Section 86AU.K.
5(1)Section 86A (attribution of gains to settlor in section 10A cases) is amended as follows.
(2)In subsection (2) (reduction in amounts attributed to settlor in accordance with section 10A by reference to chargeable amounts paid to beneficiaries during his period of non-residence)—
(a)in paragraph (a), for “the amount falling within section 86(1)(e)" substitute “ the tapered section 86(1)(e) amount ”;
(b)in paragraph (b), for “the amounts falling within section 86(1)(e)" substitute “ the tapered section 86(1)(e) amounts ”.
(3)After that subsection insert—
“(2A)In subsection (2) above “tapered section 86(1)(e) amount” means an amount falling within section 86(1)(e) as it would apply with the omission of sub-paragraph (ii).
(2B)Where subsection (2) above has effect to reduce an amount that is treated by virtue of section 86 as accruing to the settlor for a year of assessment—
(a)the reduced amount shall be treated as falling within paragraph (b) of section 2(5) and not paragraph (aa);
(b)section 86(1)(e) shall have effect in relation to that amount with the omission of sub-paragraph (ii).”.
(4)In subsection (7) (reduction in gains available for attribution to beneficiaries by amounts attributed to settlor in accordance with section 10A), for the words from “the amount or" to “so attributed" substitute “ the tapered section 10A amount ”.
(5)After that subsection insert—
“(7A)In subsection (7) above “the tapered section 10A amount” means the amount, or aggregate of the amounts, falling to be attributed as mentioned in that subsection, minus the total amount of any taper relief that would be deductible from that amount or aggregate by the trustees of the settlement but for section 86(1)(e)(ii).
Where section 86A(2) has effect to reduce that amount or aggregate, the words from “minus" to “section 86(1)(e)(ii)" above do not apply.”.