CheckLists.Tax (beta)
C3. Gift to an individual
INCOME TAX
​
Settlements code
​
- Gift as a settlement
​
- Jones v. Garnett.
​
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
CAPITAL GAINS TAX
​
Matching gains to benefits
​
- Onward gift from non-resident/qualifying new resident recipient to UK resident recipient: deemed receipt by UK resident
​
General rule
- If:
(1) The original recipient of a capital payment is a non-UK resident/qualifying new resident; and
- Does not matter if qualifying new resident claims FIG relief on the benefit.
(2) The close family member attribution rule does not apply; and
(3) At the time of the original receipt there was an arrangement/intention to pass on all/part of the benefit to another person.
- It must also be reasonable to expect that the other person will be UK resident when they receive at least part of what is passed on.
- Condition 3 is presumed to be met if conditions (4) - (6) are met unless the contrary is shown (s.87HA(6)).
(4) The original recipient provides a benefit to another person either:
- within 3 years of receipt of the original benefit; or
- prior to the receipt of the original benefit but it is reasonable to assume in anticipation of it.
(5) The onward gift is of or includes:
- all or part of the original benefit.
- anything deriving from or representing the original benefit.
- any other property if the original benefit is made with a view to enabling/otherwise in connection with providing the onward gift.
(6) The onward gift recipient is resident in the UK when they receive the onward gift.
Then: the onward gift is treated as a capital payment received from the trustees by the onward gift recipient as a beneficiary (s.87HA).
- May have been a case of indirect receipt, in any event.
- Query how the onward gift recipient is supposed to know whether the above test is met?
​
Time of deemed receipt of capital payment
- Is the time of receipt of the onward gift, unless the onward gift is received before the original recipient actually receives the capital payment (s.87HA(5)).
​
Indirect provision of onward gift
- An original recipient provides a benefit to another even where there is a series of two or more benefits between the original recipient and the final recipient (s.87HA(4)).
​
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
- Gift to non-resident individual: query whether the rules matching gains to benefits can apply
​​
- The gift may be a settlement under the extended meaning (TCGA s.97(7)).
- The 'trustee' is any person in whom the settled property is for the time being vested (s.97(7A)).
- A person who receives a capital payment from the trustees is treated as a beneficiary from that point onward (s.97(8)).
- The rules matching gains to benefits apply where the trustees are non-resident (s.87(1)).
- The s.1(3) amount for the settlement is the amount upon which the trustees would be chargeable if UK resident (s.87(4)).
- It seems possible, therefore, that the matching rules could apply.
- Identification of gains and benefits should logically be limited to those arising to/provided by the non-resident person in their capacity as the 'deemed' trustee.
​
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​