Taxation of Chargeable Gains Act 1992 section 87G

Settlor liable if capital payment received by close family member

Section 87G makes the settlor of an offshore trust personally liable for capital gains tax when a capital payment from the trust is received by a close member of the settlor's family, provided the settlor is UK resident in the relevant tax year.

• Where trustees of a settlement make a capital payment to a beneficiary who is a close family member of a UK-resident settlor, the payment is treated as if it were received by the settlor rather than the family member.
• An exception applies where the original recipient is UK resident and the settlor is a qualifying new resident for that tax year — in that case, the payment is not redirected to the settlor.
• If the settlor pays tax as a result of this rule, they have a statutory right to recover the full amount of that tax from the family member who actually received the payment.
• To support recovery, the settlor can request a certificate from HMRC confirming the tax paid, the gains involved and the tax year in which those gains arose — this certificate serves as conclusive evidence of those facts.