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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Matching: non-UK domiciled beneficiary - unmatched section 2(2) amount for year before 2008 - 09 - example

FA08/Sch07/para124

2005-06 Capital payments received Nil
     
  Section 2(2) amount £7,000
2006-07 Capital payments received Nil
  Section 2(2) amount £5,000
2008-09 Capital payment received £30,000
  Section 2(2) amount £16,000

Section 87 gains

The ordinary LIFO rules apply to match the £30,000 capital payment received in 2008-09 against the section 2(2) amounts as follows.

2008-09 £16,000
   
2006-07 £5,000
2005-06 £7,000
2008-09 section 87 gain £28,000

If the beneficiary was non-domiciled in 2008-09 they are charged to Capital Gains Tax only on the £16,000 2008-09 section 2(2) amount. The fact that no tax is charged does not stop the 2008-09 capital payment being matched against the section 2(2) amounts for the earlier years and those amounts being reduced to nil. The section 2(2) amount for 2008-09 is reduced to £2,000.