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Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

205

 

(6)   

For the purposes of this section a settlement arising under a will or

intestacy is treated as made by the testator or intestate at the time of

death.

87A     

Section 87: matching

(1)   

This section supplements section 87.

5

(2)   

The following steps are to be taken for the purposes of matching

capital payments with section 2(2) amounts.

   

Step 1

   

Find the section 2(2) amount for the relevant tax year.

   

Step 2

10

   

Find the total amount of capital payments received by the

beneficiaries from the trustees in the relevant tax year.

   

Step 3

   

The section 2(2) amount for the relevant tax year is matched with—

(a)   

if the total amount of capital payments received in the

15

relevant tax year does not exceed the section 2(2) amount for

the relevant tax year, each capital payment so received, and

(b)   

otherwise, the relevant proportion of each of those capital

payments.

   

“The relevant proportion” is the section 2(2) amount for the relevant

20

tax year divided by the total amount of capital payments received in

the relevant tax year.

   

Step 4

   

If paragraph (a) of Step 3 applies—

(a)   

reduce the section 2(2) amount for the relevant tax year by the

25

total amount of capital payments referred to there, and

(b)   

reduce the amount of those capital payments to nil.

   

If paragraph (b) of that Step applies—

(a)   

reduce the section 2(2) amount for the relevant tax year to nil,

and

30

(b)   

reduce the amount of each of the capital payments referred to

there by the relevant proportion of that capital payment.

   

Step 5

   

Start again at Step 1 (unless subsection (3) applies).

   

If the section 2(2) amount for the relevant tax year (as reduced under

35

Step 4) is not nil, read references to capital payments received in the

relevant tax year as references to capital payments received in the

latest tax year which—

(a)   

is before the last tax year for which Steps 1 to 4 have been

undertaken, and

40

(b)   

is a tax year in which capital payments (the amounts of which

have not been reduced to nil) were received by beneficiaries.

   

If the section 2(2) amount for the relevant tax year (as so reduced) is

nil, read references to the section 2(2) amount for the relevant tax

year as the section 2(2) amount for the latest tax year—

45

(a)   

which is before the last tax year for which Steps 1 to 4 have

been undertaken, and

(b)   

for which the section 2(2) amount is not nil.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

206

 

(3)   

This subsection applies if—

(a)   

all of the capital payments received by beneficiaries from the

trustees in the relevant tax year or any earlier tax year have

been reduced to nil, or

(b)   

the section 2(2) amounts for the relevant tax year and all

5

earlier tax years have been reduced to nil.

(4)   

The effect of any reduction under Step 4 of subsection (2) is to be

taken into account in any subsequent application of this section.

87B     

Section 87: remittance basis

(1)   

This section applies if—

10

(a)   

chargeable gains are treated under section 87 as accruing to

an individual in a tax year,

(b)   

section 809B, 809D or 809E (remittance basis) applies to the

individual for that year, and

(c)   

the individual is not domiciled in the United Kingdom in that

15

year.

(2)   

The chargeable gains are foreign chargeable gains within the

meaning of section 12 (non-UK domiciled beneficiaries to whom

remittance basis applies).

(3)   

For the purposes of sections 809L to 809R of ITA 2007 (meaning of

20

“remitted to the United Kingdom” etc), treat relevant property or

benefits as deriving from the chargeable gains.

(4)   

For the purposes of subsection (3) property or a benefit is “relevant”

if the capital payment by reason of which the chargeable gains are

treated as accruing consists of—

25

(a)   

the payment or transfer of the property or its becoming

property to which section 60 applies, or

(b)   

the conferring of the benefit.

87C     

Sections 87 and 87A: disregard of certain capital payments

(1)   

For the purposes of sections 87 and 87A as they apply in relation to a

30

settlement, no account is to be taken of a capital payment (or a part

of a capital payment) within subsection (2).

(2)   

A capital payment is within this subsection if (and to the extent that)

it is received (or treated as received) in a tax year from the trustees of

the settlement by a company that—

35

(a)   

is not resident in the United Kingdom in that year, and

(b)   

would be a close company if it were resident in the United

Kingdom,

   

(and is not treated under any of subsections (3) to (5) of section 96 as

received by another person).”

40

109   (1)  

Section 88 (gains of dual resident settlements) is amended as follows.

      (2)  

For subsection (2) substitute—

“(2)   

The section 2(2) amount for a tax year for which section 87 applies by

virtue of this section is what it would be if the amount mentioned in

section 87(4)(a) were the assumed chargeable amount.”

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Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

207

 

      (3)  

Omit subsection (7).

110   (1)  

Section 89 (migrant settlements) is amended as follows.

      (2)  

In subsection (1), for “section 87 if” substitute “sections 87 and 87A if”.

      (3)  

For subsections (2) and (3) substitute—

“(1A)   

Subsection (2) applies to a settlement if—

5

(a)   

a non-resident period is succeeded by a resident period, and

(b)   

in relation to the last tax year in the non-resident period (“the

last non-resident tax year”), section 87A(3) applied by virtue

of paragraph (a) of that provision (exhaustion of capital

payments).

10

(2)   

Chargeable gains are treated as accruing in a tax year (in the resident

period) to a beneficiary of the settlement who receives a capital

payment from the trustees in that year if all or part of the capital

payment is matched (under section 87A as it applies for that year)

with the section 2(2) amount for the last non-resident tax year or any

15

earlier tax year.

(3)   

Section 87(3) and (4) and sections 87A to 87C apply for the purposes

of subsection (2) as if the relevant tax year were the tax year

mentioned in subsection (2).

(4)   

Section 87B (remittance basis) applies in relation to chargeable gains

20

treated under subsection (2) as accruing as it applies in relation to

chargeable gains treated under section 87 as accruing.”

111        

For section 90 substitute—

“90     

Sections 87 and 89(2): transfers between settlements

(1)   

This section applies if—

25

(a)   

section 87 applies or has applied to a settlement (“the

transferor settlement”), and

(b)   

the trustees of that settlement transfer all or part of the settled

property to the trustees of another settlement (“the transferee

settlement”).

30

(2)   

In this section “the year of transfer” means the tax year in which the

transfer occurs.

(3)   

Treat the section 2(2) amount for the transferee settlement for any tax

year (not later than the year of transfer) as increased by—

(a)   

the section 2(2) amount for the transferor settlement for that

35

year (as reduced under section 87A as it applies in relation to

that settlement for the year of transfer and all earlier tax

years), or

(b)   

if part only of the settled property is transferred, the relevant

proportion of the amount mentioned in paragraph (a).

40

(4)   

“The relevant proportion” is—

(a)   

the market value of the property transferred, divided by

(b)   

the market value of the property comprised in the transferor

settlement immediately before the transfer.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

208

 

(5)   

Treat the section 2(2) amount for the transferor settlement for any tax

year as reduced by the amount by which the section 2(2) amount for

the transferee settlement for that year is increased under subsection

(3).

(6)   

If neither section 87 nor section 89(2) would otherwise apply to the

5

transferee settlement for the year of transfer—

(a)   

section 89(2) to (4) apply to the settlement for that year (and

subsequent tax years), and

(b)   

for this purpose, references there to the last non-resident tax

year are to be read as the year of transfer.

10

(7)   

The increase under subsection (3) has effect for the year of transfer

and subsequent tax years.

(8)   

The reduction under subsection (5) has effect for tax years after the

year of transfer.

(9)   

When calculating the market value of property for the purposes of

15

this section or section 90A in a case where the property is subject to

a debt, reduce the market value by the amount of the debt.

(10)   

This section does not apply to—

(a)   

a transfer to which Schedule 4B applies, or

(b)   

any section 2(2) amount that is in a Schedule 4C pool (see

20

paragraph 1 of Schedule 4C).

90A     

Section 90: transfers made for consideration in money or money’s

worth

(1)   

Section 90 does not apply to a transfer of settled property made for

consideration in money or money’s worth if the amount (or value) of

25

that consideration is equal to or exceeds the market value of the

property transferred.

(2)   

The following provisions apply if—

(a)   

section 90 applies to a transfer of settled property made for

consideration in money or money’s worth, and

30

(b)   

the amount (or value) of that consideration is less than the

market value of the property transferred.

(3)   

If the transfer is of all of the settled property, for the purposes of

section 90 treat the transfer as being of part only of the settled

property.

35

(4)   

Deduct the amount (or value) of the consideration from the amount

of the market value referred to in section 90(4)(a).”

112   (1)  

Section 91 (increase in tax payable under section 87 or 89(2)) is amended as

follows.

      (2)  

For subsection (1) substitute—

40

“(1)   

This section applies if—

(a)   

chargeable gains are treated under section 87 or 89(2) as

accruing to a beneficiary by virtue of the matching (under

section 87A) of all or part of a capital payment with the

section 2(2) amount for a tax year (“the relevant tax year”),

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Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

209

 

(b)   

the beneficiary is charged to tax by virtue of that matching,

and

(c)   

the capital payment was made more than one year after the

end of the relevant tax year.

(1A)   

Where part of a capital payment is matched, references in

5

subsections (2) and (3) to the capital payment are to the part

matched.”

      (3)  

In subsection (5)(a), for the words from “year” to the end (excluding the

“and”) substitute “tax year immediately after the relevant tax year,”.

      (4)  

Omit subsection (8).

10

113        

Omit sections 92 to 95 (matching).

114        

Omit—

(a)   

in FA 1998, section 130(1) and (4), and paragraph 6(3) and (4) of

Schedule 21,

(b)   

in FA 2002, paragraph 6 of Schedule 11,

15

(c)   

in FA 2003, section 163(3), and

(d)   

in FA 2006, paragraphs 34(2)(d) and 36(2)(a) of Schedule 12.

Attribution of gains to beneficiaries: commencement etc

115        

The amendments made by paragraphs 106 to 114 have effect for the tax year

2008-09 and subsequent tax years.

20

116        

For the purposes of sections 87 and 87A of TCGA 1992, no account is to be

taken of—

(a)   

any capital payment received before 10 March 1981, or

(b)   

any capital payment received on or after that date but before 6 April

1984, so far as it represents a chargeable gain which accrued to the

25

trustees before 6 April 1981.

117        

In the application of section 87 of TCGA 1992 for a tax year by virtue of

section 88, no account is to be taken of any capital payment received before

6 April 1991.

118   (1)  

This paragraph applies if—

30

(a)   

section 87 of TCGA 1992 applies to a settlement for the tax year 2008-

09 or any subsequent tax year (“the tax year”),

(b)   

the settlement was made before 17 March 1998,

(c)   

none of the settlors fulfilled the residence requirements when the

settlement was made, and

35

(d)   

none of the settlors fulfils the residence requirements in the tax year.

      (2)  

For the purposes of that section as it applies to the settlement for the tax year,

no account is to be taken of—

(a)   

any gains or losses accruing to the trustees of the settlement before

17 March 1998, or

40

(b)   

any capital payments received before that date.

      (3)  

A settlor “fulfils the residence requirements” when the settlor is—

(a)   

resident or ordinarily resident in the United Kingdom, and

(b)   

domiciled in any part of the United Kingdom.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

210

 

119        

Section 87C of TCGA 1992 does not apply in relation to any capital payment

received before 6 April 2008.

120   (1)  

This paragraph applies to a settlement if section 87 or 89(2) of TCGA 1992

applied to it for the tax year 2007-08 or any earlier tax year.

      (2)  

The following steps are to be taken for the purposes of calculating the section

5

2(2) amount for the settlement for the tax year 2007-08 and earlier tax years.

           

Step 1

           

Calculate (in accordance with section 87 and, where appropriate, section 88)

the section 2(2) amount for the settlement for the tax year 2007-08 and earlier

tax years.

10

           

For this purpose, references in section 87(4) and (5) of TCGA 1992 (as

substituted) to section 87 of that Act applying to a settlement for a tax year

are to be read as references to section 87 of that Act (as it had effect before

that substitution) applying to a settlement for a tax year.

           

Step 2

15

           

Find the total amount of chargeable gains treated under section 87 or 89(2)

as accruing to beneficiaries of the settlement in the tax year 2007-08 or any

earlier tax year (“the total deemed gains”).

           

Step 3

           

Find the earliest tax year for which the section 2(2) amount is not nil.

20

           

If the section 2(2) amount for that year is less than or equal to the total

deemed gains, reduce that section 2(2) amount to nil.

           

Otherwise, reduce that section 2(2) amount by the amount of the total

deemed gains.

           

Step 4

25

           

Reduce the total deemed gains by the amount by which the section 2(2)

amount was reduced under Step 3.

           

Step 5

           

If the total deemed gains is not nil, start again at Step 3.

           

For this purpose, read references to the earliest tax year for which the section

30

2(2) amount is not nil as references to the earliest tax year—

(a)   

which is after the last tax year for which Steps 3 and 4 have been

undertaken, and

(b)   

for which the section 2(2) amount is not nil.

      (3)  

If, before 6 April 2008, the trustees of the settlement made a transfer of value

35

to which Schedule 4B to TCGA 1992 applied, sub-paragraph (2) has effect

subject to such modifications as are just and reasonable on account of

Schedule 4C to that Act having applied in relation to the settlement.

      (4)  

This paragraph does not apply if section 90 of TCGA 1992 applied to a

transfer of settled property by or to the trustees of the settlement that was

40

made before 6 April 2008 (see paragraph 121).

121   (1)  

If section 90 of TCGA 1992 (as originally enacted) applied to a transfer of

settled property made before 6 April 2008, this paragraph applies in relation

to the transferor settlement and the transferee settlement.

      (2)  

In this paragraph “the year of transfer” means the tax year in which the

45

transfer occurred.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

211

 

      (3)  

The following steps are to be taken for the purpose of calculating the section

2(2) amount for the transferor and transferee settlements for the tax year

2007-08 and earlier tax years.

           

Step 1

           

Take the steps in paragraph 120(2) for the purpose of calculating the section

5

2(2) amount (at the end of the year of transfer) for the transferor settlement

for the year of transfer and earlier tax years.

           

For this purpose, read references there to the tax year 2007-08 as references

to the year of transfer.

           

Step 2

10

           

Take the steps in paragraph 120(2) for the purpose of calculating the section

2(2) amount (before the year of transfer) for the transferee settlement for the

tax year before the year of transfer and earlier tax years.

           

For this purpose, read references there to the tax year 2007-08 as references

to the tax year before the year of transfer.

15

           

Step 3

           

Calculate the section 2(2) amount for the transferee settlement for the year of

transfer.

           

Step 4

           

Treat the section 2(2) amount for the transferee settlement for the year of

20

transfer or any earlier tax year (as calculated under Step 2 or 3) as increased

by—

(a)   

the section 2(2) amount for the transferor settlement for that year (as

calculated under Step 1), or

(b)   

if part only of the settled property was transferred, the relevant

25

proportion of the amount mentioned in paragraph (a).

           

“The relevant proportion” here has the same meaning as in section 90(4) of

TCGA 1992 (as substituted by this Schedule).

           

Step 5

           

Treat the section 2(2) amount for the transferor settlement for any tax year as

30

reduced by the amount by which the section 2(2) amount for the transferee

settlement for that year is increased under Step 4.

           

Step 6

           

Take the steps in paragraph 120(2) for the purpose of calculating the section

2(2) amount for the transferor settlement for the tax year 2007-08 and earlier

35

tax years.

           

For this purpose—

(a)   

treat the section 2(2) amount for the year of transfer or any earlier tax

year as the amount calculated by taking Steps 1 and 5 above, and

(b)   

reduce the total deemed gains by the amount of the total deemed

40

gains calculated by taking Step 1 above.

           

Step 7

           

Take the steps in paragraph 120(2) for the purpose of calculating the section

2(2) amount for the transferee settlement for the tax year 2007-08 and earlier

tax years.

45

           

For this purpose—

(a)   

treat the section 2(2) amount for the year of transfer or any earlier tax

year as the amount calculated by taking Steps 2 to 4 above, and

(b)   

reduce the total deemed gains by the amount of the total deemed

gains calculated by taking Step 2 above.

50

 
 

 
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