Taxation of Chargeable Gains Act 1992 Schedule 5 paragraph 1

Construction of section 86(1)(e)

Schedule 5 paragraph 1 sets out detailed rules for calculating the amount of gains attributable to a settlor under section 86(1)(e), including how losses are handled, how gains from non-resident companies are included, and how double taxation treaty protections can limit the chargeable amount.

• Trustees' gains are computed as if they were UK resident, with no annual exempt amount, and allowable losses can be carried forward — but only from years when the section 86 conditions were met (and not from before 19 March 1991 for pre-existing settlements).
• Where trustees hold shares as participators in a non-resident close company, any gains attributed to the trustees under the close company rules (section 3) are included in the section 86 computation if the shares originate from the settlor.
• Where trustees are UK resident but treated as non-resident under a double taxation treaty, the chargeable amount is restricted to the gains on treaty-protected assets — unless total gains are lower, in which case the lower figure applies.
• From 2025/26, losses from earlier years when section 86 did not apply solely because the settlor was not UK domiciled can be brought into account, provided they have not already been used under the section 87 beneficiary attribution rules.