Part III Individuals, partnerships, trusts and collective investment schemes F85etc
Chapter II Settlements
Migration of settlements, non-resident settlements and dual resident settlements
80 Trustees ceasing to be resident in U.K.
1
This section applies if the trustees of a settlement become at any time (“the relevant time”) F58not 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—
C6a
the trustees carry on a trade in the United Kingdom through a branch or agency, and
C6b
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
C2b
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.
80AF40Postponing gain or loss under section 80(2): interests in UK land
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.
81 Death of trustee: special rules.
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 F24... 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 F81... 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 F37... 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 F138... 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.
82 Past trustees: liability for tax.
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 F110cease 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.
83 Trustees ceasing to be liable to U.K. tax.
1
This section applies if the trustees of a settlement, while continuing to be resident F28... 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.
83AF15Trustees both resident and non-resident in a year of assessment
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
F83b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 F42not resident in the United Kingdom, or
F915
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84 Acquisition by dual resident trustees.
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 F10... 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,
c
the assets are of a description specified in the arrangements, and
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.
85 Disposal of interests in non-resident settlements.
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 F59not resident in the United Kingdom.
2
F108Subject 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
c
the interest was created for his benefit, or he otherwise acquired it, before the relevant time.
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
F27Subject 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,
c
the interest was created for his benefit, or he otherwise acquired it, before the relevant time, and
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.
F10510
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, F132chargeable 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.
85AF135Transfers of value: attribution of gains to beneficiaries and treatment of losses
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.
F1042A
For the purposes of sections 87 to 89, no account is to be taken of F137any section 1(3) amount in a Schedule 4C pool (see paragraph 1 of Schedule 4C).
F623
When calculating the F144section 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 F137section 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.
C1086 Attribution of gains to settlors with interest in non-resident or dual resident settlements.
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 F100resident in the United Kingdom for the year;
d
at any time during the year the settlor has an interest in the settlement;
f
paragraph 3, 4 or 5 of Schedule 5 does not prevent this section applying.
F192
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
F1273A
Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of subsection (1)(c).
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 F123or 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.
F564ZA
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).
F1434ZB
Where (apart from this subsection) the amount mentioned in subsection (1)(e) would include an amount of chargeable gains treated as accruing under section 103KA(2) or (3) (carried interest gains), the amount of the gains is to be disregarded for the purposes of subsection (1)(e).
F844A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Schedule 5 (which contains provisions supplementary to this section) shall have effect.
F11786AAttribution of gains to settlor F20where temporarily non-resident
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 F134section 1M(3) as accruing to a settlor under section 86 in the period of return,
b
c
those amounts are in respect of matched capital payments received F96... .
2
A “matched” capital payment is a capital payment, all or part of which is matched under section 87A with F61the 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 F16section 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 F26the 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 F75section 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 F101the 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 F101the 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,
c
“period of return” and “year of return” have the same meanings as in F92section 1M(3), and
d
paragraph 8 of Schedule 5 applies in construing the reference to property originating from the settlor.
C5C4C7F9987Non-UK resident settlements: attribution of gains to beneficiaries
1
This section applies to a settlement for a tax year (“the relevant tax year”) if F70there 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 F51the section 1(3) amount for the relevant tax year or any earlier tax year.
F1282A
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
F64The section 1(3) amount for a settlement for a tax year for which this section applies to the settlement is—
a
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
F4The section 1(3) amount for a settlement for a tax year for which this section does not apply to the settlement is nil.
F725A
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.
F35B
Where (apart from this subsection) the amount mentioned in subsection (4)(a) would include an amount of chargeable gains treated as accruing under section 103KA(2) or (3) (carried interest gains), the amount of the gains is to be disregarded for the purposes of determining F44the section 1(3) amount.
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.
F507
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C5C4C787AF99Section 87: matching
1
This section supplements section 87.
2
The following steps are to be taken for the purposes of matching capital payments F115with section 1(3) amounts.
Step 1
Find F23the section 1(3) amount for the relevant tax year.
Step 2
Find the total amount of capital payments received by the beneficiaries from the trustees in the relevant tax year.
Step 3
F23The section 1(3) amount for the relevant tax year is matched with—
- a
if the total amount of capital payments received in the relevant tax year does not exceed F23the section 1(3) amount for the relevant tax year, each capital payment so received, and
- b
otherwise, the relevant proportion of each of those capital payments.
“The relevant proportion” is F23the section 1(3) amount for the relevant tax year divided by the total amount of capital payments received in the relevant tax year.
- a
Step 4
If paragraph (a) of Step 3 applies—
- a
reduce F23the section 1(3) amount for the relevant tax year by the total amount of capital payments referred to there, and
- b
reduce the amount of those capital payments to nil.
If paragraph (b) of that Step applies—
- a
reduce F23the section 1(3) amount for the relevant tax year to nil, and
- b
reduce the amount of each of the capital payments referred to there by the relevant proportion of that capital payment.
- a
Step 5
Start again at Step 1 (unless subsection (3) applies).
If F23the 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—
- a
is before the last tax year for which Steps 1 to 4 have been undertaken, and
- b
is a tax year in which capital payments (the amounts of which have not been reduced to nil) were received by beneficiaries.
If F23the section 1(3) amount for the relevant tax year (as so reduced) is nil, read references to F23the section 1(3) amount for the relevant tax year as F23the section 1(3) amount for the latest tax year—
- a
which is before the last tax year for which Steps 1 to 4 have been undertaken, and
- b
for which F23the section 1(3) amount is not nil.
- a
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
F145the 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.
C4C787BF99Section 87: remittance basis
1
This section applies if—
a
b
F48c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F652
The chargeable gains are chargeable gains accruing 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 paymentF54, or onward payment (see section 87I(1)(c)), by reason of which the chargeable gains are treated as accruing consists 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.
C5C4C787CF99Sections 87 and 87A: disregard of certain capital payments
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).
87DF21Sections 87 and 87A: disregard of capital payments to non-residents
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, and
b
does not affect the operation of sections 87I to 87L (see, in particular, sections 87K(2) and 87L(2) which apply sections 87 and 87A by reference to the payment mentioned in section 87I(1)(a)).
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
c
the settlor is resident in the United Kingdom in the tax year in which the payment (or part) is received.
87ESections 87 and 87A: disregarded payments to temporary non-resident
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
c
the payment (or part) is received in the beneficiary's temporary period of non-residence,
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.
87FSections 87 and 87A: disregarded payments in year settlement ends
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
c
at least one of the recipients is, and at least one is not, a non-resident beneficiary.
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.
87GSettlor liable if capital payment received by close family member
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 at any time in that 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.
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, and
b
the amount of the gains on which the tax is paid,
and any such certificate is conclusive evidence of the facts stated in it.
87HMeaning of “close member of the settlor's family”
1
For the purposes of sections 87D, 87G and 87L 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.
F252
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.
87INon-UK resident settlements: recipients of onward gifts
1
Sections 87J and 87K apply if in the case of a settlement—
a
a capital payment (“the original payment”) is received in a tax year (“the payment year”) by a person (“the original beneficiary”) from the trustees of the settlement,
b
at the time of receipt—
i
there are arrangements, or there is an intention, as regards the (direct or indirect) passing-on of the whole or part of the original payment, and
ii
it is reasonable to expect that, in the event of the whole or part of the original payment being passed on to another person as envisaged by 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,
c
the original beneficiary makes, directly or indirectly, a gift (“the onward payment”) to a person (“the subsequent recipient”)—
i
at the time the original payment is received, or at any later time in the 3 years beginning with the day containing the start time, or
ii
at any time before the original payment is received and, it is reasonable to assume, in anticipation of receipt of the original payment,
d
the gift is of or includes—
i
the whole or part of the original payment,
ii
anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of the original payment, or
iii
any other property, but only if the original payment is made with a view to enabling or facilitating, or otherwise in connection with, the making of the gift of the property to the subsequent recipient,
e
the subsequent recipient is resident in the United Kingdom in the tax year in which the onward payment is received by the subsequent recipient (“the gift year”, but see subsection (4)), and
f
in the period beginning with the start of the payment year and ending with the end of the gift year, there is at least one tax year—
i
for which the otherwise-liable person is not resident in the United Kingdom, or
ii
for which section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the otherwise-liable person.
2
Where—
a
there is a series of two or more gifts,
b
the first gift in the series is made, directly or indirectly, by the original beneficiary—
i
at the time the original payment is received, or at any later time in the 3 years beginning with the day containing the start time, or
ii
at any time before the original payment is received and, it is reasonable to assume, in anticipation of receipt of the original payment,
c
the recipient of a gift in the series is the person who makes, directly or indirectly, the next gift in the series,
d
the recipient of the last gift in the series is resident in the United Kingdom in the tax year in which that gift is received,
e
as regards each earlier gift in the series, its recipient is not resident in the United Kingdom at any time in the tax year in which it is received, and
f
the condition in subsection (1)(d) is met in relation to each gift in the series,
the last gift in the series is treated for the purposes of subsection (1)(c) as if its maker were the original beneficiary (and not its actual maker).
3
For the purposes of subsections (1)(c)(i) and (2)(b)(i)—
a
if the original payment is a capital payment other than one that is treated as received by section 87M, “the start time” is the time the original payment is received, and
b
if the original payment is a capital payment that is treated as received by section 87M in connection with the operation of this section, and sections 87J and 87K, on a previous occasion, “the start time” is the time given by this subsection as the start time on that occasion
4
Where the onward payment is made as mentioned in subsection (1)(c)(ii), the onward payment is to be treated—
a
for the purposes of the provisions of this section following subsection (1)(c), and
b
for the purposes of sections 87K to 87M,
as made and received immediately after the original payment is received (and in the payment year).
5
Where this section provides for section 87K to apply in relation to two or more gifts received from the original beneficiary in the gift year by reference to the original payment—
a
treat that section as applying in relation to a single gift equal in amount to the total of the amount or value of each of the gifts (and as not applying in relation to each gift separately), and
b
apportion between the gifts (in proportion to their amounts or values)—
i
any capital payments given by section 87K(2), and
ii
any gains given by section 87K(3),
as a result of applying section 87K in accordance with paragraph (a).
6
Where this section provides for sections 87J and 87K to apply in relation to a gift received in a tax year—
a
take the steps required by section 87J before applying section 87K in relation to the gift, but
b
in taking the steps required by section 87J, have regard to the application of section 87K in relation to gifts made in earlier tax years.
7
In this section—
“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),
“gift” includes any benefit,
“make”, in relation to a gift that is a benefit, means confer, and
“the otherwise-liable person” means the original beneficiary unless section 87G(2) applies in relation to the original payment in which event the settlor is “the otherwise-liable person”.
8
Where subsection (1)(c) and (d) are met in any case, it is to be presumed (unless the contrary is shown) that subsection (1)(b) is also met in that case.
87JRelevant parts of payment from which onward gift derived
1
Where this section applies (see section 87I), for the purposes of section 87K treat the original payment as divided into slices as follows—
a
a slice consisting of the taxed part (if any) of each matched amount (if any),
b
a slice (“U”) consisting of the untaxed part (if any) of each matched amount (if any), and
c
a slice (“R”) consisting of the rest (if any) of the original payment.
2
For the purposes of this section, if all or part of the original payment is, in a tax year (“the matching year”) not later than the gift year, matched under section 87A with F43the section 1(3) amount for the matching year or any earlier tax year, so much of the original payment as is so matched is a “matched amount”.
3
For the purposes of subsection (1), if—
a
as a result of there being a matched amount, gains are treated by section 87 as accruing to the otherwise-liable person,
b
the otherwise-liable person is resident in the United Kingdom for the matching year, and
c
none of sections 809B, 809D and 809E of ITA 2007 applies to the otherwise-liable person for the matching year,
the whole of the matched amount is its “taxed part” (and it has no “untaxed part”).
4
For the purposes of subsection (1), if—
a
as a result of there being a matched amount, gains are treated by section 87 as accruing to the otherwise-liable person,
b
section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the otherwise-liable person for the matching year, and
c
the whole or part of those gains is remitted to the United Kingdom in a tax year—
i
that is not later than the gift year, and
ii
in which the otherwise-liable person is resident in the United Kingdom,
so much of the matched amount as is equal to so much of the gains as is remitted as mentioned in paragraph (c) is the matched amount's “taxed part”, and the rest of the matched amount is its “untaxed part”.
5
For the purposes of subsection (1), if all or part of the original payment is in a tax year (“the pool-matching year”) not later than the gift year matched, under section 87A as applied by paragraph 8 of Schedule 4C, with F116the section 1(3) amount in the Schedule 4C pool for the pool-matching year or any earlier tax year—
a
so much of the original payment as is so matched is a “matched amount”, and
b
the whole of the matched amount is its “taxed part” (and it has no “untaxed part”).
87KAttribution of gains or payments to recipient of onward gift
1
Where this section applies (see section 87I), G is—
a
the amount or value of so much of the onward payment as is within any of sub-paragraphs (i) to (iii) of section 87I(1)(d), or
b
if lower, the amount of the original payment.
(For the meaning of R and U, see section 87J.)
2
If R is greater than nil, sections 87 and 87A have effect for the gift year and later tax years—
a
as if a capital payment was received from the trustees by the subsequent recipient—
i
as a beneficiary of the settlement (whether or not the subsequent recipient is otherwise a beneficiary of the settlement), and
ii
at the time the subsequent recipient received the onward payment,
b
as if that capital payment consisted of—
i
R, if G is greater than R, or
ii
so much of R as is equal to G, if G is not greater than R, and
c
as if so much of the original payment as is equal to that capital payment was not received by the otherwise-liable person.
3
If G is greater than R, and if U is greater than nil—
a
chargeable gains are treated as accruing to the subsequent recipient in the gift year (but see section 87L(3) and (4)),
b
the amount of those gains is—
i
U, if (G − R) is greater than U, or
ii
so much of U as is equal to (G − R), if (G − R) is not greater than U, and
c
the chargeable gains treated by section 87 as accruing to the otherwise-liable person by reason of the original payment are treated as from the end of the gift year as reduced by that amount, with that reduction being made from so much of those gains as has not by then been remitted to the United Kingdom in a tax year in which the otherwise-liable person is resident in the United Kingdom.
4
If this section applies by reference to the original payment also in relation to a gift received from the original beneficiary in a tax year earlier than the gift year, this section applies in relation to the onward payment as if—
a
the amount given by section 87J for R were reduced by the amount of any capital payment given by subsection (2) in relation to that earlier year, and
b
the amount given by section 87J for U were reduced by the amount of any gains given by subsection (3) in relation to that earlier year.
87LCases where settlor liable following onward gift
1
Subsection (2) applies where—
a
ignoring this section and section 87M, a person is treated by section 87K(2) as receiving a capital payment from the trustees of a settlement at a time (“the time of receipt”) in a tax year,
b
the settlor is resident in the United Kingdom at any time in that year, and
c
the person mentioned in paragraph (a) is a close member of the settlor's family (see section 87H) at the time of receipt.
2
Sections 87 and 87A have effect for that year, and later tax years, 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 of receipt, and
b
was not received by the person mentioned in subsection (1)(a).
3
Subsection (4) applies where—
a
in the case of a settlement, chargeable gains are (ignoring this section and section 87M) treated by section 87K(3) as accruing to a person in a tax year (“the subsequent recipient”),
b
the settlor is resident in the United Kingdom at any time in that year, and
c
the subsequent recipient is a close member of the settlor's family when the subsequent recipient receives the onward payment (see section 87I(1)(c)) by reference to which the chargeable gains are treated as accruing.
4
Section 87K(3)(a) has effect as if its reference to the subsequent recipient were a reference to the settlor, and references (however expressed) to chargeable gains treated as accruing by this section are to chargeable gains treated by section 87K(3)(a) as accruing to the settlor as a result of the operation of this subsection.
5
Where, in the case of a settlement, any tax is chargeable on the settlor as a result of this section and is paid, the settlor is entitled to recover the full amount of the tax from the person mentioned in subsection (1)(a) or (3)(a), as the case may be.
6
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, and
b
the amount of the gains on which the tax is paid,
and any such certificate is conclusive evidence of the facts stated in it.
87MCases where recipient of onward gift is user of remittance basis
1
Subsection (2) applies where—
a
ignoring this section, a person is treated by section 87K(2) as receiving a capital payment from the trustees of a settlement at a time (“the time of receipt”) in a tax year,
b
section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the person for that tax year, and
c
the payment is not treated by section 87L(2) as received by the settlor.
2
Section 87I(1)(a) has effect as if the capital payment were received from the trustees by the person at the time of receipt, and section 87K(2)(a) and (b) do not have effect for the purposes of sections 87 and 87A in the case of the payment.
3
The rules in subsection (4) apply where—
a
in the case of a settlement, chargeable gains are (ignoring this section) treated by section 87K(3), but not as a result of the operation of section 87L(4), as accruing to a person in a tax year by reference to a gift within section 87I(1)(d) made to the person,
b
section 809B, 809D or 809E of ITA 2007 applies to the person for that tax year, and
c
none, or part only, of the gains is remitted to the United Kingdom in that tax year.
4
The rules are—
a
section 87I(1)(a) has effect—
i
as if a capital payment were received from the trustees by the person at the time the gift is made, and
ii
as if the capital payment were equal in amount to so much of the gains as is not remitted in the tax year mentioned in subsection (3)(a) of this section,
b
for the purposes of section 87J—
i
the whole of the capital payment is a “matched amount”, and
ii
the whole of the matched amount is its “untaxed part” (and the matched amount has no “taxed part”), and
c
the amount of the gains treated by section 87K(3)(a) and (b) as accruing to the person by reference to the gift is reduced by the amount of the capital payment.
5
Where the capital payment mentioned in section 87I(1)(a) is one treated as received by subsection (2) or (4) of this section in connection with the operation of sections 87I to 87K on a previous occasion, section 87I(1) has effect—
a
with the omission of its paragraph (b),
b
as if the reference in its paragraph (c) to the original payment were, instead, to what was the onward payment on that previous occasion, and
c
as if the references in its paragraph (d) to the original payment were, instead, to so much of that onward payment as was on that previous occasion within any of sub-paragraphs (i) to (iii) of that paragraph.
6
Section 87I(4) and (7) (interpretation of references to gifts and their making) apply also for the purposes of subsections (3) and (4) of this section.
87NSections 87 and 87A: disregard of payments to migrating beneficiary
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,
c
if the relevant person is not resident in the United Kingdom in the particular tax year, and
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
F131the 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
F114the 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”.
87PSections 87 and 87A: temporary migration after payment disregarded
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
F109the 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
F107the 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.
C5C4C788 Gains of dual resident settlements.
1
Section 87 also applies to a settlement for any year of assessment beginning on or after 6th April 1991 if—
b
F34c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F142
The F29section 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 F30section 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 F118section 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;
c
if different assets are identified by reference to different relevant times, all of them are protected assets.
F696
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F907
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C5C4C789 Migrant settlements etc.
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 F47sections 87 and 87A if it was not made in anticipation of a disposal made by the trustees in the non-resident period.
F1241A
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 F88the 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 F8687P 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.
C5C7F8990Sections 87 and 89(2): transfers between settlements
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 F68the section 1(3) amount for the transferee settlement for any tax year (not later than the year of transfer) as increased by—
a
F68the 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.
5
6
If neither section 87 nor section 89(2) would otherwise apply to the transferee settlement for the year of transfer—
a
section 89(2) to (4) apply to the settlement for that year (and subsequent tax years), and
b
for this purpose, references there to the last non-resident tax year are to be read as the year of transfer.
7
The increase under subsection (3) has effect for the year of transfer and subsequent tax years.
8
The reduction under subsection (5) has effect for tax years after the year of transfer.
9
When calculating the market value of property for the purposes of this section or section 90A in a case where the property is subject to a debt, reduce the market value by the amount of the debt.
10
This section does not apply to—
a
a transfer to which Schedule 4B applies, or
b
any F22section 1(3) amount that is in a Schedule 4C pool (see paragraph 1 of Schedule 4C).
C790AF89Section 90: transfers made for consideration in money or money's worth
1
Section 90 does not apply to a transfer of settled property made for consideration in money or money's worth if the amount (or value) of that consideration is equal to or exceeds the market value of the property transferred.
2
The following provisions apply if—
a
section 90 applies to a transfer of settled property made for consideration in money or money's worth, and
b
the amount (or value) of that consideration is less than the market value of the property transferred.
3
If the transfer is of all of the settled property, for the purposes of section 90 treat the transfer as being of part only of the settled property.
4
Deduct the amount (or value) of the consideration from the amount of the market value referred to in section 90(4)(a).
91 Increase in tax payable under section 87 or 89(2).
F1421
This section applies if—
a
b
the F66individual is charged to tax by virtue of that matching, and
c
the capital payment was made more than one year after the end of the relevant tax year.
1A
Where part of a capital payment is matched, references in subsections (2) and (3) to the capital payment are to the part matched.
2
The tax payable by the F41individual in respect of the payment shall be increased by the amount found under subsection (3) below, except that it shall not be increased beyond the amount of the payment; and an assessment may charge tax accordingly.
3
The amount is one equal to the interest that would be yielded if an amount equal to the tax which would be payable by the F32individual in respect of the payment (apart from this section) carried interest for the chargeable period at the rate of 10 per cent. per annum.
4
The chargeable period is the period which—
a
begins with the later of the 2 days specified in subsection (5) below, and
b
ends with 30th November in the year of assessment following that in which the capital payment is made.
5
The 2 days are—
a
1st December in the F112tax year immediately after the relevant tax year, and
b
1st December falling 6 years before 1st December in the year of assessment following that in which the capital payment is made.
6
The Treasury may by order substitute for the percentage specified in subsection (3) above (whether as originally enacted or as amended at any time under this subsection) such other percentage as they think fit.
7
An order under subsection (6) above may provide that an alteration of the percentage is to have effect for periods beginning on or after a day specified in the order in relation to interest running for chargeable periods beginning before that day (as well as interest running for chargeable periods beginning on or after that day).
F1258
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1892 Qualifying amounts and matching.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1893 Matching: special cases.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1894 Transfers of settled property where qualifying amounts not wholly matched.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1895 Matching after transfer.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C3C196 Payments by and to companies.
1
Where a capital payment is received from a qualifying company which is controlled by the trustees of a settlement at the time it is received, for the purposes of sections 87 to 90 F31and Schedule 4C it shall be treated as received from the trustees.
2
Where a capital payment is received from the trustees of a settlement (or treated as so received by virtue of subsection (1) above) and it is received by a non-resident qualifying company, the rules in subsections (3) to (6) below shall apply for the purposes of sections 87 to 90 F31and Schedule 4C.
3
If the company is controlled by one person alone at the time the payment is received, and that person is then resident F1... in the United Kingdom, it shall be treated as a capital payment received by that person.
4
If the company is controlled by 2 or more persons (taking each one separately) at the time the payment is received, then—
a
if one of them is then resident F74... in the United Kingdom, it shall be treated as a capital payment received by that person;
b
if 2 or more of them are then resident F74... in the United Kingdom (“the residents”) it shall be treated as being as many equal capital payments as there are residents and each of them shall be treated as receiving one of the payments.
5
If the company is controlled by 2 or more persons (taking them together) at the time the payment is received F113... —
a
it shall be treated as being as many capital payments as there are participators in the company at the time it is received, and
b
each such participator (whatever his residence F8... ) shall be treated as receiving one of the payments, quantified on the basis of a just and reasonable apportionment,
but where (by virtue of the preceding provisions of this subsection and apart from this provision) a participator would be treated as receiving less than one-twentieth of the payment actually received by the company, he shall not be treated as receiving anything by virtue of this subsection.
6
For the purposes of subsection (1) above a qualifying company is a close company or a company which would be a close company if it were resident in the United Kingdom.
7
For the purposes of subsection (1) above a company is controlled by the trustees of a settlement if it is controlled by the trustees alone or by the trustees together with a person who (or persons each of whom) falls within subsection (8) below.
8
A person falls within this subsection if—
a
he is a settlor in relation to the settlement, or
b
he is connected with a person falling within paragraph (a) above.
9
For the purposes of subsection (2) above a non-resident qualifying company is a company which is not resident in the United Kingdom and would be a close company if it were so resident.
F949A
For the purposes of this section an individual shall be deemed to have been resident in the United Kingdom at any time in any year of assessment F73for which he or she was not so resident if—
a
F98section 1M applies to him or her, and
b
the year falls within the temporary period of non-residence.
9B
If—
a
it appears after the end of any year of assessment that any individual is to be treated by virtue of subsection (9A) above as having been resident in the United Kingdom at any time in that year, and
b
as a consequence, any adjustments fall to be made to the amounts of tax taken to have been chargeable by virtue of this section on any person,
nothing in any enactment limiting the time for the making of any claim or assessment shall prevent the making of those adjustments (whether by means of an assessment, an amendment of an assessment, a repayment of tax or otherwise).
10
For the purposes of this section—
a
the question whether a company is controlled by a person or persons shall be construed in accordance with F93sections 450 and 451 of CTA 2010, but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under F97section 451(4) to (6) of CTA 2010 if he is not a participator in the company;
F130aa
a person is not to be regarded as a participator in a company controlled by the trustees of a settlement where the person has a share or interest in the capital or income of the company solely by virtue of an interest which the person has under the settlement;
b
“participator” has the meaning given by F71section 454 of CTA 2010.
11
This section shall apply to payments received on or after 19th March 1991.
C3C197 Supplementary provisions.
1
a
means any payment which is F63neither—
i
chargeable to income tax on the recipient, nor
ii
chargeable to income tax on another person under any of sections 643A, 643J and 643L of ITTOIA 2005 and sections 733A, 733C and 733E of ITA 2007,
or, in the case of a recipient who is F38not resident in the United Kingdom, any payment received otherwise than as income, but
b
does not include a payment under a transaction entered into at arm’s length if it is received on or after 19th March 1991.
2
In subsection (1) above references to a payment include references to the transfer of an asset and the conferring of any other benefit, and to any occasion on which settled property becomes property to which section 60 applies.
3
The fact that the whole or part of a benefit is by virtue of F120section 643A or 643J or 643L of ITTOIA 2005, or sections 731 to 733E of ITA 2007, treated as an individual's income for a year of assessment after that in which it is received—
a
b
shall preclude its being treated for those purposes as a capital payment in relation to that or any later year of assessment.
4
For the purposes of F52sections 86A to 96 F111and Schedule 4C the amount of a capital payment made by way of loan, and of any other capital payment which is not an outright payment of money, shall be taken to be equal to the value of the benefit conferred by it F49(see sections 97A to 97C for the value of benefits conferred by a capital payment made by way of loan or by way of making movable property or land available).
5
For the purposes of F52sections 86A to 90 F36and Schedule 4C a capital payment shall be regarded as received by a beneficiary from the trustees of a settlement if—
a
he receives it from them directly or indirectly, or
b
it is directly or indirectly applied by them in payment of any debt of his or is otherwise paid or applied for his benefit, or
c
it is received by a third person at the beneficiary’s direction.
6
Section 16(3) shall not prevent losses accruing to trustees in a year of assessment for which section 87 of this Act or section 17 of the 1979 Act applied to the settlement from being allowed as a deduction from chargeable gains accruing in any later year (so far as they have not previously been set against gains for the purposes of a computation under either of those sections or otherwise).
7
F767A
In this section, sections 86A to 96 and Schedule 4C “trustee”, in relation to a settlement in relation to which there would be no trustees apart from this subsection, means any person in whom the settled property or its management is for the time being vested (and a person who is treated as a trustee of the settlement by virtue of this subsection shall be treated as a trustee of the settlement for the purposes of section 69).
8
In a case where—
a
at any time on or after 19th March 1991 a capital payment is received from the trustees of a settlement or is treated as so received by virtue of section 96(1),
b
it is received by a person, or treated as received by a person by virtue of section 96(2) to (5),
c
at the time it is received or treated as received, the person is not (apart from this subsection) a beneficiary of the settlement, and
d
subsection (9) or (10) below does not prevent this subsection applying,
9
Subsection (8) above shall not apply where a payment mentioned in paragraph (a) is made in circumstances where it is treated (otherwise than by subsection (8) above) as received by a beneficiary.
10
Subsection (8) above shall not apply so as to treat—
a
the trustees of the settlement referred to in that subsection, or
b
the trustees of any other settlement,
as beneficiaries of the settlement referred to in that subsection.
97AF82Value of benefit conferred by capital payment made by way of loan
1
For the purposes of section 97(4), the value of the benefit conferred on a person (P) by a capital payment made by way of loan to P is, for each tax year in which the loan is outstanding, the amount (if any) by which—
a
the amount of interest that would have been payable in that year on the loan if interest had been payable on the loan at the official rate, exceeds
b
the amount of interest (if any) actually paid by P in that year on the loan.
2
In this section and section 97B the “official rate”, in relation to interest, means the rate applicable from time to time under section 178 of the Finance Act 1989 for the purposes of Chapter 7 of Part 3 of ITEPA 2003.
97BValue of benefit conferred by capital payment made by way of making movable property available
1
For the purposes of section 97(4), the value of the benefit conferred by a capital payment consisting of making movable property available, without any transfer of the property in it, to a person (P) is, for each tax year in which the benefit is conferred on P—
where—
CC is the capital cost of the movable property on the date when the property is first made available to P in the tax year,
D is the number of days in the tax year on which the property is made available to P (the relevant period),
R is the official rate of interest for the relevant period (but see subsection (3)),
T is the total of the amounts (if any) paid in the tax year by P—
- a
to the person conferring the benefit, in respect of the availability of the movable property, or
- b
so far as not within paragraph (a), in respect of the repair, insurance, maintenance or storage of the movable property, and
Y is the number of days in the tax year.
2
In subsection (1), in the meaning of CC, the “capital cost” of movable property means an amount equal to the total of—
a
the amount which is the greater of—
i
the amount or value of the consideration given for the acquisition of the movable property by, or on behalf of, the person (A) conferring the benefit, and
ii
its market value at the time of that acquisition, and
b
the amount of any expenditure wholly and exclusively incurred by, or on behalf of, A for the purpose of enhancing the value of the movable property.
3
If the official rate of interest changes during the relevant period, then in subsection (1) R is the average official rate of interest for the period calculated as follows.
Step 1 Multiply each official rate of interest in force during the relevant period by the number of days when it is in force.
Step 2 Add together the products found in Step 1.
Step 3 Divide the total found in Step 2 by the number of days in the relevant period.
4
In subsections (1) and (2), “movable property” means any tangible movable property other than money.
97CValue of benefit conferred by capital payment made by way of making land available
1
For the purposes of section 97(4), the value of the benefit conferred by a capital payment consisting of making land available for the use of a person (P) is, for each tax year in which the benefit is conferred on P, the amount by which—
a
the rental value of the land for the period of the tax year during which the land is made available to P, exceeds
b
the total of the amounts (if any) paid in the tax year by P—
i
to the person conferring the benefit, in respect of the availability of the land, or
ii
so far as not within sub-paragraph (i), in respect of costs of repair, insurance or maintenance relating to the land.
2
Subsection (1) does not apply in the case where the person conferring the benefit transfers the whole of the person's interest in the land to P.
3
In subsection (1) “the rental value” of the land for a period means the rent which would have been payable for the period if the land had been let to P at an annual rent equal to the annual value.
4
For the purposes of subsection (3) “the annual value” of land is the rent that might reasonably be expected to be obtained on a letting from year to year if—
a
the tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and
b
the landlord undertook to bear the costs of the repairs and insurance and the other expenses (if any) necessary for maintaining the property in a state to command that rent.
5
For the purposes of subsection (4) that rent—
a
is to be taken to be the amount that might reasonably be expected to be so obtained in respect of a letting of the land, and
b
is to be calculated on the basis that the only amounts that may be deducted in respect of services provided by the landlord are amounts in respect of the costs to the landlord of providing any relevant services.
6
In subsection (5) “relevant service” means a service other than the repair, insurance or maintenance of the property.
C3C198 Power to obtain information for purposes of sections 87 to 90.
1
The Board may by notice require any person to furnish them within such time as they may direct, not being less than 28 days, with such particulars as they think necessary for the purposes of sections 87 to 90.
2
F136Sections 748(3) to (5), 749 and 750 of ITA 2007 shall have effect in relation to subsection (1) above as they have effect in relation to section 748(1) and (2) of that Act, but in their application by virtue of this subsection—
a
F57b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1033
The provisions of subsections (1) and (2) above have effect as if the references to sections 87 to 90 included references to Schedule 4C.
98AF77Settlements with foreign element: information.
Schedule 5A to this Act (which contains general provisions about information relating to settlements with a foreign element) shall have effect.
Word in Pt. 3 heading inserted (with effect in accordance with Sch. 22 para. 12 of the amending Act) by Finance Act 2009 (c. 10), Sch. 22 para. 9; S.I. 2010/670, art. 2