86 Attribution of gains to settlors with interest in non-resident or dual resident settlements.U.K.
(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 domiciled in the United Kingdom at some time in the year and is [F1resident 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 2(2) [F2if 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.
[F3(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 [F4resident F5... 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.
(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 [F6or if, as respects the settlor, the year is a split year, in the UK part of that year], and
(b)those gains shall be treated as forming the highest part of the amount on which he is chargeable to capital gains tax for the year.
F7(4A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)Schedule 5 (which contains provisions supplementary to this section) shall have effect.
Textual Amendments
F1Words in s. 86(1)(c) substituted (with effect in accordance with Sch. 46 para. 112 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 91(2)
F2Words in s. 86(1)(e) substituted (with effect in accordance with Sch. 2 para. 56(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 30
F3S. 86(2) substituted (with effect in accordance with Sch. 46 para. 112 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 91(3)
F4Words in s. 86(3) substituted (with effect in accordance with Sch. 12 para. 34(3) of the amending Act) by Finance Act 2006 (c. 25), Sch. 12 para. 34(1)(2)(c)
F5Words in s. 86(3) omitted (with effect in accordance with Sch. 46 para. 112 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 91(4)
F6Words in s. 86(4)(a) inserted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 100
F7S. 86(4A) repealed (with effect in accordance with Sch. 11 paras. 7, 8 of the amending Act) by Finance Act 2002 (c. 23), Sch. 40 Pt. 3(4)
Modifications etc. (not altering text)
C1S. 86 modified (with effect in accordance with Sch. 23 paras. 1(1), 2(1)(5)(6), 3(1)(4)(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 23 paras. 1(2)(3), 2(2)-(4), 3(2)(3)
C2S. 86(1)(e) modified (31.7.1998) by Finance Act 1998 (c. 36), s. 132(5)
C3S. 86(1)(e) modified (31.7.1998) by Finance Act 1998 (c. 36), Sch. 23 para. 4(1)