Paragraph 69

Schedule 5 (attribution of gains to settlors with interest in non-resident or dual resident settlement) is amended as follows.

In paragraph 1 (construction of section 86(1)(e): losses etc), after sub-paragraph (6) insert—

“(6A)

In construing section 86(1)(e) as regards a particular year of assessment, if—

(a)

section 86 did not apply to the settlement in a year of assessment ending before 6 April 2025 (“the earlier year”), but

(b)

that section would have applied to the settlement in the earlier year if the condition in section 86(1)(e) (settlor domiciled in the United Kingdom) had been met in the earlier year,

deductions shall be made in respect of losses accruing in the earlier year, but only so far as those losses have not been taken into account for the purposes of section 87 in determining the section 1(3) amount for the settlement for the earlier year.”

Omit paragraphs 5A and 5B (protections for deemed domiciles etc).

After paragraph 5 insert—

“Old section 87 rebasing elections to apply in relation to section 86

5C

(1)

This paragraph applies if—

(a)

the trustees of the settlement made (at any time) an election under paragraph 126(1) of Schedule 7 to the Finance Act 2008 (remittance basis: capital gains rebasing), and

(b)

an amount of chargeable gains would (apart from this paragraph) be treated as accruing to the settlor under section 86(4) in a tax year (“the relevant tax year”).

(2)

The settlor is not charged to capital gains tax on so much of the chargeable gains as exceeds the relevant proportion of those gains.

(3)

For that purpose “the relevant proportion” is—

$$\frac{A}{B}$$

where—

• A is the amount that would be treated under section 86(4) as accruing to the settlor in the relevant tax year if immediately before 6 April 2008 every relevant asset had been sold by the trustees and immediately re-acquired by them at its market value at that time, and

• B is the amount mentioned in sub-paragraph (1)(b).

(4)

In sub-paragraph (3), “relevant asset” means an asset—

(a)

that was disposed of in the relevant tax year, and

(b)

that was comprised in the settlement from the beginning of 6 April 2008 until its disposal.”

In paragraph 6 (right of recovery), in sub-paragraph (3)—