Taxation of Chargeable Gains Act 1992 section 87I

Non-UK resident settlements: recipients of onward gifts

Section 87I sets out the conditions under which special rules apply to tax chargeable gains when capital payments from offshore trusts are passed on as gifts to UK residents, typically through non-UK resident intermediaries.

• When trustees of an offshore settlement make a capital payment to an original recipient, and that payment (or something derived from it) is subsequently gifted to a UK resident within three years, anti-avoidance rules may apply to tax the UK resident on the gains attributable to the original payment.
• The rules are triggered where, at the time the original payment is made, there are arrangements or an intention for the payment to be passed on to someone who is expected to be UK resident when they receive it.
• For the rules to apply, the original recipient must be either non-UK resident or using the remittance basis in at least one tax year during the period from the year of the original payment to the year of the onward gift.
• Where a chain of gifts passes through multiple non-UK resident intermediaries before reaching the UK resident, the intermediate transfers are disregarded and the focus is on the original payment from the trustees and the final gift received by the UK resident.