Section 523A | Legacies: income tax liability and exemption

(1)This section applies to a gift of property—

(a)that is made by will to a charitable trust, and

(b)that is not charged to income tax, apart from this section.

(2)Income tax is charged on the gift.

(3)It is charged on the total value of the property so received in the tax year; and for that purpose the value of any property other than money is its market value as at the time of the death of the person by whose will the gift of the property is made.

(4)But property is not taken into account in calculating total income so far as it is applied to charitable purposes only.

(5)The trustees of the charitable trust are liable for any tax charged under this section.

(6)A gift of property made to a charitable trust is treated for the purposes of this section as made by will if—

(a)the gift is made to the trust by virtue of the variation, after a person’s death, of a disposition of property effected by the person’s will, and

(b)the variation is treated under section 142 of IHTA 1984 (alteration of dispositions taking effect on death) as having been effected by the deceased.

(7)In this section—

“property” includes rights and interests of any description;

“will” includes a testament, a codicil and any testamentary disposition of property.