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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Meaning of originating - property provided by companies


Property provided by a qualifying company is treated as provided by the persons who control the company. A qualifying company is a close company or a company that would be close if it were resident in the UK. This prevents settlors avoiding section 86 by arranging for the trust property to originate from a company they control rather than providing the property themselves.

Definition of control


The definition of control is the same as that in CTA10/S450, see CTM60210. The definition of control that will apply most frequently in practice is ability to control the greater part of the company’s share capital.

  • If the company is controlled by only one person that person is treated as providing the property, paragraph 8(4)(a).
  • If the company can be controlled by more than one person acting individually the property is treated as provided equally by each of the persons who can control the company, paragraph 8(4)(b).
  • If the company can be controlled by two or more persons acting together each participator in the company is treated as providing a proportionate share of the property. This is subject to a de-minimis limit of less than 5%, paragraph 8(4)(c).

Loans by qualifying companies

A non-commercial loan made either directly or indirectly to the settlement is regarded as the provision of property by the company. A non-commercial loan is a loan made at low or no interest. HMRC published this view in paragraph 22 of SP5/92.


Mr A owns 75% and Mrs A owns 25% of the shares in A Ltd. Mr A creates the A family settlement by settling £100,000 on Guernsey trustees. A Ltd makes an interest-free loan of £200,000 to the family settlement. That is regarded as provision of property worth £200,000. Mr A is treated as providing £150,000 of that property in addition to the £100,000 he provided himself and Mrs A is treated as providing £50,000.