Guidance

HS301 Beneficiaries receiving capital payments from non-resident trusts and the calculation of the increase in tax charge (2024)

Updated 6 April 2024

This helpsheet gives you information to help you fill in box 52 in the Capital Gains Tax summary pages of your tax return. It explains how Capital Gains Tax is chargeable on capital payments or benefits from a non-resident, dual resident or immigrating trust, but it’s only an introduction.

The following instructions will show you how to complete the working sheet to arrive at a figure for box 52.

If you’re in any doubt about whether you’re liable to Capital Gains Tax on capital payments or benefits from a non-resident, dual resident or immigrating trust, or about how the tax is calculated, ask HMRC or your tax adviser.

1. Who should use this helpsheet

Any person resident in the UK who has directly or indirectly benefited from a non-resident, dual resident or immigrating settlement may be liable to Capital Gains Tax as a result. That person may also be liable to an increase in tax charge.

In this helpsheet the term ‘immigrating’ settlement or trust means one which is resident in the UK but either had been resident abroad previously or has had money or other assets transferred to it by a trust that still is abroad or had been abroad previously.

You can find more information on what is a non-resident trust or a dual resident trust and whether you’re liable to tax on the capital gains of such a trust if you’re its settlor, in Non-resident trusts and Capital Gains Tax (Self Assessment helpsheet HS299).

2. How Capital Gains Tax is charged

Capital Gains Tax may be due if you have received a capital payment or benefit from a non-resident, dual resident or immigrating trust. The maximum amount chargeable is the total capital gains made by the non-resident or dual resident trustees, calculated as if they had been resident in the UK. Gains of overseas companies in which the trustees have invested may also be taken into account.

A benefit includes interest-free loans, loans at less than the official rate of interest, rent-free occupation of trust property or use of trust property at less than market rental.

If you have directly or indirectly received, or are treated as having received, capital or a benefit from a non-resident, dual resident or immigrating trust, its value must be matched against capital gains made by the trustees and by any foreign private company in which they have invested. You may have received a capital payment from the trustees in an earlier tax year which has not been matched with trust gains. If the trustees make capital gains in the tax year 2023 to 2024 these earlier capital payments may be matched against these gains.

If so, you’ll need to include them on your return as attributed gains for the tax year 2023 to 2024. The trustees or their tax advisers should be able to tell you whether there are capital gains and how those gains are matched with your receipts or benefits.

If attributed gains are chargeable in 2023 to 2024 you enter these gains in box 18 of your Capital Gains Tax summary pages. You cannot set any personal losses against these gains.

If you’re non-UK domiciled read If I am non-UK domiciled.

2.1 Example

James is UK resident and domiciled. He received a capital payment of £10,000 from a non-resident trust during the year ended 5 April 2024, but the trustees made gains of £20,000 in the year ended 5 April 2022 that have not yet been matched with payments made to, or benefits provided for, beneficiaries.

Capital Gains Tax is due for tax year ending 5 April 2024, on the £10,000 James received. The trustees have £10,000 worth of gains remaining, still to be matched.

More detailed guidance on what is a capital payment and how the matching rules work can be found in the Capital Gains Manual, see CG38625P and CG38700P.

3. How to calculate the increase in tax

Where the capital gains, which have been matched against the capital payment or benefit, were made in an earlier year you may have to pay extra tax. In the example above, James would have to pay an increased amount of tax to reflect the fact that the gain made by the trustees actually arose 2 years earlier. The ‘table of increase in tax’ shows by what percentage the normal Capital Gains Tax bill is increased.

You should assume that the normal tax bill is calculated as if the gains deemed to arise to you from this source are the first slice of your total gains. So the benefit of your Capital Gains Tax annual exempt amount will be given against these gains.

Match the gain against the gains of the trust and any foreign private company involved and work out by how much your normal tax bill would be increased, using the working sheet.

If the matching is against gains arising in more than one of the periods listed in the table, the normal tax bill should be apportioned proportionally and the appropriate percentages applied to the apportioned amounts. In case of difficulty HMRC Trusts will be pleased to help.

3.1 Table of increase in tax

2023 to 2024 value of capital or benefit matched against gains which arose	Normal tax bill increased by
Before 6 April 2018	60%
In the year ended 5 April 2019	50%
In the year ended 5 April 2020	40%
In the year ended 5 April 2021	30%
In the year ended 5 April 2022	20%
In the year ended 5 April 2023	No increase due*
In the year ended 5 April 2024	No increase due

*A 10% increase may apply in this year, if the special anti-avoidance provisions in relation to transfers of value by trustees linked with trustee borrowing, also apply.

4. If I’m non-UK domiciled

From 6 April 2008 as a non-UK domiciled beneficiary, you can be chargeable to Capital Gains Tax where you have received a capital payment or benefit from a non-resident, dual resident or immigrating trust. You’ll only have a Capital Gains Tax charge if:

• you received the capital payment or benefit after 5 April 2008
• the gain made by the trustees or any foreign private company in which they have invested, matched against the capital payment or benefit, arose after 5 April 2008

The trustees or their tax advisers should be able to tell you whether you could have a Capital Gains Tax charge.

From 6 April 2017 an individual may become deemed domiciled in the UK. Additionally from 6 April 2018 the rules under which capital payments are brought into account for the matching rules changed. The detail of these rules are outside the scope of this helpsheet, however an individual who is deemed domiciled in the UK will not be able to claim the remittance basis.

If there could be a Capital Gains Tax charge on you, then:

• if you’re a remittance basis user the gain attributed to you’ll only be chargeable when the capital payment or benefit you received is received in, or remitted to, the UK — you can find more information on when something is remitted within the Residence, remittance basis etc notes
• if you’re not a remittance basis user the gain attributed to you’ll be chargeable to Capital Gains Tax when it’s attributed to you

When a gain becomes chargeable to Capital Gains Tax you should enter it at box 18 in your Capital Gains Tax summary pages.

5. Contact

For more information about online forms, phone numbers and addresses contact Self Assessment: general enquiries.