CG38719B - Charge on beneficiary of non-resident settlement – TCGA92/S87: Further Examples for 2018-19 and later years Table 2
New rules from 06/04/2018 where s87 applies and onward gifts made
Table covers cases where the residence or RB status of the individual does not change between the actual or deemed receipt (in CFM cases) of the capital payment and the onward gift.
Table is concerned with only the first onward gift in a chain. If the chain is longer the process is repeated for each onward payment.
RB = remittance basis
| Initial Allocation | - | - | - | Onward gift rules | - | - |
|---|---|---|---|---|---|---|
| Capital payment to | Status of original recipient | Capital payment for | Note | Onward payment to | Capital payment / gain moved to | Note |
| Settlor | UK resident - RB does not apply | Settlor | 2 | Any person | Settlor - No part of the capital payment is moved | - |
| Settlor | UK resident - RB applies | Settlor | 2 | UK resident (non CFM) RB does not apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 4 |
| - | - | - | - | UK resident (non CFM) RB does apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 5 |
| - | - | - | - | Not UK resident (non CFM) | Settlor - payment is not moved because recipient is not UK resident | 6 |
| - | - | - | - | UK resident CFM RB does not apply | Settlor | - |
| - | - | - | - | UK resident CFM RB does apply | Settlor | - |
| - | - | - | - | Not UK resident CFM | Settlor - payment is not moved because recipient is not UK resident | - |
| Settlor | Not UK resident | Settlor - but s87D(1) applies to disregard | 3 | UK resident RB does not apply (CFM rule cannot apply as S is NR) | Recipient- all of the capital payment can be moved | 7 |
| - | - | - | - | UK resident RB does apply (CFM rule cannot apply as S is NR) | Recipient- all of the capital payment can be moved | 7 |
| - | - | - | - | Not UK resident CFM rule cannot apply as S is NR) | S87D(1) diregard continues to apply | 6,7 |
| Beneficiary | Close family member - UK resident -RB does not apply (settlor UK resident and RB does not apply) | Settlor - s87G(2) applies | 1, 2 | Any person | Settlor - s87G(2) already applies. No part of the capital payment is moved | - |
| Beneficiary | Close family member - UK resident -RB does not apply (settlor UK resident and RB applies) | Settlor - s87G(2) applies | - | Settlor | Settlor - s87G(2) already applies | - |
| - | - | - | - | Other CFM | Settlor | - |
| - | - | - | - | UK resident RB does not apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 4 |
| - | - | - | - | UK resident RB does apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 5 |
| - | - | - | - | Not UK resident | Settlor - payment is not moved because recipient is not UK resident | 6 |
| Beneficiary | Close family member - UK resident -RB applies (settlor UK resident and RB does not apply) | Settlor - s87G(2) applies | 1, 2 | Any person | Settlor - s87G(2) already applies. No part of the capital payment is moved | - |
| Beneficiary | Close family member - UK resident -RB applies (settlor UK resident and RB applies) | - | - | Settlor | Settlor - s87G(2) already applies | - |
| - | - | - | - | Other CFM | Settlor | - |
| - | - | - | - | UK resident RB does not apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 4 |
| - | - | - | - | UK resident RB does apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 5 |
| - | - | - | - | Not UK resident | Settlor - payment is not moved because recipient is not UK resident | 6 |
| Beneficiary | Close family member - UK resident - RB does not apply- (settlor not UK resident) | Beneficiary (CFM rule does not apply) | 2 | Any person | Beneficiary - No part of the capital payment is moved | - |
| Beneficiary | Close family member - UK resident - RB applies (settlor not UK resident) | Beneficiary (CFM rule does not apply) | 2 | Settlor | Beneficiary. Settlor is NR so payment is not moved because recipient is not UK resident | - |
| - | - | - | - | Other CFM | Follows rules for other recipients because settlor is NR | - |
| - | - | - | - | UK resident RB does not apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 4 |
| - | - | - | - | UK resident RB does apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 5 |
| - | - | - | - | Not UK resident | Beneficiary - No part of the capital payment is moved | 6 |
| Beneficiary | Close family member - not UK resident, (settlor UK resident RB does not apply) | Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies | 1, 2 | Any person | Settlor | - |
| Beneficiary | Close family member - not UK resident, (settlor UK resident RB applies) | Settlor - s87D(1) is disapplied by (3) and s87G(2) now applies | 1, 2 | Settlor | Settlor | - |
| - | - | - | - | Other CFM | Settlor | - |
| - | - | - | - | UK resident RB does not apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | - |
| - | - | - | - | UK resident RB does apply | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | - |
| - | - | - | - | Not UK resident | Settlor - payment is not moved because recipient is not UK resident | - |
| Beneficiary | Close family member - not UK resident - (settlor not UK resident) | Beneficiary - but s87D(1) applies to disregard | 3 | Any person | s87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident | 7 |
| Beneficiary | Other beneficiary - UK resident - RB does not apply | Beneficiary | 2 | Any person (CFM rule applies) | Settlor | - |
| - | - | - | - | Any person (CFM rule does not apply) | Beneficiary - No part of the capital payment is moved | - |
| Beneficiary | Other beneficiary - UK resident - RB applies | Beneficiary | 2 | Any UK resident RB does not apply (CFM rule applies) | Settlor | - |
| - | - | - | - | Any UK resident RB does not apply (CFM does not applly) | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 4 |
| - | - | - | - | Any UK resident RB does apply (CFM rule applies) | Settlor | - |
| - | - | - | - | Any UK resident RB does apply (CFM rule does not apply) | Recipient - unmatched capital payment within (R) and matched gain if untaxed within (U) can be moved | 5 |
| - | - | - | - | Any person not UK resident (CFM rule applies) | Settlor | - |
| - | - | - | - | Any person not UK resident (CFM rule dooes not apply) | Beneficiary - No part of the capital payment is moved | 6 |
| Beneficiary | Other beneficiary - not UK resident | Beneficiary - but s87D(1) applies to disregard | 3 | UK resident RB does not apply(CFM rule applies) | Settlor | - |
| - | - | - | - | UK resident RB does not apply(CFM rule does not apply) | Recipient- all of the capital payment can be moved | 7 |
| - | - | - | - | UK resident RB does apply (CFM rule applies) | Settlor | - |
| - | - | - | - | UK resident RB does apply (CFM does not apply) | Recipient- all of the capital payment can be moved | 7 |
| - | - | - | - | Non UK resident (CFM rule applies) | Settlor | - |
| - | - | - | - | Not UK resident (CFM rule does not apply) | s87D(1) disregard unaffected. Payment is not moved because recipient is not UK resident | 7 |
General notes
A. Any unmatched capital payments from the years to 5/4/18 are within the scope of the disregards in s87D (subject to s87E) and s87N (subject to s87P).
B. Special rules in s87F may apply if the settlement ceases to exist in the year
C. Close family member defined in s87H
D. The residence or RB status of a close family member does not impact the treatment of a capital payment for the settlor
E. For split years any gains are treated as arising in the UK part of that year - s87(2A)
F. Amounts G, T, U and R see s87J/K
G. If two or more gifts are made in the same year all amounts are allocated on a pro rata basis - s871
Referenced notes
- Settlor has power of recovery from CFM beneficiary for any tax charged s87G(3). Equivalent provision in s87J(5) where recycling applies.
- If the individual to whom the capital payment is allocated becomes non resident then under s87N no account will be taken of any unmatched part of the capital payment unless person is within scope of the temporary no resident provisions in which case s87P will apply
- If the individual is only temporarily non-resident s87E will bring the payment back into account in the period of return
- Untaxed matched gains (U) would be chargeable for the year, unmatched capital payments (R) would be available for matching
- Untaxed matched gains (U) would be chargeable if remitted, unmatched capital payments (R) would be available for matching
- The position of the first UK resident recipient would be considered
- If the onward payment was to a close family member, the capital payment or gain is moved to the settlor if UK resident. If settlor NR CFM rule does not apply