CG38040 - Disposal of interests in settlements: Specific events

TCGA92/S76 (2)

Under TCGA92/S76 (2) the holder of an interest in settled property is treated as disposing of the interest when he, she or it becomes, as holder of that interest, absolutely entitled as against the trustees to settled property. A chargeable gain can accrue on that disposal if a chargeable gain would have accrued on any actual disposal of that interest under CG38010. The consideration for such a deemed disposal is the market value of the property received by the beneficiary less any CGT charge on the trustees under TCGA92/S71 (1), see CG37100. The charge on the beneficiary is quite separate from the deemed disposal by the trustees.

 

Merger of interests

See CG37600+ for the tax treatment of mergers of interests, including the application or non-application of Section 76.

 

Non-resident settlements

TCGA92/S85 (1)

A chargeable gain accrues on the actual disposal of an interest in a non-resident settlement, but not where the disposal is a deemed disposal under TCGA92/S76 (2). Under TCGA92/S17 (2)(a), in computing the gain on a disposal by a person for whose benefit the interest was created no deduction for acquisition cost, other than relevant incidental costs, is due where the interest was acquired on or after 10 March 1981.

TCGA92/S85 (2) - (9)

TCGA92/S85 (2)-(9) contains rules preventing a double charge where a settlement has previously been subject to the exit charge under TCGA92/S80 see CG38215.

Where a settlement emigrates on or after 19 March 1991, for the purposes of computing a subsequent gain the taxpayer is treated as having disposed of the interest on the date of change of residence and reacquired it at market value on that date, but without a charge to tax.

Because WMBC Assets (Edinburgh) deal with non-resident trusts, they will also provide advice on the application of TCGA92/S85. If you do need to refer to that office it would be helpful to quote the reference under which they deal with the trustees.