Finance Act 2003 (c. 14)

SCHEDULES

SCHEDULE 29 U.K. Transfers of value: attribution of gains to beneficiaries

Other gains to be brought into Schedule 4C pool U.K.

3 U.K. After paragraph 7 insert—

“Outstanding section 87/89 gains U.K.

7A (1) The amount of outstanding section 87/89 gains of a settlement at the end of a year of assessment is given by—

where—

G is the amount of the settlement’s section 87/89 gains for the year (see sub-paragraph (2)),

B is the amount of the gains treated in accordance with section 87(4) or 89(2) as accruing in that year to beneficiaries, and

NC is the amount of gains so treated as accruing in that year to beneficiaries who were not chargeable to tax for that year.

(2) The amount of a settlement’s section 87/89 gains for a year of assessment is—

(a) if section 87 applies to the settlement for the year—

(i) the amount of the settlement’s trust gains within the meaning of section 87(2), together with

(ii) any amount by which that amount falls to be increased under section 90(1)(a), or would fall to be increased but for section 90(2) or (3);

(b) if section 89(2) applies to the settlement for the year (otherwise than by virtue of section 90(1)(c))—

(i) the amount of the trust gains referred to in section 89(2), together with

(ii) any amount by which that amount falls to be increased under section 90(1)(b), or would fall to be increased but for section 90(2) or (3);

(c) if section 90(1)(c) applies to the settlement for the year, the amount that falls to be treated as trust gains in accordance with that provision, or would fall to be so treated but for section 90(2) or (3).

Gains to be brought into pool on subsequent transfer of value U.K.

7B (1) Where the trustees of a settlement who have made a transfer of value to which Schedule 4B applies make a further transfer of value to which that Schedule applies, the following provisions apply.

(2) If the further transfer is made in the same year of assessment as the original transfer, any Schedule 4B trust gains accruing by virtue of the further transfer are brought into the settlement’s Schedule 4C pool at the end of the year.

(3) If the further transfer is made in a later year of assessment at the beginning of which there are outstanding gains in the settlement’s Schedule 4C pool—

(a) any Schedule 4B trust gains accruing by virtue of the further transfer, and

(b) any outstanding section 87/89 gains of the settlement at the end of the later year of assessment,

are brought into the settlement’s Schedule 4C pool at the end of the later year.

• “Outstanding gains in the settlement’s Schedule 4C pool” means gains in that pool that have not been attributed to beneficiaries in accordance with this Schedule.

(4) If the further transfer is made in a later year of assessment at the beginning of which the settlement no longer has a Schedule 4C pool, the provisions of this Schedule apply in relation to the further transfer as they applied in relation to the original transfer.

(5) For the purposes of this paragraph a settlement is treated as continuing to have a Schedule 4C pool until the end of the last year of assessment in which there are any gains in the pool.”.