Taxation of Chargeable Gains Act 1992 section 5

Accumulation and discretionary settlements

Section 5 deals with the rate of capital gains tax applicable to gains arising within accumulation and discretionary settlements (trusts where income is accumulated or distributed at the trustees' discretion).

• Gains arising in accumulation and discretionary settlements are subject to capital gains tax at a specific rate applicable to trustees, rather than the rates that apply to individuals.
• The rate of tax charged on such settlements reflects their nature as trusts where no individual beneficiary has an automatic entitlement to the income or capital.
• This provision was amended by the Finance Act 2019 (Schedule 1, paragraph 2), updating the rules governing how these settlements are taxed on their chargeable gains.
• The section ensures that accumulation and discretionary trusts are treated distinctly from other types of settlement for capital gains tax purposes, with an appropriate rate of charge reflecting the discretionary nature of distributions.

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