Taxation of Chargeable Gains Act 1992 Schedule A1 paragraph 8

Cases where there are non-qualifying beneficiaries

Paragraph 8 of Schedule A1 deals with how taper relief is restricted where a trust has one or more beneficiaries who do not qualify for the relief, ensuring that the benefit of taper relief is only given in proportion to the qualifying beneficiaries' share.

• Where a trust has a mixture of qualifying and non-qualifying beneficiaries, full taper relief cannot be claimed on the entire gain.
• The gain must be apportioned between qualifying and non-qualifying beneficiaries, and taper relief applies only to the portion attributable to qualifying beneficiaries.
• The presence of even one non-qualifying beneficiary means the trustees must calculate the appropriate fraction of the gain that is eligible for taper relief.
• This restriction ensures that taper relief through a trust cannot be used to benefit persons who would not qualify for the relief in their own right.