Taxation of Chargeable Gains Act 1992 section 87E

Sections 87 and 87A: disregarded payments to temporary non-resident

Section 87E deals with capital payments from non-resident settlements that are made to beneficiaries who have temporarily left the UK, ensuring those payments are not permanently excluded from the trust gains matching rules.

• Where a capital payment from a non-resident settlement is normally disregarded because the beneficiary is non-UK resident, this section overrides that disregard if the beneficiary is only temporarily non-resident.
• The capital payment (or relevant part of it) is treated as if the beneficiary received it in the tax year when they return to the UK, bringing it back within the trust gains matching rules at that point.
• Whether an individual qualifies as temporarily non-resident, and the meaning of the temporary period of non-residence and the period of return, are defined by the statutory residence test rules in Part 4 of Schedule 45 to the Finance Act 2013.
• The effect is to prevent beneficiaries from avoiding a tax charge on trust gains simply by being outside the UK for a short period when they receive capital payments from the settlement.