Finance Act 1984

8 (1) The provisions of this paragraph apply if, in a case where paragraph 7 above applies, the amount of capital gains tax referred to in sub-paragraph (1)(a) of that paragraph exceeds 30 per cent. of the aggregte of those capital payments falling within sub-paragraph (1)(b) of that paragraph which the beneficiary has received from the trustees of the settlement to which the claim relates.

(2) In the following provisions of this paragraph—

(a) the capital payments falling within sub-paragraph (1)(b) of paragraph 7 above which the beneficiary has received otherwise than from the trustees of the settlement to which the claim relates are referred to as “related payments"; and

(b) any of those related payments which, apart from this paragraph, would fall to be brought into account as mentioned in sub-paragraph (4)(b) of paragraph 7 above is referred to as a “related section 80 payment".

(3) If sub-paragraph (2) of paragraph 7 above applies, then—

(a) as respects the year of assessment in which the claim is made and any subsequent year, any related section 80 payment shall be left out of account for the purposes of sub-paragraphs (3) and (4) of section 80 of the Finance Act 1981; and

(b) all the related payments shall be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule.

(4) If sub-paragraph (3) of paragraph 7 above applies, then—

(a) as respects the year of assessment in which the claim is made and any subsequent year, so much of any related section 80 payment as is equal to 3⅓ times the amount of capital gains tax released by that payment shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981; and

(b) so much of each of the related payments as is equal to 3⅓ times the amount of capital gains tax released by the payment shall be left out of account for the purposes mentioned in sub-paragraph (3)(b) above.

(5) For the purposes of sub-paragraph (4) above, the amount of capital gains tax released by a related payment shall be determined by the formula—

where—

• “A" is the capital gains tax referred to in sub-paragraph (1)(a) of paragraph 7 above;

• “B" is an amount equal to 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) of that paragraph which the beneficiary has received from the trustees of the settlement to which the claim relates;

• “C" is the related payment in question; and

• “D" is the aggregate of all the related payments.

(6) Where, by virtue of sub-paragraph (3)(a) or sub-paragraph (4)(a) above, the whole or any part of a related section 80 payment falls to be left out of account as mentioned in that sub-paragraph, section [F1 740 of the Taxes Act 1988] shall have effect in relation to the benefit received by the beneficiary which, in whole or in part, consists of that payment as if, in the year of assessment in which the claim is made, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary.

Textual Amendments

F1 Words substituted by Income and Corporation Taxes Act 1988 (c. 1), Sch. 29 para. 32