CG38770 | Matching: non-UK domiciled beneficiary - unmatched section 2(2) amount for year before 2008 - 09 - example
From HM Revenue & Customs · Capital Gains Manual
FA08/Sch07/para124
| Year | - | Amount |
|---|---|---|
| 2005-06 | Capital payments received | Nil |
| - | Section 2(2) amount | £7,000 |
| 2006-07 | Capital payments received | Nil |
| - | Section 2(2) amount | £5,000 |
| 2008-09 | Capital payment received | £30,000 |
| - | Section 2(2) amount | £16,000 |
Section 87 gains
The ordinary LIFO rules apply to match the £30,000 capital payment received in 2008-09 against the section 2(2) amounts as follows.
| Year | Amount |
|---|---|
| 2008-09 | £16,000 |
| 2006-07 | £5,000 |
| 2005-06 | £7,000 |
| 2008-09 section 87 gain | £28,000 |
If the beneficiary was non-domiciled in 2008-09 they are charged to Capital Gains Tax only on the £16,000 2008-09 section 2(2) amount. The fact that no tax is charged does not stop the 2008-09 capital payment being matched against the section 2(2) amounts for the earlier years and those amounts being reduced to nil. The section 2(2) amount for 2008-09 is reduced to £2,000.