Matching: non-UK domiciled beneficiary - unmatched capital payment for year before 2008 - 09 - example
|2005 -06||Capital payments received||£10,000|
|2008-09||Capital payments received||£16,000|
|Section 2(2) amount||£24,000|
Section 87 gains
The 2008-09 section 2(2) amount is matched on the usual LIFO basis. So the £24,000 is matched first against the 2008-09 capital payment leaving a balance of £8,000 to be matched against the 2005-06 capital payment. The 2005-06 capital payment is reduced to £2,000 (£10,000 - £8,000) and the 2008-09 section 2(2) amount is reduced to nil.
If the beneficiary was non-domiciled in 2008-09 they would be charged to Capital Gains Tax only on the £16,000 matched to the 2008-09 capital payment. The fact that no tax is charged doesn’t prevent the matching and the reduction in the 2005-06 section 2(2) amount and capital payment.