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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Matching in an earlier year - example

2013-14

Trustees’ section 2(2) amount   £10,000
     
Capital payments beneficiary A £65,000

2012-13

Trustees’ section 2(2) amount £20,000
   
Capital payments nil

2011-12

Trustees’ section 2(2) amount £30,000
   
Capital payments nil

Section 87 gains

The capital payment £65,000 is matched first against the 2013-14 £10,000 section 2(2) amount. The unmatched capital payments of £55,000 are available for matching against section 2(2) amounts in earlier years taking the latest year first.

The payments are matched first against the section 2(2) amount of £20,000 in 2012-13 and then against the section 2(2) amount of £30,000 in 2011-12. Total gains of £60,000 accrue to A in 2013-14, £10,000 + £20,000 + £30,000.

A has an unmatched capital payment of £5,000 in 2013-14 available for matching against section 2(2) amounts of later years. See CG38720.

The section 2(2) amounts for all years are reduced to nil.

Because a capital payment received in 2013-14 is matched against a section 2(2) amount for a tax year two years earlier the rate of Capital Gains Tax is increased by 10% on that part of the gain, CG38795. If A is liable to Capital Gains Tax at 28% the rate of tax charged on the £30,000 gain matched against 2011-12 section 2(2) amount is 30.8%.