CG38723 | Charge on beneficiary of non-resident settlement – TCGA92/S87: Matching in an earlier year - example - the rules for 2008-09 to 2017-18
From HM Revenue & Customs · Capital Gains Manual
2013-14
| - | - | Amount |
|---|---|---|
| Trustees’ section 2(2) amount | - | £10,000 |
| Capital payments | beneficiary A | £65,000 |
2012-13
| - | Amount |
|---|---|
| Trustees’ section 2(2) amount | £20,000 |
| Capital payments | nil |
2011-12
| - | Amount |
|---|---|
| Trustees’ section 2(2) amount | £30,000 |
| Capital payments | nil |
Section 87 gains
The capital payment £65,000 is matched first against the 2013-14 £10,000 section 2(2) amount. The unmatched capital payments of £55,000 are available for matching against section 2(2) amounts in earlier years taking the latest year first.
The payments are matched first against the section 2(2) amount of £20,000 in 2012-13 and then against the section 2(2) amount of £30,000 in 2011-12. Total gains of £60,000 accrue to A in 2013-14, £10,000 + £20,000 + £30,000.
A has an unmatched capital payment of £5,000 in 2013-14 available for matching against section 2(2) amounts of later years. See CG38720.
The section 2(2) amounts for all years are reduced to nil.
Because a capital payment received in 2013-14 is matched against a section 2(2) amount for a tax year two years earlier the rate of Capital Gains Tax is increased by 10% on that part of the gain, CG38795. If A is liable to Capital Gains Tax at 28% the rate of tax charged on the £30,000 gain matched against 2011-12 section 2(2) amount is 30.8%.