CG38716 | Charge on beneficiary of non-resident settlement – TCGA92/S87: Interaction of rules and practical considerations

In isolation the basic rules are relatively straightforward to apply and work from the general principle of seeking to match the gains of the non-resident trustees to UK resident beneficiaries that receive capital payments.

As a direct consequence of being matching rules it follows that there are at least two points in time that must be considered i.e. the point at which the trustees make gains and the point at which a capital payment is made. It is quite possible that the position of a settlor, a close family member of the settlor or other beneficiary may change between these dates. Onward gifts may also have been made and there may have been multiple capital payments to different beneficiaries.

The correct operation of the rules requires a methodical approach considering the position for each beneficiary on a year by year basis.

There are some examples at CG38718 showing features of these rules.

Examples 1 – 3 Basic rules

Examples 4 – 5 Split years under the Statutory Residence Test

Examples 6 – 7 Temporary non-residence

Example 8 Close family member rule (settlor interested trust)

Example 9 Close family member rule and temporary non-residence

Examples 10 -11 Onward payments

Additionally the following tables may assist when considering any computations supplied. If using these tables any notes must also be considered.

Table 1 at CG38719A for a capital payment where the onward gift rules do not need to be considered.

Table 2 at CG38719B for capital payments where the onward gift rules need to be considered.