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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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How the CGT legislation works: introduction

The special treatment can be claimed only if the trustees are resident in the UK, FA05/S30(1)(c).

If the beneficiary is resident in the UK for the years 2004-05 to 2007-08 FA2005/S31 treats the beneficiary and trustees as if the settlement were one to which TCGA92/S77(1) applies. Section 77 taxes the gains of UK-resident settlor-interested trusts on the settlor. See CG34700+). FA08 repealed section 77 with effect for the tax year 2008-09. Guidance on cases where the beneficiary is UK resident for the tax years 2004-05 to 2007-08 is in CG35515+.

If the beneficiary is resident in the UK for the year 2008-09 onwards the gains are taxed on the trustees. If they claim the special treatment the tax is reduced to the amount that would have been payable if the gain had accrued to the beneficiary. Guidance on cases where the beneficiary is UK resident for the tax year 2008-09 onwards is in CG35522.

If the beneficiary is not resident in the UK the gains are taxed on the trustees in all years. But if they claim the special treatment the tax is reduced to the amount that would have been payable if the gain had accrued to the beneficiary. Guidance on cases where the beneficiary is non-resident are dealt with at CG35541.

Cases where the trustees are non-resident are dealt with at CG35550.