CG38718 - Charge on beneficiary of non-resident settlement – TCGA92/S87: Further Examples for 2018-19 and later years
Example 1. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount £100,000 for 2018/19.
Capital payments made in 2018/19 to:
Mr A – UK resident £50,000 All matched for Mr A
Mr B – non UK resident £100,000 No matching, s87D applies to disregard.
Mrs A UK resident £50,000 All matched for Mrs A
Gains for 2018/19:
Mr A £50,000
Mrs A £50,000
Example 2. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount £100,000 for 2019/20.
Capital payments made to:
Mr A – UK resident £10,000 (18/19), £40,000 (19/20) All matched for Mr A
Mr B – non UK resident £100,000 (18/19) No matching, s87D applies to disregard.
Mrs A UK resident £50,000 (19/20) All matched for Mrs A
Gains for 2019/20:
Mr A £50,000
Mrs A £50,000
Notes;
Capital payments of £90,000 made in and matched to gains of 2019/20
Balance of 2019/20 gains of £10,000 matched to capital payments to Mr A brought forward from 2018/19.
Example 3. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount £80,000 for 2019/20.
Capital payments made to:
Mr A – UK resident £10,000 (18/19), £40,000 (19/20) Matched to gains of £35,556 (see A)
Mr B – Not UK resident £100,000 (18/19)
Mrs A UK resident £50,000 (19/20) Matched to gains of £44,444 (see B)
A - matching for Mr A from 19/20 (40,000/90,000) x 80,000 = £35,556
B - matching for Mr B from 19/20 (50,000/90,0000 x 80,000 = £44,444
Unmatched capital payments are:
Mr A £10,000 (18/19), £4,444 (19/20)
Mr B £100,000 disregarded for year
Mrs A £5,556 (19/20)
Example 4. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount £120,000 for 2019/20.
Capital payments made to:
Mr A – UK resident £10,000 (18/19), £40,000 (19/20) Matched to gains of £42,727
Mr B – UK resident but leaves 19/20 (split year) £100,000 (18/19) Matched to gains of £27,273
Mrs A UK resident £50,000 (19/20) Matched to gains of £50,000
19/20 All capital payments of £90,000 matched
A – 18/19 matching for Mr A (10.000/110,000) x 30,000 = £2,727 (gains for 19/20 40,000+2,727)
B – 18/19 matching for Mrs B (100,000/110,000) x 30,000 = £27,273
Unmatched capital payments are:
Mr A £7,273 (18/19)
Mr B £72,727 (18/19) but may be disregarded in later years depending on residence position
Example 5. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount of £195,000 2019/20
Capital payments made to:
Mr A – UK resident £10,000 (18/19) £40,000 (19/20) Matched to gains of £45,000
Mr B UK resident but leaves 19/20 (split Year) £100,000 (19/20) Matched to gains of £100,000
Mrs A – UK resident £50,000 (19/20) Matched to gains of £50,000
For Mr A (40,000 from 19/20) + (5,000 from 18/19). Unmatched capital payments from 2018/19 of £5,000
Example 6. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount of £195,000 for 2019/20
Capital payments are made to:
Mr A – UK resident £10,000 (18/19), £40,000 (19/20) Matched to gains of £50,000
Mr B – Not resident 18/19, UK resident 19/20 (absence not within temporary non-residence rules)
£100,000 (18/19)
Mrs A – UK resident £50,000 (19/20) Matched to gains of £50,000
Unmatched gains from 2019/20 £95,000
Capital payments to Mr B are not matched in 2019/20 because they were received when not resident and are disregarded.
Example 7. Capital payments from a non-settlor interested non-resident trust
Trustee’s s2(2)* amount of £195,000 for 2019/20
Capital payments are made to:
Mr A – UK resident £10,000 (18/19), £40,000 (19/20) Matched to gains of £45,000
Mr B – Not resident 18/19 (originally left 8/15), Resident 19/20
£100,000 (18/19) Matched to gains of £100,000
Mrs A – UK resident £50,000 (19/20) Matched to gains of £50,000
For Mr A matching (40,000 from 19/20) + (5,000 from 18/19). Balance of unmatched capital payments from 2018/19 of £5,000
For Mr B although the capital payment was received while non resident, the temporary non-residence rules would apply to move receipt of the capital payment to 2019/20 and it would be matched for 2019/20.
Example 8. Settlor interested non-resident trust (s86 does not apply)
Trustee’s s2(2)* amount of £250,000 for 2019/20
Capital payments to:
Mr A – UK resident (settlor) £10,000 (18/19), £40,000 19/20
Mr B – not UK resident £100,000 (18/19)
Mrs A – UK resident – spouse of Mr A £50,000 (19/20)
Miss A – Not UK resident (under 18 at time of receipt and daughter of Mr A) £20,000 (18/19)
After application of close family member rule capital payments allocated to:
Mr A - £30,000 (18/19) and £90,000 (19/20)
Mr B - £100,000 (18/19) but disregarded as non-resident
For Mr A capital payments of £120,000 matched to gains of 2019/20.
Unmatched capital payments of £130,000 carried forward.
Unmatched and disregarded capital payments to Mr B of £100,000 (18/19) may be brought back into account if absence from UK is only temporary non-residence.
Example 9. Settlor interested non-resident trust (s86 does not apply)
Impact of s91\TCGA1992 (see CG38795 onwards) not considered in this example.
Trustee’s s2(2)* amount for 19/20 £195,000
Capital payments to:
Mr A – UK resident for 17/18, £10,000 received
UK resident for 18/19, £10,000 received
UK resident for 19/20, £40,000 received
Mr B - Not UK resident 17/18, £50,000 received
Not UK resident 18/19, £20,000 received
UK resident (absence was temporary) 19/20
Mrs A – spouse of Mr A- UK resident 18/19, £30,000 received
Mr C UK resident 17/18, £20,000 received
Not UK resident for 19/20
Miss A – daughter of settlor (born 6/4/01) UK resident 17/18, £10,000 received
Not UK resident 19/20, £30,000 received (May 19)
Allocation after application of close family member and other rules:
Mr A 17/18 £20,000 (10,000 Mr A, 10,000 Miss A)
18/19 £40,000 (10,000 Mr A, 30,000 Mrs A)
19/20 £40,000
Mr B 19/20 £70,000 (only temporary non-residence so capital payments treated as received)
Mr C 17/18 £20,000 but as non resident for 19/20 this will be disregarded for 19/20.
Mrs A Nil – close family member rule applies
Miss A Nil – close family member rule applies to capital payment 17/18, for 19/20 rule no longer applies but as not resident 19/20 capital payment is disregarded for 19/20.
Gains matched as follows for 19/20:
Mr A £100,000 (20,000 + 40,000 +40,000)
Mr B £70,000
Unmatched gains of £25,000 carried forward.
For both Mr C and Miss A if temporary non residence rules apply if they return to the UK, disregarded capital payments may be brought back into account.
Example 10. Settlor interested non-resident trust (s86 does not apply)
Trustee’s s2(2)* amount for 19/20 £120,000
Capital payments to:
Mr A – UK resident for 17/18, £10,000 received
UK resident for 18/19, £10,000 received
UK resident for 19/20, £40,000 received
Mrs A – spouse of Mr A- UK resident 18/19, £50,000 received
Mr C UK resident 17/18, £20,000 received
Not UK resident for 19/20
Miss A – 25 year old daughter of settlor Not UK resident 17/18, £20,000 received
Not UK resident 18/19, £20,000 received but onward payment of the full amount made to Mr A in the year
Not UK resident 19/20, £20,000 received
Allocation after application of close family member and other rules:
Mr A 17/18 £10,000
18/19 £80,000 (10,000 Mr A, 50,000 Mrs A, 20,000 onward payment from Miss A)
19/20 £40,000
Mr C 17/18 £20,000 but as non resident for 19/20 this will be disregarded for 19/20.
Mrs A Nil – close family member rule applies
Miss A Nil – for 17/18 and 19/20 capital payments disregarded for 19/20 as non resident. For 18/19 onward payment was made to Mr A.
Gains matched as follows for 19/20:
Mr A £120,000 (40,000 19/20 + 80,000 18/19)
Unmatched capital payments carried forward:
Mr A £10,000 from 17/18.
For both Mr C and Miss A if temporary non residence rules apply if they return to the UK, disregarded capital payments may be brought back into account.
Example 11. Capital payments from a non-settlor interested non-resident trust
Impact of s91\TCGA1992 (see CG38795 onwards) not considered in this example.
Trustee’s s2(2)* amount of £120,000 for 19/20
Capital payments to:
Mr A – UK resident for 17/18, £10,000 received
UK resident for 18/19, £10,000 received
UK resident for 19/20, £40,000 received
Mrs A – spouse of Mr A- UK resident 18/19, £50,000 received
Mr C UK resident 18/19 (and 19/20), £10,000 received with onward payment of £10,000 made to Mr A in 19/20
Allocation:
Mr A 17/18 £10,000
18/19 £10,000
19/20 £40,000
Mrs A 18/19 £50,000 (Mr A is not the settlor so close family member rule doesn’t apply)
Mr C 18/19 £10,000 (not moved because resident)
Gains matched as follows for 19/20:
Mr A £60,000 (40,000 19/20 + 10,000 18/19 + 10,000 17/18)
Mrs A £50,000 (from 18/19)
Mr C £10,000 (from 18/19)
*This section was re-written for disposals from 6 April 2019 to section 1(3) see CG10150.