CG38706 | Charge on beneficiary of non-resident settlement – TCGA92/S87: Disregard of Capital Payments to migrating beneficiary for 2018-19 and later years

S87N\TCGA1992

When considering the capital payments that are to be taken into account for 2018/19 and later years the residence of the beneficiary also needs to be considered in the year that capital payments are taken into account for matching when the matching year is different.

Where a capital payment (or part) was received in an earlier year and has not been matched in an earlier year, that capital payment is disregarded if the beneficiary is no longer UK resident.

Example: Capital payments have been made as follows and the capital payments before 2018/19 have not previously been matched to section 2(2) amounts.

100 to Mr A in 2016/17. Mr A has been UK resident for many years

100 to Mr B in 2016/17. Mr B was resident in 2016/17 but has been non-resident from 2018/19

Trustees section 2(2) amount 100 for 2018/19

Although originally resident when the capital payment was received by Mr B it is not taken into account for 2018/19 because Mr B is not resident for 2018/19.

Gains of 100 would be treated as accruing to Mr A for 2018/19.

To apply the rules correctly a record of both the year in which any capital payment is made and the residence status for that year and the year of potential matching must be maintained.