Paragraph 3 Capital payments made by settlement: section 87 and 89 TCGA 1992 cases

United Kingdom

(1)

This paragraph applies for the tax year 2025-26, 2026-27 or 2027-28 in relation to an individual if—

(a)

chargeable gains are treated as accruing to the individual in that tax year as a result of section 87(2) or 89(2) of TCGA 1992 in relation to a capital payment from the trustees of a settlement for which the individual is a beneficiary, and

(b)

the settlement has a section 1(3) amount that is greater than nil for one or more tax years before 2025-26.

(2)

So much of the payment as is matched with section 1(3) amounts for tax years before 2025-26 is qualifying overseas capital.

(3)

For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—

(a)

the section 1(3) amount for each tax year after the tax year 2024-25 were nil, and

(b)

the reference in Step 2 in subsection (2) of section 87A of that Act to the total amount of capital payments received by the beneficiaries were to the total amount of capital payments—

(i)

received by the individual and other beneficiaries that are qualifying individuals for the relevant tax year, and

(ii)

to which section 87(2) or 89(2) of that Act applies.

(4)

For the purposes of this paragraph, ignore any reduction of a section 1(3) amount for the tax year 2024-25 or an earlier tax year resulting from the application of section 87 or 89(2) of TCGA 1992 in the tax year 2025-26 or any subsequent tax year.

(5)

Sub-paragraph (6) applies where—

(a)

an amount of a capital payment has been matched with a section 1(3) amount under sub-paragraph (2), and

(b)

that amount is designated as designated qualifying overseas capital.

(6)

The section 1(3) amount is to be taken to have been reduced (but not below nil) by so much of it as matches with the capital payment for the purposes of any subsequent application of this paragraph.

(7)

This paragraph is not to be taken as affecting the application of section 87A of TCGA 1992 for any purpose other than for the purposes of this paragraph and F1paragraph 5 (and no section 1(3) amounts or capital payments are to be taken to have been reduced as a result of the application of this paragraph for any other purpose).

(8)

For the purposes of this paragraph—

(a)

“section 1(3) amount” has the meaning it has in section 87 of TCGA 1992, and

(b)

section 97 of TCGA 1992 (supplementary provisions) applies as it applies for the purposes of sections 86A to 96 of that Act.

(9)

For the purposes of this paragraph, and F2paragraph 5, an individual is a qualifying individual in a tax year if the individual—

(a)

is UK resident for the purposes of income tax and capital gains tax for that tax year, and

(b)

was subject to the remittance basis for at least one tax year (being a tax year before the tax year 2025-26).

Annotations

Textual amendments

F1: Words in Sch. 10 para. 3(7) substituted (retrospective and with effect in accordance with s. 52(4)(b) of the amending Act) by Finance Act 2026 (c. 11), s. 52(2)(d)(i)(4)(a)
F2: Words in Sch. 10 para. 3(9) substituted (retrospective and with effect in accordance with s. 52(4)(b) of the amending Act) by Finance Act 2026 (c. 11), s. 52(2)(d)(ii)(4)(a)