Section 87BA — Taxation of Chargeable Gains Act 1992: Sections 87 and 87A: disregard of capital payments made from carried interest gains

Sections 87 and 87A: disregard of capital payments made from carried interest gains 87BA 1 This section applies to a settlement where—

a a chargeable gain accruing by virtue of the trustee’s entitlement to a sum of carried interest in respect of which income tax is chargeable by virtue of section 23I of ITTOIA 2005 (“a carried interest gain”) is or has been disregarded for the purposes of determining the section 1(3) amount for the settlement for a tax year as a result of section 87(5B),

and b the unused disregarded amount in relation to the carried interest gain is not nil.

2 For the purposes of sections 87 and 87A as they apply in relation to the settlement, no account is to be taken of a capital payment (or part of a capital payment) received by a beneficiary from the trustees at or after the time when the carried interest gain accrued if (or to the extent that) the amount of the capital payment does not exceed the unused disregarded amount.

3 But if subsection (2) applies in a case where—

a two or more capital payments are received by beneficiaries at the same time, and b the total of those capital payments exceeds the unused disregarded amount, no account is to be taken of the amount of each capital payment that is the relevant proportion of the unused disregarded amount.

4 In subsection (3), the “ relevant proportion ” means the proportion that the amount of the capital payment concerned bears to the total amount of all of the capital payments received by beneficiaries at the same time.

5 In this section the “ unused disregarded amount ”, in relation to a carried interest gain, means—

a the sum of—

i the amount of the carried interest gain, and ii the amount of any other carried interest gains that accrued to the trustees prior to the carried interest gain accruing that are or have been disregarded for the purposes of determining the section 1(3) amount for the settlement for a tax year as a result of section 87(5B), minus b the amount of any capital payments (or part of capital payments) received by beneficiaries from the trustees of which no account has been taken as a result of the application of this section.