carried on by one or more children of that person or one or more children of that person’s civil partner or is carried on in a partnership between that person and one or more of his/her children, or one or more children of his/her civil partner then, for the purposes of the Chapter —

• the means by which the change took place is regarded as a settlement of which the person is the settlor, and
• the children’s, or children of the civil partner’s, share of the profits are deemed to be that of the parent or the parent’s civil partner.

(2) If the child or children, or child or children of the civil partner, whose profits are deemed to be the income of the parent work in the business, the amount of that income is reduced by the amount which would have been paid to the child, or child of the civil partner, if he/she had been an employee of the business instead of an owner or partner.

Relevant Date: Finance Act 2019