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Capital Gains Manual

Charge on beneficiary of non-resident settlement – TCGA92/S87: Further Examples for 2018-19 and later years Table 2

New rules from 6/4/18 where s87 applies and onward gifts made                                                                                           

Table covers cases where the residence or RB status of the individual does not change between the actual or deemed receipt (in CFM cases) of the capital payment and the onward gift.                                                                                     

Table is concerned with only the first onward gift in a chain. If the chain is longer the process is repeated for each onward payment.                                                                                           

RB = remittance basis

Initial Allocation     Onward gift rules        
               
               
Capital payment to  Status of original recipient Capital payment for Note   Onward payment to Capital payment / gain moved to Note
               
Settlor UK resident - RB does not apply Settlor 2   Any person Settlor - No part of the capital payment is moved   
               
Settlor UK resident - RB applies Settlor 2   UK resident (non CFM) RB does not apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved. 4
          UK resident (non CFM) RB does apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved. 5
          Not UK resident (non CFM)  Settlor - payment is not moved because recipient is not UK resident. 6
               
          UK resident CFM RB does not apply Settlor   
          UK resident CFM RB does apply Settlor   
          Not UK resident CFM  Settlor - payment is not moved because recipient is not UK resident   
               
Settlor Not UK resident Settlor - but s87D(1) applies to disregard  3   UK resident RB does not apply (CFM rule cannot apply as S is NR) Recipient- all of the capital payment can be moved  7
          UK resident RB does apply (CFM rule cannot apply as S is NR) Recipient- all of the capital payment can be moved  7
          Not UK resident CFM rule cannot apply as S is NR) S87D(1) diregard continues to apply. 6,7
               
               
Beneficiary Close family member  - UK resident -RB does not apply  (settlor UK resident and RB does not apply ) Settlor - s87G(2) applies  1, 2   Any person Settlor - s87G(2) already applies. No part of the capital payment is moved  
               
               
Beneficiary Close family member  - UK resident -RB does not apply  (settlor UK resident and RB applies ) Settlor - s87G(2) applies      Settlor Settlor - s87G(2) already applies  
          Other CFM Settlor   
          UK resident RB does not apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved 4
          UK resident RB does apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved 5
          Not UK resident Settlor - payment is not moved because recipient is not UK resident  6
               
               
Beneficiary Close family member  - UK resident -RB applies (settlor UK resident and RB does not apply ) Settlor - s87G(2) applies  1, 2   Any person Settlor - s87G(2) already applies. No part of the capital payment is moved  
               
Beneficiary Close family member  - UK resident -RB applies (settlor UK resident and RB applies)       Settlor Settlor - s87G(2) already applies.   
          Other CFM Settlor   
          UK resident RB does not apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved 4
          UK resident RB does apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved 5
          Not UK resident Settlor - payment is not moved because recipient is not UK resident 6
               
               
Beneficiary Close family member  - UK resident - RB does not apply-  (settlor not UK resident) Beneficiary (CFM rule does not apply) 2   Any person Beneficiary - No part of the capital payment is moved  
               
Beneficiary Close family member  - UK resident - RB applies (settlor not UK resident) Beneficiary (CFM rule does not apply) 2   Settlor Beneficiary. Settlor is NR so payment is not moved because recipient is not UK resident.  
          Other CFM Follows rules for other recipients because settlor is NR.  
          UK resident RB does not apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved 4
          UK resident RB does apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved  5
          Not UK resident Beneficiary - No part of the capital payment is moved 6
               
               
Beneficiary Close family member - not UK resident,  (settlor UK resident RB does not apply) Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies 1, 2   Any person Settlor   
               
Beneficiary Close family member - not UK resident,  (settlor UK resident RB applies) Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies 1, 2   Settlor Settlor   
          Other CFM Settlor   
          UK resident RB does not apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved  
          UK resident RB does apply Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved  
          Not UK resident Settlor - payment is not moved because recipient is not UK resident  
               
               
Beneficiary Close family member - not UK resident - (settlor not UK resident ) Beneficiary - but s87D(1) applies to disregard  3   Any person s87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident. 7
               
               
Beneficiary Other beneficiary - UK resident - RB does not apply Beneficiary  2   Any person (CFM rule applies) Settlor   
          Any person (CFM rule does not apply) Beneficiary - No part of the capital payment is moved  
               
Beneficiary Other beneficiary - UK resident - RB applies Beneficiary  2   Any UK resident RB does not apply (CFM rule applies) Settlor   
          Any UK resident RB does not apply (CFM does not applly) Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved  4
               
          Any UK resident RB does apply (CFM rule applies) Settlor   
          Any UK resident RB does apply (CFM rule does not apply) Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved  5
               
          Any person not UK resident (CFM rule applies) Settlor   
          Any person not UK resident (CFM rule dooes not apply) Beneficiary - No part of the capital payment is moved 6
               
               
               
Beneficiary Other beneficiary - not UK resident Beneficiary - but s87D(1) applies to disregard  3   UK resident RB does not apply(CFM rule applies) Settlor   
          UK resident RB does not apply(CFM rule does not apply) Recipient- all of the capital payment can be moved 7
               
          UK resident RB does apply (CFM rule applies) Settlor   
          UK resident RB does apply (CFM does not apply) Recipient- all of the capital payment can be moved 7
               
               
          Non UK resident (CFM rule applies) Settlor   
          Not UK resident (CFM rule does not apply) s87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident. 7
 

 

General notes

A. Any unmatched capital payments from the years to 5/4/18 are within the scope of the disregards in s87D (subject to s87E) and s87N (subject to s87P).     

B. Special rules in s87F may apply if the settlement ceases to exist in the year

C. Close family member defined in s87H

D. The  residence or RB status of a close family member does not impact the treatment of a capital payment for the settlor

E. For split years any gains are treated as arising in the UK part of that year - s87(2A)

F. Amounts G, T, U and R see s87J/K

G. If two or more gifts are made in the same year all amounts are allocated on a pro rata basis - s871

 

Referenced notes

  1. Settlor has power of recovery from CFM beneficiary for any tax charged s87G(3). Equivalent provision in s87J(5) where recycling applies.
  2. If the individual to whom the capital payment is allocated becomes non resident then under s87N no account will be taken of any unmatched part of the capital payment unless person is within scope of the temporary no resident provisions in which case s87P will apply
  3. If the individual is only temporarily non-resident s87E will bring the payment back into account in the period of return
  4. Untaxed matched gains (U) would be chargeable for the year, unmatched capital payments (R) would be available for matching
  5. Untaxed matched gains (U) would be chargeable if remitted, unmatched capital payments (R) would be available for matching
  6. The position of the first UK resident recipient would be considered
  7. If the onward payment was to a close family member, the capital payment or gain is moved to the settlor if UK resident. If settlor NR CFM rule does not apply