Taxation of Chargeable Gains Act 1992 section 81

Death of trustee: special rules

Section 81 limits or eliminates the deemed disposal charge under section 80 where the trustees of a settlement cease to be UK resident because of a trustee's death, and then resume UK residence within six months.

• Where the trustees lose UK residence due to a trustee's death but become UK resident again within six months, the section 80 exit charge is restricted to a narrower pool of assets rather than applying to all trust assets.
• The restricted pool covers only assets actually disposed of by the trustees in the period between the death and the return to UK residence, plus assets that would remain sheltered from UK capital gains tax under a double taxation treaty even after the trustees become UK resident again.
• Where the trustees become UK resident on the death but then cease UK residence again within six months (triggering section 80 in reverse), the exit charge is restricted to assets acquired during that period through transfers that benefited from gift hold-over relief under section 165 or section 260(3).
• The overall effect is to prevent a full exit charge arising from what may be a temporary and involuntary change in the trust's residence caused solely by the death of a trustee, while still catching assets that were disposed of, treaty-protected assets, or assets deliberately transferred into the trust on a held-over basis during the interim period.