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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Annual exempt amount: taxable amount: cases involving losses and attributed gains: 1998-99 onwards

In certain situations amounts representing the gains of the trustees of a settlement are assessed on the settlor or on the beneficiaries. The relevant instructions and legislation are as follows.

  • Settlor of UK resident trust: TCGA92/S77, see CG34710 +.
  • Settlor of non-resident trust: TCGA92/S86, see CG38430+.
  • Beneficiary of non-resident trust: TCGA92/S87 and TCGA92/S89(2), see CG38570c.

These gains are commonly referred to as ’attributed gains’.


The rules governing the deduction of personal losses from gains attributed to a settlor were changed by FA02. If gains are attributed under S77 or S86 for

  • 2003-04 onwards see CG34865 +
  • 2000-01 to 2002-03 if an election is made covering the year, see CG34873
  • For other cases from 1998-99 to 2002-03 inclusive see CG34875.


Personal losses may not be set against gains attributed to a beneficiary under S87 or S89(2).

The taxable amount, see CG18031, is calculated as follows:

  • Step 1 - Calculate the gross amount of chargeable gains before losses or taper relief, but after all other deductions and reliefs applying in computing the chargeable gains. At this stage, however, do not add the ’attributed gains’.
  • Step 2 - Deduct any allowable losses for the year, even if this reduces the net gains below the annual exempt amount.
  • Step 3 - If there are losses brought forward or carried back which can be taken into account, deduct the amount of these losses calculated in accordance with CG18034.
  • Step 4 Add any ‘attributed gains’ from which personal losses may be deducted and deduct from these gains any remaining personal losses (including any remaining losses calculated in accordance with CG18034 brought forward or back).
  • Step 5 - Add any ‘attributed gains’ from which personal losses may not be deducted. (Referred to in the legislation as ‘the Section 2(5)(b) amount.’).

The calculation is illustrated by examples at CG18203 and CG18204. The calculation was modified to take account of taper relief until 2007/2008.