»Ê¹ÚÌåÓýapp

FA08/Sch07/para125

FA08/Sch07/para125 is an anti-avoidance measure. Its purpose was to discourage trustees making large capital payments to non-UK domiciled beneficiaries immediately before the beginning of 2008-09. »Ê¹ÚÌåÓýappse would then be matched against section 2(2) amounts for 2008-09 or later and, unless they had become UK domiciled, the beneficiaries would not be liable to Capital Gains Tax on any gains accruing to them.

»Ê¹ÚÌåÓýapp paragraph provides that any capital payment received on or after 12 March and before 6 April 2008 is ignored if it was received by:

• a UK resident but non-domiciled beneficiary, and
• the payment is matched against a 2008-09 or later section 2(2) amount, and
• the beneficiary is still non-domiciled when the gain accrues.

For example, a UK resident but non-domiciled beneficiary receives a capital payment of £500,000 on 4 April 2008. »Ê¹ÚÌåÓýapp trust has no section 2(2) amount for 2007-08 and there are no unmatched trusteesâ€� gains for any earlier year. In 2008-09 the trustees accrue a gain of £2 million.

Under the ordinary rules a capital gain of £500,000 would accrue to the beneficiary in 2008-09 and the 2008-09 section 2(2) amount would be reduced to £1.5 million. But because the beneficiary is not domiciled in the UK they would not be liable to capital gains tax on the chargeable gain, CG38765.

»Ê¹ÚÌåÓýapp effect of FA08/Sch07/para125 is that the 4 April 2008 capital payment is ignored. »Ê¹ÚÌåÓýapp 2008-09 section 2(2) amount of £2 million remains available for matching against capital payments received in later years.