CG38695 - Calculating the TCGA/S87 gain

TCGA92/S87

»Ê¹ÚÌåÓýapp basic operation of TCGA92/S87 is:

  • capital payments received by the beneficiaries are matched against the trusteesâ€� section 1(3) amount for a year
  • the beneficiary is treated as accruing a chargeable gain equal to the amount matched
  • the gain accrues to the beneficiary in the year the payment is matched not the year the capital payment is received
  • the trustees' section 1(3) amount for that year and the capital payment are reduced by the amount of the matched payment.

»Ê¹ÚÌåÓýapp rules relating to the matching of capital payments changed from 6 April 2018. »Ê¹ÚÌåÓýapp rules from 6 April 2018 are detailed in this manual from CG38702 and before this date from CG38721.

If a capital payment is matched against a section 1(3) amount for a tax year that is more than a year earlier the rate of tax is increased by 10% for a maximum of six years. For example, if a capital payment received in 2023-24 is matched against a section 1(3) amount for 2021-22 the rate of tax is increased by 20%, see CG38795 or the Helpsheet 301 for the year the capital payment is matched.