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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Basic terms of trust law as applied to CGT: sub-fund settlements: basic effects for CGT: other effects


With effect from the specified date, any persons who are trustees of the trusts of the sub-fund settlement and are not trustees of the trusts of the principal settlement are to be treated as having ceased to be trustees of the principal settlement (paragraph 18).

As the sub-fund settlement is treated as coming into existence on the specified date (paragraph 17) a separate Self Assessment return will required for the year of assessment but beginning on that date.

If the trustees of the sub-fund settlement are not resident in the UK, TCGA section 80 would apply, but does not apply if the same asset is deemed to be disposed of by the trustees of the principal settlement under section 71(1), by reason of paragraph 19.

Under paragraph 21 if money is treated as passing, this is treated as received by the trustees of the sub-fund settlement on the specified date. This would be relevant for the purposes of identifying the settlor of the sub-fund settlement, which is determined by section 68B, see CG33247.

Paragraph 22 deals with cases to which deeming a new settlement to have come into existence means section 90 or section 94 applies.

If on the specified date the assets of the sub-fund settlement include shares, they would be regarded as all acquired for market value (less any reduction because of gifts-hold-over relief) on the specified date. So the holding period for taper relief would recommence on that date.