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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Disposals by trustees: shares held by trustees: Scottish trust

The liferenter or other income beneficiary of a Scottish trust is not beneficially entitled to the stock dividend. He or she can only require the trustees to account for it. There is different treatment for each of three possible situations:

  1. Enhanced Stock Dividend - The treatment is the same as for trusts established under the law of England & Wales or the law of Northern Ireland, see CG33816 above, unless it is treated as income, in which case (b) or (c) below applies.
  2. Conventional Stock Dividend pre 6 April 1993 - Prior to 1993/94 ICTA88/S249 (4) did not apply. The case fell within CG33814 above.
  3. Conventional Stock Dividend 1993 onwards - The law was changed by Section 118 Finance Act 1993 now ITA07/S464. As a result of this ITTOIA05/S410(2) applies to the stock dividend even though, under Scottish trust law, as mentioned above, the beneficiary is not in fact absolutely entitled to the stock dividend.

ITA07/S464 only applies for Income Tax purposes and therefore TCGA92/S142 before the amendment by FA 1998, see CG33812, did not apply. For years up to 1997-98, TCGA92/S141 enabled the trustees to add the `appropriate amount in cash’ (CTM17010) to the cost of their holding.

For years from 1998-99 onwards the amended TCGA92/S142 enables the trustees to treat the stock dividend shares as a fresh acquisition at a cost equal to the ` cash equivalent of the share capital’.