Skip to content
Solved

CG38719B | Charge on beneficiary of non-resident settlement – TCGA92/S87: Further Examples for 2018-19 and later years Table 2

From HM Revenue & Customs · Capital Gains Manual

New rules from 06/04/2018 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 = remittance basis

Initial Allocation---Onward gift rules--
Capital payment toStatus of original recipientCapital payment forNoteOnward payment toCapital payment / gain moved toNote
SettlorUK resident - RB does not applySettlor2Any personSettlor - No part of the capital payment is moved-
SettlorUK resident - RB appliesSettlor2UK resident (non CFM) RB does not applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved4
----UK resident (non CFM) RB does applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved5
----Not UK resident (non CFM)Settlor - payment is not moved because recipient is not UK resident6
----UK resident CFM RB does not applySettlor-
----UK resident CFM RB does applySettlor-
----Not UK resident CFMSettlor - payment is not moved because recipient is not UK resident-
SettlorNot UK residentSettlor - but s87D(1) applies to disregard3UK resident RB does not apply (CFM rule cannot apply as S is NR)Recipient- all of the capital payment can be moved7
----UK resident RB does apply (CFM rule cannot apply as S is NR)Recipient- all of the capital payment can be moved7
----Not UK resident CFM rule cannot apply as S is NR)S87D(1) diregard continues to apply6,7
BeneficiaryClose family member - UK resident -RB does not apply (settlor UK resident and RB does not apply)Settlor - s87G(2) applies1, 2Any personSettlor - s87G(2) already applies. No part of the capital payment is moved-
BeneficiaryClose family member - UK resident -RB does not apply (settlor UK resident and RB applies)Settlor - s87G(2) applies-SettlorSettlor - s87G(2) already applies-
----Other CFMSettlor-
----UK resident RB does not applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved4
----UK resident RB does applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved5
----Not UK residentSettlor - payment is not moved because recipient is not UK resident6
BeneficiaryClose family member - UK resident -RB applies (settlor UK resident and RB does not apply)Settlor - s87G(2) applies1, 2Any personSettlor - s87G(2) already applies. No part of the capital payment is moved-
BeneficiaryClose family member - UK resident -RB applies (settlor UK resident and RB applies)--SettlorSettlor - s87G(2) already applies-
----Other CFMSettlor-
----UK resident RB does not applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved4
----UK resident RB does applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved5
----Not UK residentSettlor - payment is not moved because recipient is not UK resident6
BeneficiaryClose family member - UK resident - RB does not apply- (settlor not UK resident)Beneficiary (CFM rule does not apply)2Any personBeneficiary - No part of the capital payment is moved-
BeneficiaryClose family member - UK resident - RB applies (settlor not UK resident)Beneficiary (CFM rule does not apply)2SettlorBeneficiary. Settlor is NR so payment is not moved because recipient is not UK resident-
----Other CFMFollows rules for other recipients because settlor is NR-
----UK resident RB does not applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved4
----UK resident RB does applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved5
----Not UK residentBeneficiary - No part of the capital payment is moved6
BeneficiaryClose family member - not UK resident, (settlor UK resident RB does not apply)Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies1, 2Any personSettlor-
BeneficiaryClose family member - not UK resident, (settlor UK resident RB applies)Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies1, 2SettlorSettlor-
----Other CFMSettlor-
----UK resident RB does not applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved-
----UK resident RB does applyRecipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved-
----Not UK residentSettlor - payment is not moved because recipient is not UK resident-
BeneficiaryClose family member - not UK resident - (settlor not UK resident)Beneficiary - but s87D(1) applies to disregard3Any persons87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident7
BeneficiaryOther beneficiary - UK resident - RB does not applyBeneficiary2Any person (CFM rule applies)Settlor-
----Any person (CFM rule does not apply)Beneficiary - No part of the capital payment is moved-
BeneficiaryOther beneficiary - UK resident - RB appliesBeneficiary2Any 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 moved4
----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 moved5
----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 moved6
BeneficiaryOther beneficiary - not UK residentBeneficiary - but s87D(1) applies to disregard3UK 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 moved7
----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 moved7
----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 resident7

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 - s871

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