HC Deb 15 April 1958 vol 586 c62

My next protective provision relates to Surtax. Under the existing law, if a man makes a revocable settlement and on revocation he or his wife might benefit, the income arising under the settlement is treated as his for surtax purposes. A particular settlement, which came before the House of Lords recently, was designed to defeat this law by the artifice of providing that a minimum sum of £100 should not be subject to the provisions of the settlement enabling capital or income to be appointed to the settlor's wife. The taxpayer was successful on this technical point. I cannot approve of such a stratagem.

In this respect I propose to restore the law to what was originally intended, so that if, in fact, any part of the settlement capital or income can go to the settlor or his wife a proportionate part of the income should be treated as the settlor's for tax purposes. This provision will apply for 1957–58 Surtax, which is payable on 1st January, 1959, to all settlements whenever made, but I shall excuse from its operation any settlement made before today that would otherwise be caught, if the settlement is made truly irrevocable within three months after the Royal Assent to the Finance Bill.