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| Disposal of interests in a settlement. |
126. - (1) In section 76 of the Taxation of Chargeable Gains Act 1992 (disposal of interests in settled property)-
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(a) in subsection (1), at the beginning there shall be inserted "Subject to subsection (1A) below"; and |
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(b) after that subsection there shall be inserted the subsections set out in subsection (2) below. |
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(2) Those subsections are as follows-
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"(1A) Subsection (1) above does not apply if-
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(a) the settlement falls within subsection (1B) below; or |
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(b) the property comprised in the settlement is or includes property deriving directly or indirectly from a settlement falling within that subsection. |
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(1B) A settlement falls within this subsection if there has been a time when the trustees of that settlement-
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(a) were not resident or ordinarily resident in the United Kingdom; or |
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(b) fell to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom." |
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(3) This section has effect in relation to any disposal on or after 6th March 1998.
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| Attribution of gains to settlor in section 10A cases. |
127. - (1) After section 86 of the Taxation of Chargeable Gains Act 1992 there shall be inserted the following section-
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| "Attribution of gains to settlor in section 10A cases. |
86A. - (1) This section applies in the case of a person who is a settlor in relation to any settlement ("the relevant settlement") where-
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(a) by virtue of section 10A, amounts falling within section 86(1)(e) for any intervening year or years would (apart from this section) be treated as accruing to the settlor in the year of return; and |
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(b) there is an excess of the relevant chargeable amounts for the non-residence period over the amount of the section 87 pool at the end of the year of departure. |
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(2) Only so much (if any) of-
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(a) the amount falling within section 86(1)(e) for the intervening year, or |
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(b) if there is more than one intervening year, the aggregate of the amounts falling within section 86(1)(e) for those years, |
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as exceeds the amount of the excess mentioned in subsection (1)(b) above shall fall in accordance with section 10A to be attributed to the settlor for the year of return.
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(3) In subsection (1) above, the reference to the relevant chargeable amounts for the non-residence period is (subject to subsection (5) below) a reference to the aggregate of the amounts on which beneficiaries of the relevant settlement are charged to tax under section 87 or 89(2) for the intervening year or years in respect of any capital payments received by them.
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(4) In subsection (1) above, the reference to the section 87 pool at the end of the year of departure is (subject to subsection (5) below) a reference to the amount (if any) which, in accordance with subsection (2) of that section, fell in relation to the relevant settlement to be carried forward from the year of departure to be included in the amount of the trust gains for the year of assessment immediately following the year of departure.
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(5) Where the property comprised in the relevant settlement has at any time included property not originating from the settlor, only so much (if any) of any capital payment or amount carried forward in accordance with section 87(2) as, on a just and reasonable apportionment, is properly referable to property originating from the settlor shall be taken into account for the purposes of subsections (3) and (4) above.
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(6) Where any reduction falls to be made by virtue of subsection (2) above in any amount to be attributed in accordance with section 10A to any settlor for any year of assessment, the reduction to be treated as made for that year in accordance with section 87(3) in the case of the settlement in question shall not be made until-
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(a) the reduction (if any) falling to be made by virtue of that subsection has been made in the case of every settlor to whom any amount is so attributed; and |
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(b) the amount or aggregate amount which (after any reduction or reductions in accordance with subsection (2) above) is for that year to be attributed to settlors of the settlement in accordance with section 10A has been applied in reducing the amount carried forward to that year in accordance with section 87(2). |
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(7) Where an amount or aggregate amount has been applied, in accordance with subsection (6)(b) above, in reducing the amount which in the case of any settlement is carried forward to any year in accordance with section 87(2), that amount (or, as the case may be, so much of it as does not exceed the amount which it is applied in reducing) shall be deducted from the amount used for that year for making the reduction under section 87(3) in the case of that settlement.
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(8) Expressions used in this section and section 10A have the same meanings in this section as in that section; and paragraph 8 of Schedule 5 shall apply for the construction of the references in subsection (5) above to property originating from the settlor as it applies for the purposes of that Schedule."
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(2) In section 97(1) to (5), (7) and (8) of that Act (interpretation of sections 87 to 96), for the words "sections 87", wherever occurring, there shall be substituted "sections 86A".
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(3) This section has effect where the year of departure is the year 1997-98 or any subsequent year of assessment.
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| Charge on beneficiaries of settlements with non-resident settlors. |
128. - (1) In subsection (1) of section 87 of the Taxation of Chargeable Gains Act 1992 (charge on beneficiaries of a non-resident settlement if the settlor is or has been domiciled and resident in the United Kingdom), the words from "if the settlor" to the end of the subsection shall be omitted.
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(2) In subsection (1) of section 88 of that Act (charge on beneficiaries of a settlement treated as resident outside the United Kingdom if the settlor is or has been domiciled and resident in the United Kingdom)-
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(a) the word "and" shall be inserted at the end of paragraph (a); and |
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(b) paragraph (c) and the word "and" immediately preceding it shall be omitted. |
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(3) Subject to subsection (4) below, the preceding provisions of this section apply for the year 1998-99 and subsequent years of assessment and shall be deemed to have applied for the year 1997-98.
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(4) Where section 87 of that Act applies for any year of assessment in relation to any settlement in relation to which it would not have applied for that year but for subsection (1) or (2) above-
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(a) gains and losses accruing to the trustees of the settlement before 17th March 1998, and |
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(b) capital payments received before that date, |
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shall be disregarded for the purposes of that section.
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| Charge on settlors of settlements for grandchildren. |
129. - (1) In paragraph 2 of Schedule 5 to the Taxation of Chargeable Gains Act 1992 (test whether settlor has interest)-
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(a) after sub-paragraph (3)(d) there shall be inserted the following paragraphs- |
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"(da) any grandchild of the settlor or of the settlor's spouse; |
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(db) the spouse of any such grandchild;" |
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(b) in sub-paragraph (3)(e), for "(d)" there shall be substituted "(db)". |
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(2) For sub-paragraph (7) of that paragraph, there shall be substituted the following sub-paragraph-
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"(7) In this paragraph-
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"child" includes a stepchild; and |
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"grandchild" means a child of a child." |
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(3) Schedule 22 to this Act (which makes transitional provision and consequential amendments in connection with the provisions of this section) shall have effect.
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(4) The preceding provisions of this section and Schedule 22 to this Act apply for the year 1998-99 and subsequent years of assessment and shall be deemed to have applied for the year 1997-98.
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| Charge on settlors of pre-19th March 1991 settlements. |
130. - (1) In paragraph 9 of Schedule 5 to the Taxation of Chargeable Gains Act 1992 (which sets out when a settlement is a qualifying settlement for the purposes of the attribution of gains to the settlor), after sub-paragraph (1) there shall be inserted the following sub-paragraphs-
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"(1A) Subject to sub-paragraph (1B) below, a settlement created before 19th March 1991 is a qualifying settlement for the purposes of section 86 and this Schedule in-
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(a) the year 1999-00, and |
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(b) subsequent years of assessment. |
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(1B) Where a settlement created before 19th March 1991 is a protected settlement immediately after the beginning of 6th April 1999, that settlement shall be treated as a qualifying settlement for the purposes of section 86 and this Schedule in a year of assessment mentioned in sub-paragraph (1A)(a) or (b) above only if-
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(a) any of the five conditions set out in subsections (3) to (6A) below becomes fulfilled as regards the settlement in that year; or |
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(b) any of those five conditions became so fulfilled in any previous year of assessment ending after 19th March 1991." |
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(2) Sub-paragraph (2) of that paragraph shall not have effect for the purpose of determining whether any settlement is a qualifying settlement in the year 1999-00 or any subsequent year of assessment.
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(3) After sub-paragraph (6) of that paragraph there shall be inserted the following sub-paragraph-
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"(6A) The fifth condition is that the settlement ceases to be a protected settlement at any time on or after 6th April 1999."
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(4) After sub-paragraph (10) of that paragraph there shall be inserted the following sub-paragraphs-
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"(10A) Subject to sub-paragraph (10B) below, a settlement is a protected settlement at any time in a year of assessment if at that time the beneficiaries of that settlement are confined to persons falling within some or all of the following descriptions, that is to say-
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(a) children of a settlor or of a spouse of a settlor who are under the age of eighteen at that time or who were under that age at the end of the immediately preceding year of assessment; |
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(b) unborn children of a settlor, of a spouse of a settlor, or of a future spouse of a settlor; |
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(c) future spouses of any children or future children of a settlor, a spouse of a settlor or any future spouse of a settlor; |
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(d) a future spouse of a settlor; |
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(e) persons outside the defined categories. |
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(10B) For the purposes of sub-paragraph (10A) above a person is outside the defined categories at any time if, and only if, there is no settlor by reference to whom he is at that time a defined person in relation to the settlement for the purposes of paragraph 2(1) above.
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(10C) For the purposes of sub-paragraph (10A) above a person is a beneficiary of a settlement if-
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(a) there are any circumstances whatever in which relevant property which is or may become comprised in the settlement is or will or may become applicable for his benefit or payable to him; |
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(b) there are any circumstances whatever in which relevant income which arises or may arise under the settlement is or will or may become applicable for his benefit or payable to him; |
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(c) he enjoys a benefit directly or indirectly from any relevant property comprised in the settlement or any relevant income arising under the settlement. |
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(10D) In sub-paragraph (10C) above-
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"relevant property" means property originating from a settlor; and |
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"relevant income" means income originating from a settlor." |
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(5) In construing section 86(1)(e) of the Taxation of Chargeable Gains Act 1992 (which specifies the amount by reference to which a charge arises under that section) as regards a particular year of assessment and in relation to a settlement created before 19th March 1991 which-
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(a) is a qualifying settlement in the year 1999-00, but |
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(b) was not a qualifying settlement in any earlier year of assessment, |
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no account shall be taken of disposals made before 6th April 1999 (whether for the purpose of arriving at gains or for the purpose of arriving at losses).
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(6) Schedule 23 (which makes transitional provision in connection with the coming into force of this section) shall have effect.
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