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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Settlor trusts: computations: personal losses: election for 2000-01 to 2002-03: example

In 2002-03 a settlor-interested trust has chargeable gains £100,000 and allowable losses of £20,000. The taper rate applicable to these gains is 25%. The settlor has personal chargeable gains of £50,000 and allowable capital losses of £60,000.

The position with and without an election is as follows:

  Without Election   With Election
       
Trust      
Trust gains £100,000   £100,000
Less trust losses (£20,000)   (£20,000)
Net trust gains £80,000   £80,000
       
Gain Attributed to settlor £20,000    
(Taper relief is applied before the gain is attributed.)   £80,000
(No taper relief applied)        
  Settlor      
  Personal gains £50,000   £50,000
  Attributed gains £20,000   £80,000
  Less personal losses (£60,000)    
(deducted from personal gains only. Losses £10,000 carried forward for possible use if individual has gains in a later year)   (£60,000)
(deducted first from personal gains, then from attributed gain)        
  Net gains £20,000   £70,000
  Gain after taper relief No taper relief applied to attributed gain   £17,500
(Taper relief applied to the attributed gain at the rate (25%) at which the trustees would have applied it)        
  Deduct annual exempt amount (£7,700)   (£7,700)
  Amount chargeable to CGT £12,300   £9,800
  Tax paid (in this example at 40%) £4,920   £3,920
  Reimbursement from the trustees £4,920   £3,920