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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Migrating settlements - TCGA92/S87


Any easy way to avoid section 87 would be for the trustees of a non-resident settlement with significant gains to be replaced by UK resident trustees and make the capital payments after the settlement becomes UK resident. TCGA92/S89 prevents this avoidance by applying the section 87 rules if a non-resident settlement becomes UK resident.

Section 89 also works the other way round; if a UK resident settlement becomes non-resident. The trustees’ gains during the resident period would already have been taxed. Any capital payments received will not have been matched against those gains. In theory those unmatched capital payments for the earlier resident years could be matched against the trustees’ section 2(2) amounts for the later non-resident years. S89(1) prevents this. It provides capital payments received when the settlement is UK resident are not matched against section 2(2) amounts when the settlement is non-resident. This relief does not apply if the trustees make capital payments knowing that a chargeable gain will accrue when the settlement becomes non-resident.