Taxation of Chargeable Gains Act 1992 section 85

Disposal of interests in non-resident settlements

Section 85 deals with the capital gains tax treatment when a person disposes of an interest in a settlement whose trustees are not resident in the UK, including rules to prevent double taxation where an exit charge has already applied.

• When trustees are non-UK resident, a disposal of an interest in the settlement is a chargeable event — but the normal rule treating certain deemed disposals as not giving rise to a gain does not apply
• Where trustees have already been subject to an exit charge on ceasing UK residence, a rebasing mechanism applies so that the person disposing of the interest is treated as having disposed of and reacquired it at market value immediately before the trustees left the UK, preventing a double charge
• Where the trustees subsequently became resident in a tax treaty country (triggering a further deemed disposal), the rebasing is instead set at the earliest time the treaty country charge arose, provided this fell within the period between the person acquiring the interest and the trustees' departure from the UK
• Neither rebasing rule applies if the settlement has "relevant offshore gains" at the material time — broadly, where there are accumulated gains that would be attributed to beneficiaries receiving capital payments under the offshore settlements anti-avoidance rules