189A Special trusts for permanently incapacitated individuals.

(1) In this section—

“incapacitated individual” means an individual who is permanently and totally incapacitated, by reason of mental or physical infirmity, from being able to maintain himself or herself;

“public subscriptions” means subscriptions, in the form of money or other property, raised, following an appeal made in that behalf to members of the public, for the benefit of one or more incapacitated individual or individuals, whose identity or identities is or are known to the persons making the subscriptions, being subscriptions that meet either of the following conditions, namely—

(a) the total amount of the subscriptions does not exceed ^[2]>£300,000^<[2][2]>€381,000^<[2], or

(b) no amount of the subscriptions, at any time on or after the specified return date for the chargeable period for which exemption is first claimed under either subsection (2) or (3), constitutes a subscription made by any one person that is greater than 30 per cent of the total amount of the subscriptions;

“qualifying trust” means a trust established by deed ^[7]>in respect of which it is shown to the satisfaction of the inspector or, on appeal, to the Appeal Commissioners, that^<[7]—

(a) ^[8]>the trust^<[8][8]>that^<[8] has been established exclusively for the benefit of one or more specified incapacitated individual or individuals, for whose benefit public subscriptions, within the meaning of this section, have been raised,

(b) ^[8]>the trust^<[8][8]>that^<[8] requires that—

(i) the trust funds be applied for the benefit of that individual or those individuals, as the case may be, at the discretion of the trustees of the trust, and

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(ii) in the event of the death of that individual or those individuals, as the case may be, the undistributed part of the trust funds be applied for charitable purposes or be appointed in favour of the trustees of charitable bodies,

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(ii) the undistributed part of the trust funds—

(I) where the individual or the last surviving individual, as the case may be, is survived by a child, spouse or civil partner, be appointed in favour of the estate of the deceased individual, or

(II) otherwise, be applied for charitable purposes or be appointed in favour of the trustees of charitable bodies,

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and

(c) ^[9]>none of the trustees^<[9][9]>where no trustee^<[9] of the trust is connected (within the meaning of section 10) with that individual or any of those individuals, as the case may be;

“specified return date for the chargeable period” has the same meaning as in ^[5]>section 950^<[5][5]>section 959A^<[5];

“trust funds” means, in relation to a qualifying trust—

(a) public subscriptions, raised for the benefit of the incapacitated individual or individuals, the subject or subjects of the trust, and

(b) all moneys and other property derived directly or indirectly from such public subscriptions.

(2) Income arising to the trustees of a qualifying trust in respect of the trust funds, being income consisting of dividends or other income which but for this section would be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 59 or section 745) or V of Schedule D or under Schedule F, shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts.

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(3) Income (in this subsection referred to as “the relevant income”) which—

(a) consists of payments made by the trustees of a qualifying trust to or in respect of any incapacitated individual, being a subject of the trust, or

(b) arises to such an incapacitated individual from the investment in whole or in part of payments made by the trustees of a qualifying trust or of income derived from such payments, being income consisting of dividends or other income which but for this section would be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 59 or section 745) or V of Schedule D or under Schedule F,

shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts; but this subsection shall not apply in a case unless the relevant income is the sole or main income of the individual to or in respect of whom the relevant income arises.

(4) The provisions of the Income Tax Acts relating to the making of returns of total income shall apply as if this section had not been enacted.

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(3) Gains accruing to trustees of a qualifying trust in respect of the trust funds shall not be chargeable gains for the purposes of the Capital Gains Tax Acts.

(4) (a) In this subsection—

“relevant gains” means chargeable gains (including allowable losses) within the meaning of the Capital Gains Tax Acts, which accrue to an incapacitated individual from the disposal of—

(a) assets acquired with payments made by the trustees of a qualifying trust,

(b) assets acquired with relevant income, or

(c) assets acquired directly or indirectly with the proceeds from the disposal of assets referred to in paragraphs (a) and (b);

“relevant income” means income which—

(a) consists of payments made by the trustees of a qualifying trust to or in respect of an incapacitated individual, being a subject of the trust, or

(b) arises to such an incapacitated individual from the investment—

(i) in whole or in part of payments, made by the trustees of a qualifying trust, or

(ii) of income derived directly or indirectly from such payments,

being income consisting of dividends or other income which, but for this section, would be chargeable to tax under Schedule C or under Case III, IV (by virtue of ^[4]>section 59 or section 745^<[4][4]>section 59, 745 or 747E^<[4]) or V of Schedule D or under Schedule F.

(b) Where for any year of assessment the aggregate of relevant income arising to and the relevant gains accruing to an individual exceeds 50 per cent of the aggregate of the total income arising to and the total chargeable gains (including allowable losses) accruing to the individual in that year of assessment—

(i) the relevant income shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts, but the provisions of those Acts relating to the making of returns shall apply as if this section had not been enacted, and

(ii) the relevant gains shall be exempt from capital gains tax, but the provisions of the Capital Gains Tax Acts relating to the making of returns shall apply as if this section had not been enacted.

(c) For the purposes of computing whether a chargeable gain is, in whole or in part, a relevant gain, or whether income is, in whole or in part, relevant income, all such apportionments shall be made as are, in the circumstances, just and reasonable

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(5) This section shall have effect as respects the year 1997-98 and subsequent years of assessment.