Finance Act 1984

Time when postponed tax becomes payable U.K.

11 (1) The provisions of this paragraph apply where, as a result of a claim, payment of an amount of capital gains tax, determined in accordance with paragraphs 6 to 9 above, is postponed by virtue of this Schedule; and, subject to sub-paragraph (6) below, any reference in the following provisions of this paragraph to postponed tax is a reference to tax the payment of which is so postponed.

(2) Postponed tax shall become payable in accordance with sub-paragraph (5) below if, at any time in the year of assessment in which the claim is made or any later year, the beneficiary disposes of his interest in the settlement to which the claim relates in circumstances such that, by virtue of section 58(1) of the principal Act, no chargeable gain could accrue on the disposal; and in sub-paragraph (5) below “the relevant consideration” means the amount or value of the consideration for such a disposal.

(3) Subject to paragraph 12 below, postponed tax shall become payable in accordance with sub-paragraph (5) below if, in the year of assessment in which the claim is made or any later year, the beneficiary or a close relative of his receives a capital payment from the trustees of the settlement to which the claim relates or a related settlement.

(4) In the following provisions of this paragraph and paragraph 12 below, any reference to a material year of assessment is a reference to one in which the beneficiary disposes of his interest as mentioned in sub-paragraph (2) above or in which sub-paragraph (3) above applies.

(5) For any material year of assessment, so much of the postponed tax as does not exceed 30 per cent. of the aggregate of—

(a) the relevant consideration in respect of any disposal in that year, and

(b) subject to paragraph 12 below, the capital payments received in that year as mentioned in sub-paragraph (3) above,

shall become payable as if it were capital gains tax assessed in respect of gains accruing in that year.

(6) If, for any material year of assessment, the amount of the postponed tax exceeds 30 per cent. of the aggregate referred to in sub-paragraph (5) above, only the excess shall continue after the end of that year to be postponed tax for the purposes of this paragraph, but without prejudice to the subsequent operation of this paragraph in relation to a later year of assessment which is a material year.

(7) Where part, but not the whole, of any postponed tax becomes payable in accordance with sub-paragraph (5) above, tax assessed for an earlier year shall be regarded as becoming so payable before tax assessed for a later year.