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HMRC internal manual

Capital Gains Manual

Assessment: collection of tax from beneficiaries

TCGA92/S69 (4)


  • the tax on a chargeable gain accruing to trustees is not paid within six months of the date on which it becomes payable by the trustees, and
  • while the tax is still outstanding, the asset (or any part of the proceeds of sale of the asset) on which a gain arose is transferred by the trustees to any beneficiary who is absolutely entitled to it,

the tax outstanding may be assessed on that person in the name of the trustees at any time within two years from the date when it became payable by the trustees. If only part of the asset or part of the proceeds is transferred, only the proportionate part of the tax may be recovered from the beneficiary.

The beneficiary is to be assessed by the Trustees’ Office in the name of the trustees who have, however, no right of appeal against the assessment. The beneficiary’s personal rate of tax is irrelevant, and his or her own capital losses cannot be taken into account.

Where there has been an appeal against the assessment on the trustees, the period within which an assessment can be made on the beneficiary commences with the normal due and payable date, or, if later, in the case of postponed tax, the date on which the appeal is finally determined.


If the conditions of TCGA92/S69 (4) are not met, and there is a chargeable gain arising on an occasion of absolute entitlement under Section 71 (1) upon which the tax is not paid by the trustees, then it may be possible to assess the beneficiary under Section 282, see CG66500+. Section 282(4) defines gift as including any transaction otherwise than by way of a bargain at arm’s length. The absolute entitlement must therefore arise as the result of a transaction, such as the exercise of a power, the variation or termination of the trust or the merger of interests by gift or purchase. The occurrence of a contingency such as death or a birthday is not a transaction.