Commentary

I5.1239 Disposal of interest in a settlement

IHT, trusts and estates

I5.1239 Disposal of interest in a settlement

Liability of beneficiaries—capital gains tax

I5.1239 Disposal of interest in a settlement

Beneficiaries' chargeable gains—introduction

There are two main occasions which result in a capital gain accruing to a beneficiary of a non-resident settlement:

  1.  

    (a)     when a beneficiary disposes of their interest in the settlement (see below)

  2.  

    (b)     where settlement gains are matched with capital payments made to a beneficiary (see I5.1240)

The charge in (b) has been extended from 2018/19 to tax certain capital payments on the settlor and recipients of onwards gifts (see I5.1244).

This document deals with the charge in (a).

Beneficiary's interest in a settlement—overview

The interest of a beneficiary of a trust, for example a life interest or reversionary interest, is a chargeable asset for CGT purposes1.

A beneficiary of a settlement disposes of his interest in the usual ways, for example by selling it or giving it away, and he is also treated as disposing of the interest when he releases his interest or becomes absolutely entitled to the trust

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