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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Matching in a later year - more than one year - example

2013-14

Trustees’ section 2(2) amount £60,000
   
Capital payments beneficiary A £20,000

2012-13

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

2011-12

Trustees’ section 2(2) amount £nil
   
Capital payments beneficiary E £25,000

This example illustrates the principle that capital payments are matched taking the latest year first.

Section 87 gains

The £60,000 section 2(2) amount in 2013-14 is matched first against A’s 2013-14 capital payment of £20,000, then against D’s 2012-13 capital payment of £30,000 and finally against £10,000 of E’s 2011-12 capital payment of £25,000 leaving E with unmatched capital payments of £15,000 in 2011-14.

The gains of £20,000, £30,000 and £10,000 all accrue in 2013-14. In practice it is unusual for capital payments to be made before the gains accrue to the trustees.