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Taxation of Chargeable Gains Act 1992

Type Public General Act

Publication 1992-03-06

Last updated 2026-09-19

State In force

Department Statute Law Database

Source legislation.gov.uk

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An Act to consolidate certain enactments relating to the taxation of chargeable gains.

Reform history JSON API

(b) that the settlor made (or was treated for the purposes of this Act as making) before 6 April 2025,

subsection (2B)(c) has effect as if after “resident” there were inserted “or domiciled”.

(2D) A trustee who is not resident in the United Kingdom shall be treated for the purposes of subsections (2A) and (2B) as if he were resident in the United Kingdom at any time when he acts as trustee in the course of a business which he carries on in the United Kingdom through a branch, agency or permanent establishment there.

(2DA) A trustee who is resident in the United Kingdom for a tax year is to be treated for the purposes of subsections (2A) and (2B) as if he or she were not resident in the United Kingdom for that year if—

(a) the trustee is an individual,

(b) the individual becomes or ceases to be a trustee of the settlement during the tax year,

(d) in that year, the only period when the individual is a trustee of the settlement falls wholly within the overseas part of the year.

(2DB) Subsection (2DA) is subject to subsection (2D) and, accordingly, an individual who is treated under subsection (2DA) as not resident is, in spite of that, to be regarded as resident whenever the individual acts as mentioned in subsection (2D).

(2E) If the deemed person referred to in subsection (1) is not treated for the purposes of this Act as resident in the United Kingdom, then for the purposes of this Act it is treated as being not resident in the United Kingdom.

(2F) Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of subsection (2CA).

(3) For the purposes of this section, and of sections 71(1) and 72(1), where part of the property comprised in a settlement is vested in one trustee or set of trustees and part in another (and in particular where settled land within the meaning of the Settled Land Act 1925 is vested in the tenant for life and investments representing capital money are vested in the trustees of the settlement), they shall be treated as together constituting and, in so far as they act separately, as acting on behalf of a single body of trustees.

(4) If tax assessed on the trustees, or any one trustee, of a settlement in respect of a chargeable gain accruing to the trustees is not paid within 6 months from the date when it becomes payable by the trustees or trustee, and before or after the expiration of that period of 6 months the asset in respect of which the chargeable gain accrued, or any part of the proceeds of sale of that asset, is transferred by the trustees to a person who as against the trustees is absolutely entitled to it, that person may at any time within 2 years from the time when the tax became payable be assessed and charged (in the name of the trustees) to an amount of capital gains tax not exceeding tax chargeable on an amount equal to the amount of the chargeable gain and, where part only of the asset or of the proceeds was transferred, not exceeding a proportionate part of that amount.

Sub-fund settlements

69A

Schedule 4ZA (which makes provision about sub-fund settlements) shall have effect.

Transfers into settlement.

70

A transfer into settlement, whether revocable or irrevocable, is a disposal of the entire property thereby becoming settled property notwithstanding that the transferor has some interest as a beneficiary under the settlement and notwithstanding that he is a trustee, or the sole trustee, of the settlement.

Person becoming absolutely entitled to settled property.

71

(1) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee all the assets forming part of the settled property to which he becomes so entitled shall be deemed to have been disposed of by the trustee, and immediately reacquired by him in his capacity as a trustee within section 60(1), for a consideration equal to their market value.

(2) Where, in any case in which a person (“the beneficiary”) becomes absolutely entitled to any settled property as against the trustee, an allowable loss would (apart from this subsection) have accrued to the trustee on the deemed disposal under subsection (1) above of an asset comprised in that property—

(a) that loss shall be treated, to the extent only that it cannot be deducted from pre-entitlement gains of the trustee, as an allowable loss accruing to the beneficiary (instead of to the trustee); but

(b) any allowable loss treated as accruing to the beneficiary under this subsection shall be deductible under this Act from chargeable gains accruing to the beneficiary to the extent only that it can be deducted from gains accruing to the beneficiary on the disposal by him of—

(i) the asset on the deemed disposal of which the loss accrued; or

(ii) where that asset is an estate, interest or right in or over land, that asset or any asset deriving from that asset.

(2A) In subsection (2) above “pre-entitlement gain”, in relation to an allowable loss accruing to a trustee on the deemed disposal of any asset comprised in any settled property, means a chargeable gain accruing to that trustee on—

(a) a disposal which, on the occasion on which the beneficiary becomes absolutely entitled as against the trustee to that property, is deemed under subsection (1) above to have taken place; or

(b) any other disposal taking place before that occasion but in the same year of assessment.

(2B) For the purposes of subsection (2)(b)(ii) above an asset (“the relevant asset”) derives from another if, in a case where—

(a) assets have merged,

(b) an asset has divided or otherwise changed its nature, or

the value of the relevant asset is wholly or partly derived (through one or more successive events falling within paragraphs (a) to (c) above but not otherwise) from the other asset.

(2C) The rules set out in subsection (2D) below shall apply (notwithstanding any other rules contained in this Act or in section 113(2) of the Finance Act 1995 (order of deduction))—

(a) for determining for the purposes of this section whether an allowable loss accruing to the trustee, or treated as accruing to the beneficiary, can be deducted from particular chargeable gains for any year of assessment; and

(b) for the making of deductions of allowable losses from chargeable gains in cases where it has been determined that such an allowable loss can be deducted from particular chargeable gains.

(2D) Those rules are as follows—

(a) allowable losses accruing to the trustee on a deemed disposal under subsection (1) above shall be deducted before any deduction is made in respect of any other allowable losses accruing to the trustee in that year;

(b) allowable losses treated as accruing to the beneficiary under this section, so far as they cannot be deducted in a year of assessment as mentioned in subsection (2)(b) above, may be carried forward from year to year until they can be so deducted; and

(c) allowable losses treated as accruing to the beneficiary for any year of assessment under this section, and allowable losses carried forward to any year of assessment under paragraph (b) above—

(i) shall be deducted before any deduction is made in respect of any allowable losses accruing to the beneficiary in that year otherwise than by virtue of this section; and

(ii) in the case of losses carried forward to any year, shall be deductible as if they were losses actually accruing in that year.

(3) References in this section to the case where a person becomes absolutely entitled to settled property as against the trustee shall be taken to include references to the case where a person would become so entitled but for being an infant or other person under disability.

Termination of life interest on death of person entitled.

72

(1) On the termination, on the death of the person entitled to it, of an interest in possession in all or any part of settled property—

(a) the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property shall be deemed for the purposes of this Act at that time to be disposed of and immediately reacquired by the trustee for a consideration equal to the whole or a corresponding part of the market value of the asset; but

(b) no chargeable gain shall accrue on that disposal.

For the purposes of this subsection an interest which is a right to part of the income of settled property shall be treated as an interest in a corresponding part of the settled property.

(1A) Where the interest in possession mentioned in subsection (1) above is one to which the person becomes entitled on or after 22nd March 2006, the first sentence of that subsection applies in relation to that interest only if—

(a) immediately before the person's death, the interest falls within subsection (1B) below, or

(b) the person dies under the age of 18 years and, immediately before the person's death, section 71D of the Inheritance Tax Act 1984 (age 18-to-25 trusts) applies to the property in which the interest subsists.

(1B) An interest falls within this subsection if—

(a) the interest is—

(i) an immediate post-death interest, within the meaning given by section 49A of the Inheritance Tax Act 1984,

(ii) a transitional serial interest, within the meaning given by section 49B of that Act, or

(iii) a disabled person's interest, within the meaning given by section 89B of that Act, or

(b) section 71A of that Act (trusts for bereaved minors) applies to the property in which the interest subsists.

(1C) Subsection (1A) above does not have effect in relation to the operation of subsection (1) above as applied by subsection (2) below (but see subsection (2A) below).

(2) Subsection (1) above shall apply where the person entitled to an interest in possession in all or any part of settled property dies (although the interest does not then terminate) as it applies on the termination of such an interest.

(2A) Where the interest in possession mentioned in subsection (2) above is one to which the person becomes entitled on or after 22nd March 2006—

(a) subsection (2) above, and

(b) the first sentence of subsection (1) above as applied by subsection (2) above,

apply in relation to that interest only if, immediately before the person's death, the interest falls within subsection (1B)(a) above.

(3) This section shall apply on the death of the person entitled to any annuity payable out of, or charged on, settled property or the income of settled property as it applies on the death of a person whose interest in possession in the whole or any part of settled property terminates on his death.

(4) Where, in the case of any entitlement to an annuity created by a settlement some of the settled property is appropriated by the trustees as a fund out of which the annuity is payable, and there is no right of recourse to, or to the income of, settled property not so appropriated, then without prejudice to subsection (5) below, the settled property so appropriated shall, while the annuity is payable, and on the occasion of the death of the person entitled to the annuity, be treated for the purposes of this section as being settled property under a separate settlement.

(5) If there is an interest in a part of the settled property and, where that is an interest in income, there is no right of recourse to, or to the income of, the remainder of the settled property, the part of the settled property in which the ... interest subsists shall while it subsists be treated for the purposes of this section as being settled property under a separate settlement.

(6) An interest which is a disabled person's interest by virtue of section 89B(1)(a) or (b) of the Inheritance Tax Act 1984 is to be treated as an interest in possession for the purposes of this section.

Death of life tenant: exclusion of chargeable gain.

73

(1) Where, by virtue of section 71(1), the assets forming part of any settled property are deemed to be disposed of and reacquired by the trustee on the occasion when a person becomes (or would but for a disability become) absolutely entitled thereto as against the trustee, then, if that occasion is the death of a person entitled to an interest in possession in the settled property—

(a) no chargeable gain shall accrue on the disposal, and

(b) if on the death the property reverts to the disponer, the disposal and reacquisition under that subsection shall be deemed to be for such consideration as to secure that neither a gain nor a loss accrues to the trustee, and shall, if the trustee had first acquired the property at a date earlier than 31 March 1982, be deemed to be at that earlier date.

(1A) Subsection (1)(b) above shall be treated as having effect in relation to a sub-fund settlement if the property does not revert to the trustees of the principal settlement in relation to that sub-fund settlement by reason only that—

(a) a sub-fund election is or has been made in respect of another sub-fund of the principal settlement, and

(b) the property becomes comprised in that other sub-fund settlement on the death of the person entitled to the interest in possession.

(2) Where the ... interest referred to in subsection (1) above is an interest in part only of the settled property to which section 71 applies, subsection (1)(a) above shall not apply but any chargeable gain accruing on the disposal shall be reduced by a proportion corresponding to that represented by the part.

(2A) Where the interest in possession referred to in subsection (1) above is one to which the person becomes entitled on or after 22nd March 2006, subsections (1) and (2) above apply in relation to that interest only if—

(a) immediately before the person's death, the interest falls within section 72(1B), or

(b) the person dies under the age of 18 years and, immediately before the person's death, section 71D of the Inheritance Tax Act 1984 (age 18-to-25 trusts) applies to the property in which the interest subsists.

(3) The last sentence of subsection (1) of section 72 and subsections (3) to (6) of that section shall apply for the purposes of this section as they apply for the purposes of section 72(1).

Effect on sections 72 and 73 of relief under section 165 or 260.

74

(1) This section applies where—

(a) a claim for relief was made under section 165 or 260 in respect of the disposal of an asset to a trustee, and

(b) the trustee is deemed to have disposed of the asset, or part of it, by virtue of section 71(1) or 72(1)(a).

(2) Sections 72(1)(b) and 73(1)(a) shall not apply to the disposal of the asset or part by the trustee, but any chargeable gain accruing to the trustee on the disposal shall be restricted to the amount of the held-over gain (or a corresponding part of it) on the disposal of the asset to him.

(3) Subsection (2) above shall not have effect in a case within section 73(2) but in such a case the reduction provided for by section 73(2) shall be diminished by an amount equal to the proportion there mentioned of the held-over gain.

(4) In this section “held-over gain” has the same meaning as in section 165 or, as the case may be, 260.

Death of annuitant.

75

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Disposal of interests in settled property.

76

(1) Subject to subsection (1A) below No chargeable gain shall accrue on the disposal of an interest created by or arising under a settlement (including, in particular, an annuity or life interest, and the reversion to an annuity or life interest) by the person for whose benefit the interest was created by the terms of the settlement or by any other person except one who acquired, or derives his title from one who acquired, the interest for a consideration in money or money’s worth, other than consideration consisting of another interest under the settlement.

(1A) Subject to subsection (3) below, subsection (1) above does not apply if—

(a) the settlement falls within subsection (1B) below; or

(b) the property comprised in the settlement is or includes property deriving directly or indirectly from a settlement falling within that subsection.

(1B) A settlement falls within this subsection if there has been a time when the trustees of that settlement—

(a) were not resident in the United Kingdom; or

(b) fell to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

(2) Subject to subsection (1) above, where a person who has acquired an interest in settled property (including in particular the reversion to an annuity or life interest) becomes, as the holder of that interest, absolutely entitled as against the trustee to any settled property, he shall be treated as disposing of the interest in consideration of obtaining that settled property (but without prejudice to any gain accruing to the trustee on the disposal of that property deemed to be effected by him under section 71(1)).

(3) Subsection (1A) above shall not prevent subsection (1) above from applying where the disposal in question is a disposal in consideration of obtaining settled property that is treated as made under subsection (2) above.

Disposal of interest in settled property: deemed disposal of underlying assets.

76A

Schedule 4A to this Act has effect with respect to disposals for consideration of an interest in settled property.

Transfers of value by trustees linked with trustee borrowing.

76B

Schedule 4B to this Act has effect with respect to transfers of value by trustees that are, in accordance with the Schedule, treated as linked with trustee borrowing.

Charge on settlor with interest in settlement.

77

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Right of recovery.

78

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Provisions supplemental to sections 77 and 78.

79

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Restriction on set-off of trust losses.

79A

(1) This section applies to a chargeable gain accruing to the trustees of a settlement where—

(a) in computing the gain, the allowable expenditure is reduced in consequence, directly or indirectly, of a claim to gifts relief in relation to an earlier disposal to the trustees;

(b) the transferor on that earlier disposal, or any person connected with the transferor, has at any time—

(i) acquired an interest in the settled property, or

(ii) entered into an arrangement to acquire such an interest; and

(c) in connection with that acquisition or arrangement any person has at any time received, or become entitled to receive, any consideration.

(2) Where this section applies to a chargeable gain, no allowable losses accruing to the trustees (in the year in which the gain accrues or any earlier year) may be set against the gain.

This applies to the whole of the chargeable gain (and not just the element deferred as a result of the claim to gifts relief).

(3) In this section—

(a) “gifts relief” means relief under section 165 or 260; and

(b) references to losses not being allowed to be set against a chargeable gain are to the losses not being allowed as a deduction against chargeable gains to the extent that they include that gain.

(4) The references in subsection (1)(b) above to an interest in settled property have the same meaning as in Schedule 4A.

Attribution to trustees of gains of non-resident companies.

79B

(1) This section applies where the trustees of a settlement are participators—

(a) in a close company, or

(b) in a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom.

For this purpose “participator” has the same meaning as in section 3 (see section 3B).

(2) Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing a charge to tax arising by virtue of the attribution to the trustees under section 3, by reason of their participation in the company mentioned in subsection (1) above, of any part of a chargeable gain accruing to a company that is not resident in the United Kingdom.

(3) Where this section applies and—

(a) a chargeable gain accrues to a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom, and

(b) all or part of the chargeable gain is treated under section 3 as accruing to a close company which is not chargeable to corporation tax in respect of the gain by reason of double taxation relief arrangements, and

(c) had the company mentioned in paragraph (b) (and any other relevant company) not been resident in the United Kingdom, all or part of the chargeable gain would have been attributed to the trustees by reason of their participation in the company mentioned in subsection (1) above,

section 3(7) shall apply as if the company mentioned in paragraph (b) above (and any other relevant company) were not resident in the United Kingdom.

(4) The references in subsection (3) above to “any other relevant company" are to any other company which if it were not resident in the United Kingdom would be a company in relation to which section 3(7) applied with the result that all or part of the chargeable gain was attributed to the trustees as mentioned in that subsection.

Migration of settlements, non-resident settlements and dual resident settlements

Trustees ceasing to be resident in U.K.

80

(1) This section applies if the trustees of a settlement become at any time (“the relevant time”) not resident in the United Kingdom.

(2) The trustees shall be deemed for all purposes of this Act—

(a) to have disposed of the defined assets immediately before the relevant time, and

(b) immediately to have reacquired them,

at their market value at that time.

(3) Subject to subsections (4) and (5) below, the defined assets are all assets constituting settled property of the settlement immediately before the relevant time.

(4) If immediately after the relevant time—

(a) the trustees carry on a trade in the United Kingdom through a branch or agency, and

(b) any assets are situated in the United Kingdom and either used in or for the purposes of the trade or used or held for the purposes of the branch or agency,

the assets falling within paragraph (b) above shall not be defined assets.

(5) Assets shall not be defined assets if—

(a) they are of a description specified in any double taxation relief arrangements, and

(b) were the trustees to dispose of them immediately before the relevant time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.

(6) Section 152 shall not apply where the trustees—

(a) have disposed of the old assets, or their interest in them, before the relevant time, and

(b) acquire the new assets, or their interest in them, after that time,

unless the new assets are excepted from this subsection by subsection (7) below.

(7) If at the time when the new assets are acquired—

(a) the trustees carry on a trade in the United Kingdom through a branch or agency, and

(b) any new assets are situated in the United Kingdom and either used in or for the purposes of the trade or used or held for the purposes of the branch or agency,

the assets falling within paragraph (b) above shall be excepted from subsection (6) above.

(8) In this section “the old assets” and “the new assets” have the same meanings as in section 152.

Postponing gain or loss under section 80(2): interests in UK land

80A

(1) This section applies if—

(a) an interest in UK land is deemed to have been disposed of under section 80(2) by trustees of a settlement at any time, and

(b) the trustees make an election under this subsection.

(2) The gain or loss that, but for this subsection, would have accrued to the trustees at that time is not to accrue at that time.

(3) But, on a subsequent disposal by the trustees of the whole or part of the interest in UK land, the whole or a corresponding part of the gain or loss is treated as accruing on the subsequent disposal.

(4) This gain or loss is in addition to any gain or loss that actually accrues on the subsequent disposal.

(5) In this section “interest in UK land” has the meaning given by section 1C.

Death of trustee: special rules.

81

(1) Subsection (2) below applies where—

(a) section 80 applies as a result of the death of a trustee of the settlement, and

(b) within the period of 6 months beginning with the death, the trustees of the settlement become resident ... in the United Kingdom.

(2) That section shall apply as if the defined assets were restricted to such assets (if any) as—

(a) would be defined assets apart from this section, and

(b) fall within subsection (3) or (4) below.

(3) Assets fall within this subsection if they were disposed of by the trustees in the period which—

(a) begins with the death, and

(b) ends when the trustees become resident ... in the United Kingdom.

(4) Assets fall within this subsection if—

(a) they are of a description specified in any double taxation relief arrangements,

(b) they constitute settled property of the settlement at the time immediately after the trustees become resident ... in the United Kingdom, and

(c) were the trustees to dispose of them at that time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.

(5) Subsection (6) below applies where—

(a) at any time the trustees of a settlement become resident ... in the United Kingdom as a result of the death of a trustee of the settlement, and

(b) section 80 applies as regards the trustees of the settlement in circumstances where the relevant time (within the meaning of that section) falls within the period of 6 months beginning with the death.

(6) That section shall apply as if the defined assets were restricted to such assets (if any) as—

(a) would be defined assets apart from this section, and

(b) fall within subsection (7) below.

(7) Assets fall within this subsection if—

(a) the trustees acquired them in the period beginning with the death and ending with the relevant time, and

(b) they acquired them as a result of a disposal in respect of which relief is given under section 165 or in relation to which section 260(3) applies.

Past trustees: liability for tax.

82

(1) This section applies where—

(a) section 80 applies as regards the trustees of a settlement (“the migrating trustees”), and

(b) any capital gains tax which is payable by the migrating trustees by virtue of section 80(2) is not paid within 6 months from the time when it became payable.

(2) The Board may, at any time before the end of the period of 3 years beginning with the time when the amount of the tax is finally determined, serve on any person to whom subsection (3) below applies a notice—

(a) stating particulars of the tax payable, the amount remaining unpaid and the date when it became payable;

(b) stating particulars of any interest payable on the tax, any amount remaining unpaid and the date when it became payable;

(c) requiring that person to pay the amount of the unpaid tax, or the aggregate amount of the unpaid tax and the unpaid interest, within 30 days of the service of the notice.

(3) This subsection applies to any person who, at any time within the relevant period, was a trustee of the settlement, except that it does not apply to any such person if—

(a) he ceased to be a trustee of the settlement before the end of the relevant period, and

(b) he shows that, when he ceased to be a trustee of the settlement, there was no proposal that the trustees might cease to be resident in the United Kingdom.

(4) Any amount which a person is required to pay by a notice under this section may be recovered from him as if it were tax due and duly demanded of him; and he may recover any such amount paid by him from the migrating trustees.

(5) A payment in pursuance of a notice under this section shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

(6) For the purposes of this section—

(a) where the relevant time (within the meaning of section 80) falls within the period of 12 months beginning with 19th March 1991, the relevant period is the period beginning with that date and ending with that time;

(b) in any other case, the relevant period is the period of 12 months ending with the relevant time.

Trustees ceasing to be liable to U.K. tax.

83

(1) This section applies if the trustees of a settlement, while continuing to be resident ... in the United Kingdom, become at any time (“the time concerned”) trustees who fall to be regarded for the purposes of any double taxation relief arrangements—

(a) as resident in a territory outside the United Kingdom, and

(b) as not liable in the United Kingdom to tax on gains accruing on disposals of assets (“relevant assets”) which constitute settled property of the settlement and fall within descriptions specified in the arrangements.

(2) The trustees shall be deemed for all purposes of this Act—

(a) to have disposed of their relevant assets immediately before the time concerned, and

(b) immediately to have reacquired them,

at their market value at that time.

Trustees both resident and non-resident in a year of assessment

83A

(1) This section applies if a chargeable gain accrues to the trustees of a settlement on the disposal by them of an asset in a year of assessment and the trustees—

(a) are within the charge to capital gains tax in that year of assessment, but

(b) are non-UK resident at the time of the disposal.

(2) Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing the trustees from being chargeable to capital gains tax (or as preventing a charge to tax arising, whether or not on the trustees) by virtue of the accrual of that gain.

(3) For the purposes of this section the trustees of a settlement are within the charge to capital gains tax in a year of assessment—

(a) if, during any part of that year of assessment, they are resident ... in the United Kingdom and not Treaty non-resident, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) For the purposes of this section the trustees of a settlement are non-UK resident at a particular time if, at that time,—

(a) they are not resident in the United Kingdom, or

(b) they are resident ... in the United Kingdom but are Treaty non-resident.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acquisition by dual resident trustees.

84

(1) Section 152 shall not apply where—

(a) the new assets are, or the interest in them is, acquired by the trustees of a settlement,

(b) at the time of the acquisition the trustees are resident ... in the United Kingdom and fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom,

(d) were the trustees to dispose of the assets immediately after the acquisition, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.

(2) In this section “the new assets” has the same meaning as in section 152.

Disposal of interests in non-resident settlements.

85

(1) Subsection (1) of section 76 shall not apply to the disposal of an interest in settled property, other than one treated under subsection (2) of that section as made in consideration of obtaining the settled property, if at the time of the disposal the trustees are not resident in the United Kingdom.

(2) Subject to subsections (4), (9) and (10) below, subsection (3) below applies where—

(a) section 80 applies as regards the trustees of a settlement,

(b) after the relevant time (within the meaning of that section) a person disposes of an interest created by or arising under the settlement and the circumstances are such that subsection (1) above prevents section 76(1) applying, and

(3) For the purpose of calculating any chargeable gain accruing on the disposal of the interest, the person disposing of it shall be treated as having—

(a) disposed of it immediately before the relevant time, and

(b) immediately reacquired it,

at its market value at that time.

(4) Subsection (3) above shall not apply if section 83 applied as regards the trustees in circumstances where the time concerned (within the meaning of that section) fell before the time when the interest was created for the benefit of the person disposing of it or when he otherwise acquired it.

(5) Subject to subsection (10) below, Subsection (7) below applies where—

(a) section 80 applies as regards the trustees of a settlement,

(b) after the relevant time (within the meaning of that section) a person disposes of an interest created by or arising under the settlement and the circumstances are such that subsection (1) above prevents section 76(1) applying,

(d) section 83 applied as regards the trustees in circumstances where the time concerned (within the meaning of that section) fell in the relevant period.

(6) The relevant period is the period which—

(a) begins when the interest was created for the benefit of the person disposing of it or when he otherwise acquired it, and

(b) ends with the relevant time.

(7) For the purpose of calculating any chargeable gain accruing on the disposal of the interest, the person disposing of it shall be treated as having—

(a) disposed of it immediately before the time found under subsection (8) below, and

(b) immediately reacquired it,

at its market value at that time.

(8) The time is—

(a) the time concerned (where there is only one such time), or

(b) the earliest time concerned (where there is more than one because section 83 applied more than once).

(9) Subsection (3) above shall not apply where subsection (7) above applies.

(10) Subsection (3) or (7) above does not apply to the disposal of an interest created by or arising under a settlement which has relevant offshore gains at the material time.

The material time is—

(a) in relation to subsection (3) above, the relevant time within the meaning of section 80;

(b) in relation to subsection (7) above, the time found under subsection (8) above.

(11) For the purposes of subsection (10) above, a settlement has relevant offshore gains at any time if, were the year of assessment to end at that time, chargeable gains would be treated under section 89(2) or paragraph 8 of Schedule 4C as accruing in the following year of assessment to a beneficiary who received a capital payment from the trustees of the settlement in that year.

Transfers of value: attribution of gains to beneficiaries and treatment of losses

85A

(1) Schedule 4C to this Act has effect with respect to the attribution of gains to beneficiaries where there has been a transfer of value to which Schedule 4B applies.

(2) Sections 86A to 95 have effect subject to the provisions of Schedule 4C.

(2A) For the purposes of sections 87 to 89, no account is to be taken of any section 1(3) amount in a Schedule 4C pool (see paragraph 1 of Schedule 4C).

(3) When calculating the section 1(3) amount for a settlement for a tax year (within the meaning of section 87), no account is to be taken of any chargeable gains or allowable losses accruing by virtue of Schedule 4B.

Nothing in this subsection affects any increase in a section 1(3) amount by virtue of paragraph 1(3A) or 7B(2)(b) of Schedule 4C.

(4) No account shall be taken of any chargeable gains or allowable losses to which sections 87 to 89 apply in computing the gains or losses accruing by virtue of Schedule 4B.

Attribution of gains to settlors with interest in non-resident or dual resident settlements.

86

(1) This section applies where the following conditions are fulfilled as regards a settlement in a particular year of assessment—

(a) the settlement is a qualifying settlement in the year;

(b) the trustees of the settlement fulfil the condition as to residence specified in subsection (2) below;

(c) a person who is a settlor in relation to the settlement (“the settlor”) ... is resident in the United Kingdom for the year;

(d) at any time during the year the settlor has an interest in the settlement;

(e) by virtue of disposals of any of the settled property originating from the settlor, there is an amount on which the trustees would be chargeable to tax for the year under section 1(3) if the assumption as to residence specified in subsection (3) below were made;

(f) paragraph 3, 4 or 5 of Schedule 5 does not prevent this section applying.

(2) The condition as to residence is that—

(a) there is no time in the year when the trustees are resident in the United Kingdom, or

(b) there is such a time but, whenever the trustees are resident in the United Kingdom during the year, they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

(3) Where subsection (2)(a) above applies, the assumption as to residence is that the trustees are resident ... in the United Kingdom throughout the year; and where subsection (2)(b) above applies, the assumption as to residence is that the double taxation relief arrangements do not apply.

(3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where this section applies—

(a) chargeable gains of an amount equal to that referred to in subsection (1)(e) above shall be treated as accruing to the settlor in the year or if, as respects the settlor, the year is a split year, in the UK part of that year, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4ZA) Where (apart from this subsection) the amount mentioned in subsection (1)(e) would include a chargeable gain or allowable loss to which section 1A(3)(b) or (c) applies (disposals by non-UK residents within the charge to capital gains tax), so much of the gain or loss as would be so included is to be disregarded for the purposes of subsection (1)(e).

(4ZB) Where (apart from this subsection) the amount mentioned in subsection (1)(e) would include an amount of chargeable gains accruing by virtue of the trustee’s entitlement to a sum of carried interest, the amount of the gains is to be disregarded for the purposes of subsection (1)(e).

(4ZC) In subsection (4ZB)—

(a) “carried interest” has the same meaning as in section 23I of ITTOIA 2005 (see Part 1 of Schedule A1 to that Act), and

(b) that definition has effect as if references to a sum arising to an individual included a reference to a sum arising to the trustees.

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Schedule 5 (which contains provisions supplementary to this section) shall have effect.

(6) See also paragraph 3 of Schedule D1 (foreign gain claims: foreign gains and losses of the trustees ignored for the purposes of subsection (1)(e)).

Attribution of gains to settlor where temporarily non-resident

86A

(1) Subsection (3) applies if—

(a) chargeable gains of an amount equal to the amount referred to in section 86(1)(e) for a tax year (“year A”) are treated under section 1M(3) as accruing to a settlor under section 86 in the period of return,

(b) there are amounts on which , in the case of the settlement, individuals are charged to tax under section 87 ... or 89(2) for one or more tax years, each of which is earlier than the year of return, and

(2) A “matched” capital payment is a capital payment, all or part of which is matched under section 87A with the section 1(3) amount for year A.

(3) The amount of the chargeable gains mentioned in subsection (1)(a) for year A that are treated under section 1M(3) as accruing to the settlor under section 86 in the period of return is to be reduced by the appropriate amount.

(4) The appropriate amount is—

(a) the sum of the amounts mentioned in subsection (1)(c) to the extent that the matched capital payments are matched under section 87A with the section 1(3) amount for year A, or

(b) if the property comprised in the settlement has at any time included property not originating from the settlor, so much (if any) of that sum as, on a just and reasonable apportionment, is properly referable to the settlor.

(5) If a reduction falls to be made under subsection (3) for the year of return, the deduction to be made in accordance with section 87(4)(b) for the settlement for that year must not be made until—

(a) all the reductions to be made under subsection (3) for that year for each settlor have been made, and

(b) those reductions are to be made starting with the year immediately preceding the year of return and working backwards.

(6) Subsection (7) applies if, with respect to year A, an amount remains to be treated under section 1M(3) as accruing to any of the settlors in the period of return after having made the reductions under subsection (3) with respect to year A.

(7) The aggregate of the amounts remaining to be so treated (for all of the settlors) is to be applied in reducing so much of the section 1(3) amount for year A as has not already been matched with a capital payment under section 87A for any year prior to the year of return (but not so as to reduce the section 1(3) amount below zero).

(8) In this section—

(a) “the settlement” means the settlement in relation to which the settlor mentioned in subsection (1)(a) is a settlor,

(b) a reference to “the settlors” or “each settlor” is to the settlors or each settlor in relation to the settlement,

(d) paragraph 8 of Schedule 5 applies in construing the reference to property originating from the settlor.

Non-UK resident settlements: attribution of gains to beneficiaries

87

(1) This section applies to a settlement for a tax year (“the relevant tax year”) if there is no time in that year when the trustees are resident in the United Kingdom.

(2) Chargeable gains are treated as accruing in the relevant tax year to a beneficiary of the settlement who has received a capital payment from the trustees in the relevant tax year or any earlier tax year if all or part of the capital payment is matched (under section 87A as it applies for the relevant tax year) with the section 1(3) amount for the relevant tax year or any earlier tax year.

(2A) If the relevant tax year is a split year as respects the beneficiary, the gains are treated as accruing in the UK part of that year.

(3) The amount of chargeable gains treated as accruing is equal to—

(a) the amount of the capital payment, or

(b) if only part of the capital payment is matched, the amount of that part.

(4) The section 1(3) amount for a settlement for a tax year for which this section applies to the settlement is—

(a) the amount upon which the trustees of the settlement would be chargeable to tax under section 1(3) for that year if they were resident ... in the United Kingdom in that year, or

(b) if section 86 applies to the settlement for that year, the amount mentioned in paragraph (a) minus the total amount of chargeable gains treated under that section as accruing in that year.

(5) The section 1(3) amount for a settlement for a tax year for which this section does not apply to the settlement is nil.

(5A) Where (apart from this subsection) the amount mentioned in subsection (4)(a) would include a chargeable gain or allowable loss to which section 1A(3)(b) or (c) applies (disposals by non-UK residents within the charge to capital gains tax), so much of the gain or loss as would be so included is to be disregarded for the purposes of determining the section 1(3) amount.

(5B) Where (apart from this subsection)—

(a) the amount mentioned in subsection (4)(a) would include an amount of chargeable gains accruing by virtue of the trustee’s entitlement to a sum of carried interest, and

(b) at the time when those chargeable gains accrue, income tax is chargeable by virtue of section 23I of ITTOIA 2005 in respect of the sum of carried interest,

the amount of the gains is to be disregarded for the purposes of determining the section 1(3) amount.

(5C) In subsection (5B) and section 87BA—

(a) “carried interest” has the same meaning as in section 23I of ITTOIA 2005 (see Part 1 of Schedule A1 to that Act), and

(b) that definition has effect as if references to a sum arising to an individual included a reference to a sum arising to the trustees.

(6) For the purposes of this section a settlement arising under a will or intestacy is treated as made by the testator or intestate at the time of death.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) See also paragraph 4 of Schedule D1 (foreign gain claims: capital payments ignored for the purposes of this section and Schedule 4C).

Section 87: matching

87A

(1) This section supplements section 87.

(2) The following steps are to be taken for the purposes of matching capital payments with section 1(3) amounts.

Step 1Find the section 1(3) amount for the relevant tax year.

Step 2Find the total amount of capital payments received by the beneficiaries from the trustees in the relevant tax year.

Step 3The section 1(3) amount for the relevant tax year is matched with—if the total amount of capital payments received in the relevant tax year does not exceed the section 1(3) amount for the relevant tax year, each capital payment so received, andotherwise, the relevant proportion of each of those capital payments.“The relevant proportion” is the section 1(3) amount for the relevant tax year divided by the total amount of capital payments received in the relevant tax year.

Step 4If paragraph (a) of Step 3 applies—reduce the section 1(3) amount for the relevant tax year by the total amount of capital payments referred to there, andreduce the amount of those capital payments to nil.If paragraph (b) of that Step applies—reduce the section 1(3) amount for the relevant tax year to nil, andreduce the amount of each of the capital payments referred to there by the relevant proportion of that capital payment.

Step 5Start again at Step 1 (unless subsection (3) applies).If the section 1(3) amount for the relevant tax year (as reduced under Step 4) is not nil, read references to capital payments received in the relevant tax year as references to capital payments received in the latest tax year which—is before the last tax year for which Steps 1 to 4 have been undertaken, andis a tax year in which capital payments (the amounts of which have not been reduced to nil) were received by beneficiaries.If the section 1(3) amount for the relevant tax year (as so reduced) is nil, read references to the section 1(3) amount for the relevant tax year as the section 1(3) amount for the latest tax year—which is before the last tax year for which Steps 1 to 4 have been undertaken, andfor which the section 1(3) amount is not nil.

(3) This subsection applies if—

(a) all of the capital payments received by beneficiaries from the trustees in the relevant tax year or any earlier tax year have been reduced to nil, or

(b) the section 1(3) amounts for the relevant tax year and all earlier tax years have been reduced to nil.

(4) The effect of any reduction under Step 4 of subsection (2) is to be taken into account in any subsequent application of this section.

Section 87: remittance basis

87B

(1) This section applies if—

(a) chargeable gains were treated under section 87 , 87K or 87L as accruing to an individual in the tax year 2024-25 or an earlier tax year, and

(b) section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the individual for that year, ...

(2) The chargeable gains are treated as having accrued on the disposal of an asset situated outside the United Kingdom.

(3) For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis) treat relevant property or benefits as deriving from the chargeable gains.

(4) For the purposes of subsection (3) property or a benefit is “relevant” if the capital payment , or onward payment (see section 87I(1)(c)), by reason of which the chargeable gains were treated as accruing consisted of—

(a) the payment or transfer of the property or its becoming property to which section 60 applies, or

(b) the conferring of the benefit.

(5) The references in this section to sections 87I(1)(c), 87K and 87L (which were repealed by Part 3 of Schedule 12 to the Finance Act 2025) are to those provisions as they had effect for the tax year in which the chargeable gains were treated as accruing to the individual.

Sections 87 and 87A: disregard of capital payments made from carried interest gains

87BA

(1) This section applies to a settlement where—

(a) a chargeable gain accruing by virtue of the trustee’s entitlement to a sum of carried interest in respect of which income tax is chargeable by virtue of section 23I of ITTOIA 2005 (“a carried interest gain”) is or has been disregarded for the purposes of determining the section 1(3) amount for the settlement for a tax year as a result of section 87(5B), and

(b) the unused disregarded amount in relation to the carried interest gain is not nil.

(2) For the purposes of sections 87 and 87A as they apply in relation to the settlement, no account is to be taken of a capital payment (or part of a capital payment) received by a beneficiary from the trustees at or after the time when the carried interest gain accrued if (or to the extent that) the amount of the capital payment does not exceed the unused disregarded amount.

(3) But if subsection (2) applies in a case where—

(a) two or more capital payments are received by beneficiaries at the same time, and

(b) the total of those capital payments exceeds the unused disregarded amount,

no account is to be taken of the amount of each capital payment that is the relevant proportion of the unused disregarded amount.

(4) In subsection (3), the “relevant proportion” means the proportion that the amount of the capital payment concerned bears to the total amount of all of the capital payments received by beneficiaries at the same time.

(5) In this section the “unused disregarded amount”, in relation to a carried interest gain, means—

(a) the sum of—

(i) the amount of the carried interest gain, and

(ii) the amount of any other carried interest gains that accrued to the trustees prior to the carried interest gain accruing that are or have been disregarded for the purposes of determining the section 1(3) amount for the settlement for a tax year as a result of section 87(5B), minus

(b) the amount of any capital payments (or part of capital payments) received by beneficiaries from the trustees of which no account has been taken as a result of the application of this section.

Sections 87 and 87A: disregard of certain capital payments

87C

(1) For the purposes of sections 87 and 87A as they apply in relation to a settlement, no account is to be taken of a capital payment (or a part of a capital payment) within subsection (2).

(2) A capital payment is within this subsection if (and to the extent that) it is received (or treated as received) in a tax year from the trustees of the settlement by a company that—

(a) is not resident in the United Kingdom in that year, and

(b) would be a close company if it were resident in the United Kingdom,

(and is not treated under any of subsections (3) to (5) of section 96 as received by another person).

Sections 87 and 87A: disregard of capital payments to non-residents

87D

(1) For the purposes of sections 87 and 87A as they apply in relation to a settlement, no account is to be taken of a capital payment (or a part of a capital payment) within subsection (2), but this—

(a) is subject to subsection (3) and section 87E, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A capital payment is within this subsection if (and to the extent that) it is in a tax year received from the trustees of the settlement by a beneficiary who at all times in that year is not resident in the United Kingdom, but this is subject to section 87F.

(3) Subsection (1) does not apply in relation to a capital payment (or a part of a capital payment) if—

(a) the recipient beneficiary is a close member of the settlor's family (see section 87H) when the beneficiary receives (or is treated as receiving) the payment (or part),

(b) the payment (or part) is received on or after 6 April 2018, and

Sections 87 and 87A: disregarded payments to temporary non-resident

87E

(1) If—

(a) as a result of section 87D, no account is taken of a capital payment (or a part of a capital payment) for the purposes of sections 87 and 87A,

(b) the recipient beneficiary is an individual who is temporarily non-resident, and

the payment (or part) is treated for the purposes of sections 87 and 87A as received (by the beneficiary) in the beneficiary's period of return, and account is to be taken of it accordingly for those purposes.

(2) Part 4 of Schedule 45 to FA 2013 explains—

(a) when an individual is to be regarded as “temporarily non-resident”, and

(b) what “the temporary period of residence” and “the period of return” mean.

Sections 87 and 87A: disregarded payments in year settlement ends

87F

(1) This section applies in relation to a settlement if—

(a) in a particular tax year, the settlement ceases to exist,

(b) two or more beneficiaries (“the recipients”) in the year receive capital payments from the trustees, and

(2) Those capital payments, so far as received by such of the recipients as are non-resident beneficiaries, are not within section 87D(2).

(3) In this section “non-resident beneficiary” means a beneficiary who at all times in the year is not resident in the United Kingdom.

Settlor liable if capital payment received by close family member

87G

(1) Subsection (2) applies if in the case of a settlement—

(a) a beneficiary of the settlement receives a capital payment from the trustees in a tax year,

(b) the settlor is resident in the United Kingdom for that tax year, and

(c) the beneficiary (“the original recipient”) is a close member of the settlor's family (see section 87H) at the time of receipt.

(2) Sections 87 and 87A have effect as if the capital payment—

(a) was received from the trustees by the settlor—

(i) as a beneficiary of the settlement (whether or not the settlor is otherwise a beneficiary of the settlement), and

(ii) at the time it was received by the original recipient, and

(b) was not received by the original recipient.

(2A) But subsection (2) does not apply if—

(a) the original recipient is resident in the United Kingdom for the tax year in which they receive the capital payment, and

(b) the settlor is a qualifying new resident for that tax year.

(3) Where any tax is chargeable on the settlor as a result of subsection (2) and is paid, the settlor is entitled to recover the full amount of the tax from the original recipient.

(4) For the purpose of recovering that amount, the settlor is entitled to require an officer of Revenue and Customs to give the settlor a certificate specifying—

(a) the amount of tax paid, ...

(b) the amount of the gains on which the tax is paid, and

and any such certificate is conclusive evidence of the facts stated in it.

Meaning of “close member of the settlor's family”

87H

(1) For the purposes of sections 87D and 87G as they apply in relation to a settlement, a person is a close member of the settlor's family at any time if the settlor is living at that time and—

(a) the person is the settlor's spouse or civil partner at that time, or

(b) the person—

(i) is a child of the settlor, or of a person who at that time is the settlor's spouse or civil partner, and

(ii) at that time has not reached the age of 18.

(2) For the purposes of subsection (1), two people living together as if they were a married couple or civil partners are treated as if they were spouses or civil partners of each other.

Onward gifts from non-residents or qualifying new residents

87HA

(1) Subsection (2) applies if—

(a) a person (“the original recipient”) receives a capital payment (“the original benefit”) from the trustees of a settlement,

(b) the original recipient is not resident in the United Kingdom, or is a qualifying new resident, for the tax year in which they receive the original benefit,

(c) section 87G(2) (close family member’s benefits attributed to settlor) does not apply to the provision of the original benefit to the original recipient,

(d) at the time when the person receives the original benefit—

(i) there are arrangements, or an intention, as regards the (direct or indirect) passing on of the whole or part of the original benefit to another person, and

(ii) it is reasonable to expect that, if the whole or part of the original benefit is passed on to another person in accordance with the arrangements or intention, that other person will be resident in the United Kingdom when they receive at least part of what is passed on to them,

(e) the original recipient provides a benefit (“the onward gift”) to a person (“the subsequent recipient”)—

(i) at the time when the original benefit is provided to the original recipient or at any later time in the 3 years beginning with the day containing that time, or

(ii) at any time before the original benefit is made to the original recipient and, it is reasonable to assume, in anticipation of the original benefit’s being made,

(f) the onward gift is of or includes—

(i) the whole or part of the original benefit

(ii) anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of the original benefit, or

(iii) any other property, but only if the original benefit is provided with a view to enabling or facilitating, or otherwise in connection with, the providing of the onward gift to the subsequent recipient, and

(g) the subsequent recipient is resident in the United Kingdom for the tax year in which they receive the onward gift.

(2) So much of the onward gift as falls within subsection (1)(f) is treated for the purposes of sections 87, 87A , 87D(2) and 87G(2) as a ... payment received from the trustees by the subsequent recipient at the time when the onward gift is provided.

(3) Where subsection (2) applies, the subsequent recipient is treated as having received the ... payment as a beneficiary of the settlement (whether or not they are otherwise a beneficiary of it).

(4) For the purposes of subsection (1)(e), the circumstances in which the original recipient provides a benefit to the subsequent recipient include circumstances where there is a series of two or more benefits starting with a benefit provided by the original recipient and ending with a benefit provided to the subsequent recipient; and in such a case—

(a) the onward gift is treated for the purposes of subsection (1)(e) as provided when the final benefit in the series is provided, and

(b) the reference to the onward gift in subsection (1)(f) is to be read as a reference to each benefit in the series.

(5) Where the onward gift is made as mentioned in subsection (1)(e)(ii), the onward gift is treated for the purposes of subsection (2) as made in the tax year in which the original benefit is made to the original recipient.

(6) Where the conditions in subsection (1)(e) to (g) are met, it is to be presumed (unless the contrary is shown) that the condition in subsection (1)(d) is also met.

(7) In this section, “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

Non-UK resident settlements: recipients of onward gifts

87I

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relevant parts of payment from which onward gift derived

87J

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Attribution of gains or payments to recipient of onward gift

87K

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cases where settlor liable following onward gift

87L

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cases where recipient of onward gift is user of remittance basis

87M

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sections 87 and 87A: disregard of payments to migrating beneficiary

87N

(1) For the purposes of sections 87 and 87A as they apply in relation to a settlement for a particular tax year, no account is to be taken of a capital payment (or part of a capital payment) within subsection (2), but this is subject to section 87P.

(2) A capital payment is within this subsection—

(a) if it is received by a beneficiary of the settlement before the particular tax year,

(b) if the relevant person is resident in the United Kingdom in the tax year in which it is received,

(d) so far as it has not been matched (under section 87A as it applies for tax years before the particular tax year) with—

(i) the section 1(3) amount for any tax year before the particular tax year, but not earlier than the tax year 2018-19, in which the relevant person is resident in the United Kingdom, or

(ii) the section 1(3) amount for any tax year earlier than the tax year 2018-19.

(3) For the purposes of subsection (2), the beneficiary is “the relevant person” unless section 87G(2) applies in relation to the capital payment in which event the settlor is “the relevant person”.

Sections 87 and 87A: temporary migration after payment disregarded

87P

(1) If—

(a) as a result of section 87N, no account is taken of a capital payment (or a part of a capital payment) for the purposes of sections 87 and 87A as they apply in relation to a settlement for a particular tax year,

(b) the recipient beneficiary (where section 87G(2) does not apply in relation to the capital payment), or the settlor (where section 87G(2) does apply in relation to the capital payment), is an individual who is temporarily non-resident,

(c) the whole or part of the particular tax year constitutes, or forms part of, that individual's temporary period of non-residence,

(d) either—

(i) that individual's temporary period of non-residence begins with the start of a tax year and the payment (or part) is received before that tax year, or

(ii) that individual's temporary period of non-residence begins otherwise than at the start of a tax year and the payment (or part) is received before, or at any time in, the tax year in which that individual's temporary period of non-residence begins, and

(e) the payment (or part) has not been matched (under section 87A as it applies for tax years before the particular tax year) with—

(i) the section 1(3) amount for any tax year before the particular tax year, but not earlier than the tax year 2018-19, in which that individual is resident in the United Kingdom, or

(ii) the section 1(3) amount for any tax year earlier than the tax year 2018-19,

the payment (or part) is treated for the purposes of sections 87 and 87A as received (by that individual) in that individual's period of return, and account is to be taken of it accordingly for those purposes.

(2) Part 4 of Schedule 45 to FA 2013 explains—

(a) when an individual is to be regarded as “temporarily non-resident”, and

(b) what “the temporary period of residence” and “the period of return” mean.

Gains of dual resident settlements.

88

(1) Section 87 also applies to a settlement for any year of assessment beginning on or after 6th April 1991 if—

(a) the trustees are resident ... in the United Kingdom during any part of the year, and

(b) at any time of such residence ... they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom, ...

(2) The section 1(3) amount for a tax year for which section 87 applies by virtue of this section is what it would be if the amount mentioned in section 87(4)(a) were the assumed chargeable amount.

(3) For the purposes of subsection (2) above the assumed chargeable amount in respect of a year of assessment is the lesser of the following 2 amounts—

(a) the amount on which the trustees would be chargeable to tax for the year under section 1(3) on the assumption that the double taxation relief arrangements did not apply;

(b) the amount on which, by virtue of disposals of protected assets, the trustees would be chargeable to tax for the year under section 1(3) on the assumption that those arrangements did not apply.

(4) For the purposes of subsection (3)(b) above assets are protected assets if—

(a) they are of a description specified in the double taxation relief arrangements, and

(b) were the trustees to dispose of them at any relevant time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.

(5) For the purposes of subsection (4) above—

(a) the assumption specified in subsection (3)(b) above shall be ignored;

(b) a relevant time is any time, in the year of assessment concerned, when the trustees fall to be regarded for the purposes of the arrangements as resident in a territory outside the United Kingdom;

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Migrant settlements etc.

89

(1) Where a period of one or more years of assessment for which section 87 applies to a settlement (“a non-resident period”) succeeds a period of one or more years of assessment for each of which section 87 does not apply to the settlement (“a resident period”), a capital payment received by a beneficiary in the resident period shall be disregarded for the purposes of sections 87 and 87A if it was not made in anticipation of a disposal made by the trustees in the non-resident period.

(1A) Subsection (2) applies to a settlement if—

(a) a non-resident period is succeeded by a resident period, and

(b) in relation to the last tax year in the non-resident period (“the last non-resident tax year”), section 87A(3) applied by virtue of paragraph (a) of that provision (exhaustion of capital payments).

(2) Chargeable gains are treated as accruing in a tax year (in the resident period) to a beneficiary of the settlement who receives a capital payment from the trustees in that year if all or part of the capital payment is matched (under section 87A as it applies for that year) with the section 1(3) amount for the last non-resident tax year or any earlier tax year.

(3) Section 87(3) and (4) and sections 87A to 87P apply for the purposes of subsection (2) as if the relevant tax year were the tax year mentioned in subsection (2).

(4) Section 87B (remittance basis) applies in relation to chargeable gains treated under subsection (2) as accruing as it applies in relation to chargeable gains treated under section 87 as accruing.

Sections 87 and 89(2): transfers between settlements

90

(1) This section applies if the trustees of a settlement (“the transferor settlement”) transfer all or part of the settled property to the trustees of another settlement (“the transferee settlement”).

(2) In this section “the year of transfer” means the tax year in which the transfer occurs.

(3) Treat the section 1(3) amount for the transferee settlement for any tax year (not later than the year of transfer) as increased by—

(a) the section 1(3) amount for the transferor settlement for that year (as reduced under section 87A as it applies in relation to that settlement for the year of transfer and all earlier tax years), or

(b) if part only of the settled property is transferred, the relevant proportion of the amount mentioned in paragraph (a).

(4) “The relevant proportion”is—

(a) the market value of the property transferred, divided by

(b) the market value of the property comprised in the transferor settlement immediately before the transfer.

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