CG38855 | Paragraph 126 elections: when does the election apply?

FA08/Sch7/para126(7)

The election will apply when a section 87 gain accrues to a UK resident but non-domiciled individual, FA08/Sch7/para126(7). The reference to individual includes the case in which section 96 TCGA treats a beneficiary as receiving a capital payment received by a non-resident close company. If the beneficiary is a remittance basis user in the year the section 87 gain accrues the reduction in the gain is calculated for that year but the gain is not charged until it is remitted until to the UK.

Because the assets must be held at the 6 April 2008 the section 87 gain must accrue as a result of matching a capital payment to a section 2(2)* amount for 2008-09 or later. Similarly the section 87 gain must accrue as a result of a matching with a capital payment made after 5 April 2008 to a UK resident but non-domiciled individual. If the matching was with an earlier payment to a UK resident but non-domiciled individual paragraph FA08/Sch7/para124(2)(a) would prevent any liability to Capital Gains Tax.

TCGA92/Sch5/para5C

With effect for the tax year 2025–26 and subsequent tax years, paragraph 5C transfers the rebasing effect of a paragraph 126 election to the section 86 charge on a settlor of a non-resident settlement (see CG38530).

*This section was re-written for disposals from 6 April 2019 to section 1(3) see CG10150.