Taxation of Chargeable Gains Act 1992 Schedule 4C paragraph 5

Chargeable amount: dual resident settlement

Paragraph 5 of Schedule 4C deals with how the chargeable amount is calculated when a transfer of value is made by a settlement whose trustees are dual resident — that is, resident in the UK but also treated as resident in another country under a double taxation treaty.

• This paragraph applies where trustees of the transferor settlement are UK resident during any part of a tax year but are also treated as resident in another territory under a double taxation agreement.
• The chargeable amount is capped at the lower of two figures: the full amount that would be taxable ignoring the double taxation treaty, or the amount taxable on disposals of protected assets only.
• Protected assets are assets that are not shielded from UK capital gains tax by the double taxation treaty — their definition is taken from section 88(4) of the Act.
• The effect is to restrict the chargeable amount so that it does not exceed the gain attributable to assets that remain within the scope of UK capital gains tax despite the treaty.