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Example where both offshore income gains and capital gains received

A settlement with non-UK resident trustees has never been settlor interested and has never received any income. The following OIG amounts and capital gains have been received by the settlement:

• 2017-18 OIG amount 拢30,000
• 2018-19 Chargeable gains 拢40,000
• 2019-20 OIG amount 拢50,000 and chargeable gains 拢60,000.

The first capital payment out of the settlement is made in 2019-20. That is a capital payment of 拢70,000 to a UK resident and domiciled beneficiary.

Regulation 20(4) tells you that you match any capital payments with OIG amounts arising in the non-resident settlement before matching with chargeable gains. This applies even if the OIG amount arose in an earlier year than the capital gain.

Using the section 87A TCGA attribution rules the capital payment is matched first with the entire 拢50,000 OIG amount arising in 20119-20. Then the remaining 拢20,000 (拢70,000 - 拢50,000) is matched with 拢20,000 of the 拢30,000 OIG amount arising in 2017-18.

The beneficiary is treated as receiving 拢70,000 offshore income gains chargeable to income tax in 2019-20.

There are unmatched OIG amounts and chargeable gains in the settlement to carry forward at 5 April 2020 of:

• 2017-18 OIG amount 拢10,000 (拢30,000 less 拢20,000 matched with capital payment)
• 2018-19 Capital gains 拢40,000
• 2019-20 Capital gains 拢60,000.