Commentary

I5.1261 Transfers of value linked with trustee borrowing—attribution of gains to a beneficiary

IHT, trusts and estates

I5.1261 Transfers of value linked with trustee borrowing—attribution of gains to a beneficiary

I5.1261 Transfers of value linked with trustee borrowing—attribution of gains to a beneficiary

Attribution of gains arising on a transfer of value—overview

Where gains arise as a result of a transfer of value by trustees of a non-resident settlement (or of a settlement that was non-resident1) under TCGA 1992, Sch 4B (see I5.1260) they enter the 'Schedule 4C pool'2 where they can be matched with capital payments to UK resident beneficiaries3.

'Beneficiaries' here include4:

  1.  

    •     persons who have ceased to be beneficiaries by the time the chargeable gains accrue, and

  2.  

    •     persons who were beneficiaries of the settlement before it ceased to exist (where this is the case) but who were beneficiaries of the settlement at a time in a previous tax year when a capital payment was made to them.

Capital payments are matched against the Schedule 4C pool if they are received from the trustees of a 'relevant settlement', which means:

  1.  

    •     either the transferor or transferee settlement5, or

  2.  

    •     the recipient settlement where a relevant settlement makes a transfer of value under Sch 4B or a transfer of settled property to another settlement6 (see I5.1256)

The Schedule 4C pool

The 'Schedule 4C pool' is made up of the following three elements:

  1.  

    •     any section 1(3) amounts that are unmatched for years up to and including the year of transfer7

  2.  

    •     Sch 4B gains created by the transfer of value8

  3.  

    •     any other Sch 4B gains created by further transfers of value in the same year9

The 'section 1(3) amount' means the

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