CG38718A | Capital Gains Manual: Trusts and Capital Gains Tax: Non-resident trusts: Charge on beneficiary of non-resident settlement – TCGA92/S87: Matching capital payments: contents: Further Examples for 2018-19 and later years

From HM Revenue & Customs · Capital Gains Manual

Table 2

New rules from 6/4/18 where s87 applies and onward gifts made
Table covers cases where the residence or RB status of the individual does not change between the actual or deemed receipt (in CFM cases) of the capital payment and the onward gift.
Table is concerned with only the first onward gift in a chain. If the chain is longer the process is repeated for each onward payment.
RB = remittence basis

Initial Allocation				Onward gift rules

Capital payment to	Status of original recipient	Capital payment for	Note	Onward payment to	Capital payment / gain moved to	Note

Settlor	UK resident - RB does not apply	Settlor	2	Any person	Settlor - No part of the capital payment is moved

	UK resident - RB applies	Settlor	2	UK resident (non CFM) RB does not apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved.	4
				UK resident (non CFM) RB does apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved.	5
				Not UK resident (non CFM)	Settlor - payment is not moved because recipient is not UK resident.	6

				UK resident CFM RB does not apply	Settlor
				UK resident CFM RB does apply	Settlor
				Not UK resident CFM	Settlor - payment is not moved because recipient is not UK resident

	Not UK resident	Settlor - but s87D(1) applies to disregard	3	UK resident RB does not apply (CFM rule cannot apply as S is NR)	Recipient- all of the capital payment can be moved	7
				UK resident RB does apply (CFM rule cannot apply as S is NR)	Recipient- all of the capital payment can be moved	7
				Not UK resident CFM rule cannot apply as S is NR)	S87D(1) diregard continues to apply.	6,7


Beneficiary	Close family member - UK resident -RB does not apply (settlor UK resident and RB does not apply )	Settlor - s87G(2) applies	1, 2	Any person	Settlor - s87G(2) already applies. No part of the capital payment is moved


	Close family member - UK resident -RB does not apply (settlor UK resident and RB applies )	Settlor - s87G(2) applies		Settlor	Settlor - s87G(2) already applies
				Other CFM	Settlor
				UK resident RB does not apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	4
				UK resident RB does apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	5
				Not UK resident	Settlor - payment is not moved because recipient is not UK resident	6


	Close family member - UK resident -RB applies (settlor UK resident and RB does not apply )	Settlor - s87G(2) applies	1, 2	Any person	Settlor - s87G(2) already applies. No part of the capital payment is moved

	Close family member - UK resident -RB applies (settlor UK resident and RB applies)			Settlor	Settlor - s87G(2) already applies.
				Other CFM	Settlor
				UK resident RB does not apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	4
				UK resident RB does apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	5
				Not UK resident	Settlor - payment is not moved because recipient is not UK resident	6


	Close family member - UK resident - RB does not apply- (settlor not UK resident)	Beneficiary (CFM rule does not apply)	2	Any person	Beneficiary - No part of the capital payment is moved

	Close family member - UK resident - RB applies (settlor not UK resident)	Beneficiary (CFM rule does not apply)	2	Settlor	Beneficiary. Settlor is NR so payment is not moved because recipient is not UK resident.
				Other CFM	Follows rules for other recipients because settlor is NR.
				UK resident RB does not apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	4
				UK resident RB does apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	5
				Not UK resident	Beneficiary - No part of the capital payment is moved	6


	Close family member - not UK resident, (settlor UK resident RB does not apply)	Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies	1, 2	Any person	Settlor

	Close family member - not UK resident, (settlor UK resident RB applies)	Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies	1, 2	Settlor	Settlor
				Other CFM	Settlor
				UK resident RB does not apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved
				UK resident RB does apply	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved
				Not UK resident	Settlor - payment is not moved because recipient is not UK resident


	Close family member - not UK resident - (settlor not UK resident )	Beneficiary - but s87D(1) applies to disregard	3	Any person	s87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident.	7


	Other beneficiary - UK resident - RB does not apply	Beneficiary	2	Any person (CFM rule applies)	Settlor
				Any person (CFM rule does not apply)	Beneficiary - No part of the capital payment is moved

	Other beneficiary - UK resident - RB applies	Beneficiary	2	Any UK resident RB does not apply (CFM rule applies)	Settlor
				Any UK resident RB does not apply (CFM does not applly)	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	4

				Any UK resident RB does apply (CFM rule applies)	Settlor
				Any UK resident RB does apply (CFM rule does not apply)	Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved	5

				Any person not UK resident (CFM rule applies)	Settlor
				Any person not UK resident (CFM rule dooes not apply)	Beneficiary - No part of the capital payment is moved	6



	Other beneficiary - not UK resident	Beneficiary - but s87D(1) applies to disregard	3	UK resident RB does not apply(CFM rule applies)	Settlor
				UK resident RB does not apply(CFM rule does not apply)	Recipient- all of the capital payment can be moved	7

				UK resident RB does apply (CFM rule applies)	Settlor
				UK resident RB does apply (CFM does not apply)	Recipient- all of the capital payment can be moved	7


				Non UK resident (CFM rule applies)	Settlor
				Not UK resident (CFM rule does not apply)	s87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident.	7


General notes
A	Any unmatched capital payments from the years to 5/4/18 are within the scope of the disregards in s87D (subject to s87E)
	and s87N (subject to s87P).
B	Special rules in s87F may apply if the settlement ceases to exist in the year
C	Close family member defined in s87H
D	The residence or RB status of a close family member does not impact the treatment of a capital payment for the settlor
E	For split years any gains are treated as arising in the UK part of that year - s87(2A)
F	Amounts G, T, U and R see s87J/K
G	If two or more gifts are made in the same year all amounts are allocated on a pro rata basis - s87I





Referenced notes
1 -	Settlor has power of recovery from CFM beneficiary for any tax charged s87G(3). Equivalent provision in s87J(5) where recycling applies.
2 -	If the individual to whom the capital payment is allocated becomes non resident then under s87N no account will be taken of any unmatched part of the capital
	payment unless person is within scope of the temporary no resident provisions in which case s87P will apply
3 -	If the individual is only temporarily non-resident s87E will bring the payment back into account in the period of return.
4 -	Untaxed matched gains (U) would be chargeable for the year, unmatched capital payments (R) would be available for matching
5 -	Untaxed matched gains (U) would be chargeable if remitted, unmatched capital payments (R) would be available for matching
6 -	the position of the first UK resident recipient would be considered
7 -	If the onward payment was to a close family member, the capital payment or gain is moved to the settlor if UK resident. If settlor NR CFM rule does not apply.