Taxation of Chargeable Gains Act 1992 Schedule 4C paragraph 13

Increase in tax payable under this Schedule

Paragraph 13 provides for an increase in the tax charged on a beneficiary when there is a delay between the tax year in which trust gains arise and the year in which the corresponding capital payment is made.

• Where chargeable gains are attributed to a beneficiary through the matching of a capital payment with trust gains, and the beneficiary is charged to tax as a result, an additional tax charge applies to reflect the time delay involved.
• The increase is calculated as notional interest on the tax that would otherwise be payable, using the rate specified in section 91(3), and is computed over a defined chargeable period — but the total tax (including the increase) cannot exceed the amount of the capital payment itself.
• The chargeable period runs from the later of two dates — 1 December after the tax year in which the gains arose, or the 1 December falling six years before 1 December after the year the capital payment is made — and ends on 30 November following the tax year in which the capital payment is made.
• Where only part of a capital payment is matched with trust gains, the increase calculation applies only to that matched part, not to the whole payment.