Taxation of Chargeable Gains Act 1992 Schedule 4B paragraph 12

Value attributable to trustee borrowing

Paragraph 12 of Schedule 4B sets out the rules for determining how much of a trust asset's value is attributable to trustee borrowing, which is relevant to the anti-avoidance provisions concerning gains accruing to settlors through arrangements involving trustees.

• Where an asset has itself been borrowed by trustees, its value is attributable to trustee borrowing to the extent the borrowing proceeds have not been used for normal trust purposes
• An asset's value is also attributable to trustee borrowing where borrowed funds were used to acquire or enhance the asset, or the asset directly or indirectly represents such an asset
• Trustees are treated as having applied borrowed funds to acquire or enhance an asset if there is any outstanding trustee borrowing at the time the relevant expenditure is incurred
• Expenditure counts as being applied to acquire or enhance an asset only if it is used wholly and exclusively for that purpose, including acquisition costs, value enhancement, defending title, or purchasing additional shares or securities within the same holding