Taxation of Chargeable Gains Act 1992 Schedule 4A paragraph 4

Deemed disposal of underlying assets

Schedule 4A paragraph 4 provides that when someone disposes of an interest in settled property and certain conditions are met, the trustees are treated as having disposed of and immediately reacquired the underlying trust assets at market value.

• Where an interest in settled property is disposed of, the trustees are deemed to dispose of and immediately reacquire the relevant underlying assets at market value — this is called the "deemed disposal"
• Three conditions must all be met: the trustees must be UK resident, the settlor must be UK resident, and the settlor must have an interest in the settlement
• The deemed disposal is treated as taking place at the same time as the disposal of the interest in settled property
• A special timing rule applies where the start of the disposal and its effective completion fall in different tax years