Taxation of Chargeable Gains Act 1992 section 88

Gains of dual resident settlements

Section 88 deals with settlements where the trustees are resident in the UK but are also treated as resident in another country under a double taxation agreement, and sets out how gains on "protected assets" are attributed to beneficiaries rather than taxed on the trustees directly.

• Where trustees are UK resident but also treated as resident elsewhere under a double taxation agreement, the rules for attributing trust gains to beneficiaries (under section 87) are triggered for tax years from 6 April 1991 onwards.
• The chargeable amount attributed to beneficiaries is the lower of: (a) the total gains that would be taxable if the double taxation agreement were ignored, and (b) the gains arising from disposals of "protected assets" calculated on the same basis.
• "Protected assets" are those specified in the double taxation agreement where, if the trustees disposed of them while treated as resident overseas, the agreement would exempt those gains from UK tax.
• The trustees themselves remain chargeable on gains from assets that are not protected by the double taxation agreement; only the protected asset gains are redirected to beneficiaries under the attribution rules.