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HMRC internal manual

Capital Gains Manual

Non-resident beneficiary: tax years 2008-09 onwards

The introduction of a single rate of Capital Gains Tax by FA08 simplified the special treatment for non-resident beneficiaries for the year 2008-09 to 2015-16. The basic principle remained the same but it was no longer necessary to calculate the beneficiary’s rate of tax. The changes to the rates of Capital Gains Tax made by F(No2)A 2010 did not alter this. There may be more cases in which a claim is beneficial as the trustees will be taxed at 28 per cent on gains that accrue on or after 23 June 2010 and the beneficiary will be taxed at 18 per cent. The example in CG35544 illustrates this.

From 2016-17 the Capital Gains Tax rate for trustees remained at 28 per cent on upper rate gains and 20 per cent on other gains. In broad terms upper rate gains are on the disposals of interests in residential property and carried interest. The Capital Gains Tax rates for beneficiaries also changed but the rate changes do not alter the method of calculation of the relief.

The amount of the relief is calculated in accordance with the formula in FA2005/S32 as amended by FA08. The trustees liability to Capital Gains Tax, TQTG, is reduced by the amount of Capital Gains Tax that would have been payable if the chargeable gains accrued to the beneficiary, VQTG.

VQTG is calculated in accordance with formula


TLVA is the total of the Capital Gains Tax payable on the vulnerable beneficiary’s DCTA and the CGT payable if trustees qualifying gains accrued to the beneficiary. The vulnerable beneficiary’s DCTA is defined in FA2005/SCH1/PARA3, see CG35541c.

TLVB is the CGT payable on the beneficiary’s DCTA.