- Latest available (Revised)
- Point in Time (01/02/1991)
- Original (As enacted)
Version Superseded: 06/03/1992
Point in time view as at 01/02/1991.
There are currently no known outstanding effects for the Capital Gains Tax Act 1979 (repealed 6.3.1992), Cross Heading: Settlements.
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In this Act, unless the context otherwise requires, “settled property” means any property held in trust other than property to which section 46 above (nominees and bare trustees) applies.
This definition has effect subject to section 61(4) (insolvents’ assets) and 93 (unit trusts) below.
Modifications etc. (not altering text)
C1See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
(1)In relation to settled property, the trustees of the settlement shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the trustees), and that body shall be treated as being resident and ordinarily resident in the United Kingdom unless the general administration of the trusts is ordinarily carried on outside the United Kingdom and the trustees or a majority of them for the time being are not resident or not ordinarily resident in the United Kingdom.
(2)Notwithstanding subsection (1) above, a person carrying on a business which consists of or includes the management of trusts, and acting as trustee of a trust in the course of that business, shall be treated in relation to that trust as not resident in the United Kingdom if the whole of the settled property consists of or derives from property provided by a person not at the time (or, in the case of a trust arising under a testamentary disposition or on an intestacy or partial intestacy, at his death) domiciled, resident or ordinarily resident in the United Kingdom, and if in such a case the trustees or a majority of them are or are treated in relation to that trust as not resident in the United Kingdom, the general administration of the trust shall be treated as ordinarily carried on outside the United Kingdom.
(3)For the purposes of this section, and of sections 54(1) and 55(1) below, 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 M1Settled 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 six months from the date when it becomes payable by the trustees or trustee, and before or after the expiration of that period of six 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 two 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.
Modifications etc. (not altering text)
C2See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
Marginal Citations
A [F1transfer into] settlement, whether revocable or irrevocable, is a disposal of the entire property thereby becoming settled property notwithstanding that the [F2transferor] has some interest as a beneficiary under the settlement and notwithstanding that he is a trustee, or the sole trustee, of the settlement.
Textual Amendments
F1Words substituted by Finance Act 1981 (c. 35, SIF 63:2), s. 86 from 10 March 1981
F2Word substituted by Finance Act 1981 (c. 35, SIF 63:2), s. 86 from 10 March 1981
Modifications etc. (not altering text)
C4See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
(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 46(1) above, for a consideration equal to their market value.
(2)On the occasion when a person becomes absolutely entitled to any settled property as against the trustee, any allowable loss which has accrued to the trustee in respect of property which is, or is represented by, the property to which that person so becomes entitled (including any allowable loss carried forward to the year of assessment in which that occasion falls), being a loss which cannot be deducted from chargeable gains accruing to the trustee in that year, but before that occasion, shall be treated as if it were an allowable loss accruing at that time to the person becoming so entitled, instead of to the trustee.
[F3(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.]
Textual Amendments
F3S. 54(3) added by Finance Act 1981 (c. 35, SIF 63:2), s. 87(1) in respect of occurrences on or after 10 March 1981
Modifications etc. (not altering text)
C5See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
(1)[F4On the termination, on the death of the person entitled to it, of a life 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 a life interest which is a right to part of the income of settled property shall be treated as a life interest in a corresponding part of the settled property.
(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F5
(3)Subsection (1) above shall apply where the person entitled to a life 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 a life interest.
(4)In this section “life interest” in relation to a settlement—
(a)includes a right under the settlement to the income of, or the use or occupation of, settled property for the life of a person other than the person entitled to the right, or for lives,
(b)does not include any right which is contingent on the exercise of the discretion of the trustee or the discretion of some other person, and
(c)subject to subsection (5) below, does not include an annuity, notwithstanding that the annuity is payable out of or charged on settled property or the income of settled property.
(5)In this section the expression “life interest” shall include entitlement to an annuity created by the settlement if—
(a)some or all of the settled property is appropriated by the trustees as a fund out of which the annuity is payable, and
(b)there is no right of recourse to settled property not so appropriated, or to the income of settled property not so appropriated,
and, without prejudice to subsection (6) below, the settled property so appropriated shall, while the annuity is payable, and on the occasion of the death of the annuitant, be treated for the purposes of this section as being settled property under a separate settlement.
(6)If there is a life interest in a part of the settled property and, where that is a life 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 life interest subsists shall while it subsists be treated for the purposes of this section as being settled property under a separate settlement.
Textual Amendments
F4S. 55(1)(a)(b) and the words commencing s. 55(1) substituted for words by Finance Act 1982 (c. 39, SIF 63:2), s. 84(1) in relation to interests terminating on or after 6 April 1982
F5S. 55(2) repealed by Finance Act 1982 (c. 39, SIF 63:2), ss. 84, 157 and Sch. 22 Part VI in relation to interests terminating on or after 6 April 1982
Modifications etc. (not altering text)
C7See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
(1)Where, by virtue of section 54(1) above, the assets forming part of any settled property are deemed to be disposed of and re-acquired by the trustee on the occasion when a person becomes [F6(or would but for a disability become)] absolutely entitled thereto as against the trustee, then, if that occasion is the termination of a life interest (within the meaning of section 55 (above) by the death of the person entitled to that interest—
(a)no chargeable gain shall accrue on the disposal, and
(b)if on the death the property reverts to the disponer the disposal and re-acquisition 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 6th April 1965, be deemed to be at that earlier date.
[F7(1A)Where the life interest referred to in subsection (1) above is an interest in part only of the settled property to which section 54 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.
(1B)The last sentence of subsection (1) of section 55 above, and subsection (6) of that section, shall apply for the purposes of subsection (1A) above as they apply for the purposes of section 55(1).]
(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F8
Textual Amendments
F6Words inserted by Finance Act 1981 (c. 35, SIF 63:2), s. 87(2) in respect of occurrences on or after 10 March 1981
F7S. 56(1A)(1B) inserted by Finance Act 1982 (c. 39, SIF 63:2), s. 84 in respect of interests terminating on or after 6 April 1982
F8S. 56(2) repealed by Finance Act 1982 (c. 39, SIF 63:2), ss. 84(2), 157 and Sch. 22 Part VI in relation to interests terminating on or after 6 April 1982
Modifications etc. (not altering text)
C8See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
C9See Finance Act 1988 (c. 39, SIF 63;1, 2), s. 96 and Sch. 8 para. 1
(1)This section applies where—
(a)a claim for relief was made under section [F10126 or 147A below] 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 54(1) or 55(1)(a) above.
(2)Sections 56(1)(a) and 55(1)(b) 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 56(1A) above; but in such a case the reduction provided for by section 56(1A) above 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 [F10126 or, as the case may be, 147A below].]
Textual Amendments
F9S. 56A added by Finance Act 1982 (c. 39, SIF 63:2), s. 84 in respect of interests terminating on or after 6 April 1982
F10Words substituted by Finance Act 1989 (c. 26, SIF 63:2), s. 124 and Sch. 14 para. 6(1) in relation to disposals on or after 14th March 1989 (except where relief given under Finance Act 1980 (c. 48), s. 79 in respect of a disposal before that date)
Modifications etc. (not altering text)
C10See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
Sections 54(1) and 55(1) above shall apply, where an annuity which is not a life interest is terminated by the death of the annuitant, as they apply on the termination of a life interest by the death of the person entitled thereto.
In this section “life interest” has the same meaning as in section 55 above.
Modifications etc. (not altering text)
C11See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
(1)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.
(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 54(1) above).
Modifications etc. (not altering text)
C12See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
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