Section 87 — Taxation of Chargeable Gains Act 1992: Non-UK resident settlements: attribution of gains to beneficiaries

Non-UK resident settlements: attribution of gains to beneficiaries 87 1 This section applies to a settlement for a tax year (“the relevant tax year”) if there 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 the section 1(3) amount for the relevant tax year or any earlier tax year. 2A 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 The section 1(3) amount for a settlement for a tax year for which this section applies to the settlement is—

a the amount upon which the trustees of the settlement would be chargeable to tax under section 1(3) for that year if they were resident ... in the United Kingdom in that year, or 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 The section 1(3) amount for a settlement for a tax year for which this section does not apply to the settlement is nil. 5A 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. 5B Where (apart from this subsection)—

a the amount mentioned in subsection (4)(a) would include an amount of chargeable gains accruing by virtue of the trustee’s entitlement to a sum of carried interest, and b at the time when those chargeable gains accrue, income tax is chargeable by virtue of section 23I of ITTOIA 2005 in respect of the sum of carried interest, the amount of the gains is to be disregarded for the purposes of determining the section 1(3) amount. 5C In subsection (5B) and section 87BA—

a “ carried interest ” has the same meaning as in section 23I of ITTOIA 2005 (see Part 1 of Schedule A1 to that Act),

and b that definition has effect as if references to a sum arising to an individual included a reference to a sum arising to the trustees.

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. 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 See also paragraph 4 of Schedule D1 (foreign gain claims: capital payments ignored for the purposes of this section and Schedule 4C).