The Taxation of Chargeable Gains Act 1992 (Amendment) Regulations 2022
Published 8 March 2022
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Who is likely to be affected
Individuals who receive payments from non-resident trusts.
General description of the measure
This measure amends section 87A and Schedule 4C to the Taxation of Chargeable Gains Act 1992 (TCGA). Both provisions contain references to section 2(2) of in the TCGA. In 2019 that particular provision was rewritten and its numbering changed to section 1(3).
This measure updates both provisions so that they correctly refer to section 1(3).
Policy objective
This measure provides certainty to individuals who receive payments from non-resident trusts by ensuring that the legislation reads as intended.
Background to the measure
Finance Act 2019, Schedule 1 brought into the scope of the capital gains regime the disposal of UK commercial properties by non-UK resident persons. This required the partial rewrite and renumbering of Part 1 of the TCGA. That renumbering had to be reflected in other Parts of the TCGA. It has been identified that one of the amendments made to section 87A TCGA to reflect this renumbering means that it does not read as intended. In addition, a clarificatory amendment to Schedule 4C was missed. This measure corrects that.
Detailed proposal
Operative date
This measure will take effect from 5 April 2022.
Current law
Section 87A TCGA applies to the beneficiaries of non-resident trusts and determines how much capital gains tax (CGT) they should pay. The legislation cross referred in a number of places to section 2(2) TCGA. Section 2(2) was a general provision that explained how to determine the amount of chargeable gain that CGT is charged on.
Finance Act 2019, Schedule 1 brought into the scope of the capital gains regime the disposal of UK commercial properties by non-UK resident persons. This required the partial rewrite and renumbering of Part 1 of the TCGA. As part of those changes section 2(2) TCGA, was renumbered and became section 1(3) TCGA. This renumbering had to be reflected in other Parts of the Act. Section 2(2) now refers to corporation tax.
One consequential amendment made by Finance Act 2019, Schedule 1, Paragraph 36, was to section 87A TCGA. This amendment required the words ‘the section 2(2) amount’, which were used a number of times in section 87A, to be replaced by the words ‘the section 1(3) amount’, to reflect the renumbering of subsection 2(2).
However, subsection 87A(2) contained the words ‘with section 2(2) amounts’ and consequently still reads ‘with section 2(2) amounts’ rather than ‘with section 1(3) amounts’.
In addition, it has been identified that the heading to Paragraph 1A of Schedule 4C, which applies to transfers of value made by the trustees of trusts, still refers to section 2(2).
Finance Act 2019 provides a power at Schedule 1, Paragraph 124 enabling the Treasury to make changes to the TCGA by regulations.
Proposed revisions
Legislation will be introduced to change the references in section 87A(2) and Paragraph 1A, Schedule 4C from ‘section 2(2) amounts’ to ‘section 1(3) amounts ‘.
Summary of impacts
Exchequer impact (£ million)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| — | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure makes sure the original legislation works as intended. There are expected to be no impacts for individuals at present. There is expected to be no impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts for those in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure makes sure the original legislation works as intended. There are expected to be no impacts for businesses or civil society organisations.
Operational impact (£ million) (HMRC or other)
HMRC does not expect there to be any operational or delivery impact as a result of implementing this small legislative change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The original policy measure is kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, contact Nick Williams on Telephone: 03000 585660 or email: capitalgains.taxteam@hmrc.gov.uk
Declaration
Rt Hon Lucy Frazer QC MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.