An election made under section 37 of the Finance Act 2005 (FA 2005).

Sections 23 to 45 of FA 2005 introduced a new income and capital gains tax regime for trusts for vulnerable persons.

The new regime took effect from 6 April 2004. The aim of the special tax treatment is to protect trusts with vulnerable beneficiaries by ensuring that the amount of tax charged on income and gains arising to the trustees is no more than it would have been had the income and gains arisen directly to the vulnerable person.

The election is made using form VPE1 and must be made by both the trustees and the vulnerable person, for each tax year in which they would like the election to apply.