CG38980 - Transfer between settlements before 6 April 2008 - transferor settlement

TCGA92/Sch7para121

Follow the general rules in paragraph 120 of Schedule 7 in respect of the transferor settlement’s unmatched trust gains for the year of transfer and earlier tax years to calculate unmatched section 2(2) amounts for those years on those gains. For this purpose:

• in Step 1 of paragraph 120 include section 2(2) amounts for the year of transfer and earlier years only, and
• in Step 2 of paragraph 120 treat the ‘total deemed gains’ as being only those accruing to beneficiaries in the year of transfer and earlier years.

You then apply the rules in section 90 to the transfer of the settled property. Reduce the unmatched section 2(2) amounts by the value of the section 2(2) amounts transferred to the transferee settlement.

Go back and apply the general rules in paragraph 120 to arrive at final figures of unmatched section 2(2) amounts of the transferor settlement for 2007-08 and earlier years. But in doing this calculation:

• treat the section 2(2) amounts for the year of transfer and earlier years as those unmatched section 2(2) amounts resulting from the calculation in the previous two paragraphs, and
• include in ‘total deemed gains’ in Step 2 of paragraph 120 only any section 87 gains accruing to beneficiaries in the year after the year of transfer to 2007-08 and any unmatched section 87 gains for the years up to and including the year of transfer.