Taxation of Chargeable Gains Act 1992

• (2) In this Schedule, in relation to a transfer of value—

• (a) references to the transferor settlement are to the settlement the trustees of which made the transfer of value; and

• (b) references to a transferee settlement are to any settlement of which the settled property includes property representing, directly or indirectly, the proceeds of the transfer of value.

• (3) References in this Schedule to beneficiaries of a settlement include—

• (a) persons who have ceased to be beneficiaries by the time the chargeable gains accrue, and

• (b) persons who were beneficiaries of the settlement before it ceased to exist,

but who were beneficiaries of the settlement at a time in a previous year of assessment when a capital payment was made to them.

SCHEDULE 5 — Attribution of gains to settlors with interest in non-resident or dual resident settlement

Construction of section 86(1)(e)

1

• (1) In construing section 86(1)(e) as regards a particular year of assessment, the effect of section 1K shall be ignored.

• (2) In construing section 86(1)(e) as regards a particular year of assessment—

• (a) any deductions provided for by section 1(3) shall be made in respect of disposals of any of the settled property originating from the settlor, and

• (b) section 16(3) shall be assumed not to prevent losses accruing to trustees in one year of assessment from being allowed as a deduction from chargeable gains accruing in a later year of assessment (so far as not previously set against gains).

• (3) In a case where—

• (a) the trustees are participators in a company in respect of property which originates from the settlor, and

• (b) under section 3 gains or losses would be treated as accruing to the trustees in a particular year of assessment by virtue of so much of their interest as participators as arises from that property if the assumption as to residence specified in section 86(3) were made,

the gains or losses shall be taken into account in construing section 86(1)(e) as regards that year as if they had accrued by virtue of disposals of settled property originating from the settlor.

Section 3B(1) to (3) shall apply for the purposes of this sub-paragraph as they apply for the purposes of section 3.

• (4) Where, as regards a particular year of assessment, there would be an amount under section 86(1)(e) (apart from this sub-paragraph) and the trustees fall within section 86(2)(b), the following rules shall apply—

• (a) assume that the references in section 86(1)(e) and sub-paragraphs (2)(a) and (3) above to settled property originating from the settlor were to such of it as constitutes protected assets;

• (b) assume that the reference in sub-paragraph (3)(a) above to shares originating from the settlor were to such of them as constitute protected assets;

• (c) find the amount (if any) which would be arrived at under section 86(1)(e) on those assumptions;

• (d) if no amount is so found there shall be deemed to be no amount for the purposes of section 86(1)(e);

• (e) if an amount is found under paragraph (c) above it must be compared with the amount arrived at under section 86(1)(e) apart from this sub-paragraph. and the smaller of the 2 shall be taken to be the amount arrived at under section 86(1)(e).

• (5) Sub-paragraphs (2) to (4) above shall have effect subject to sub-paragraphs (6) and (7) below.

• (6) The following rules shall apply in construing section 86(1)(e) as regards a particular year of assessment (“the year concerned”) in a case where the trustees fall within section 86(2)(a)—

• (a) if the conditions mentioned in section 86(1) are not fulfilled as regards the settlement in any year of assessment falling before the year concerned, no deductions shall be made in respect of losses accruing before the year concerned;

• (b) if the conditions mentioned in section 86(1) are fulfilled as regards the settlement in any year or years of assessment falling before the year concerned, no deductions shall be made in respect of losses accruing before that year (or the first of those years) so falling,

but nothing in the preceding provisions of this sub-paragraph shall prevent deductions being made in respect of losses accruing in a year of assessment in which the conditions mentioned in section 86(1)(a) to (d) and (f) are fulfilled as regards the settlement.

• (6A) In construing section 86(1)(e) as regards a particular year of assessment, if—

• (a) section 86 did not apply to the settlement in a year of assessment ending before 6 April 2025 (“the earlier year”), but

• (b) that section would have applied to the settlement in the earlier year if the condition in section 86(1)(e) (settlor domiciled in the United Kingdom) had been met in the earlier year,

deductions shall be made in respect of losses accruing in the earlier year, but only so far as those losses have not been taken into account for the purposes of section 87 in determining the section 1(3) amount for the settlement for the earlier year.

• (7) In construing section 86(1)(e) as regards a particular year of assessment and in relation to a settlement created before 19th March 1991, no account shall be taken of disposals made before 19th March 1991 (whether for the purpose of arriving at gains or for the purpose of arriving at losses).

• (8) For the purposes of sub-paragraph (4) above assets are protected assets if—

• (a) they are of a description specified in the arrangements mentioned in section 86(2)(b), and

• (b) were the trustees to dispose of them at any relevant time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.

• (9) For the purposes of sub-paragraph (8) above—

• (a) the assumption as to residence specified in section 86(3) shall be ignored;

• (b) a relevant time is any time, in the year of assessment concerned, when the trustees fall to be regarded for the purposes of the arrangements as resident in a territory outside the United Kingdom;

• (c) if different assets are identified by reference to different relevant times, all of them are protected assets.

Test whether settlor has interest

2

• (1) For the purposes of section 86(1)(d) a settlor has an interest in a settlement if—

• (a) any relevant property which is or may at any time be comprised in the settlement is, or will or may become, applicable for the benefit of or payable to a defined person in any circumstances whatever,

• (b) any relevant income which arises or may arise under the settlement is, or will or may become, applicable for the benefit of or payable to a defined person in any circumstances whatever, or

• (c) any defined person enjoys a benefit directly or indirectly from any relevant property which is comprised in the settlement or any relevant income arising under the settlement;

but this sub-paragraph is subject to sub-paragraphs (4) to (6) and paragraph 2A below.

• (2) For the purposes of sub-paragraph (1) above—

• (a) relevant property is property originating from the settlor,

• (b) relevant income is income originating from the settlor.

• (3) For the purposes of sub-paragraph (1) above each of the following is a defined person—

• (a) the settlor,

• (b) the settlor’s spouse or civil partner;

• (c) any child of the settlor or of the settlor’s spouse or civil partner;

• (d) the spouse or civil partner of any such child;

• (da) any grandchild of the settlor or of the settlor’s spouse or civil partner;

• (db) the spouse or civil partner of any such grandchild;

• (e) a company controlled by a person or persons falling within paragraphs (a) to (db) above;

• (f) a company associated with a company falling within paragraph (e) above.

• (4) A settlor does not have an interest in a settlement by virtue of paragraph (a) of sub-paragraph (1) above at any time when none of the property concerned can become applicable or payable as mentioned in that paragraph except in the event of—

• (a) the bankruptcy of some person who is or may become beneficially entitled to the property,

• (b) any assignment of or charge on the property being made or given by some such person,

• (c) in the case of a marriage settlement or civil partnership settlement, the death of both parties to the marriage or civil partnership and of all or any of the children of the family of the parties to the marriage or civil partnership, or

• (d) the death under the age of 25 or some lower age of some person who would be beneficially entitled to the property on attaining that age.

• (4A) In sub-paragraph (4) “child of the family”, in relation to parties to a marriage or civil partner, means a child of one or both of them.

• (5) A settlor does not have an interest in a settlement by virtue of paragraph (a) of sub-paragraph (1) above at any time when some person is alive and under the age of 25 if during that person’s life none of the property concerned can become applicable or payable as mentioned in that paragraph except in the event of that person becoming bankrupt or assigning or charging his interest in the property concerned.

• (6) Sub-paragraphs (4) and (5) above apply for the purposes of paragraph (b) of sub-paragraph (1) above as they apply for the purposes of paragraph (a), reading “ income ” for “property".

• (7) In this paragraph—

• “child” includes a stepchild; and

• “grandchild” means a child of a child.

• (8) For the purposes of sub-paragraph (3) above the question whether a company is controlled by a person or persons shall be construed in accordance with sections 450 and 451 of CTA 2010; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (9) For the purposes of sub-paragraph (3) above the question whether a company is associated with another shall be construed in accordance with section 449 of CTA 2010; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (10) In sub-paragraphs (8) and (9) “participator” has the meaning given by section 454 of CTA 2010.

Settlements created before 17th March 1998

2A

• (1) In determining for the purposes of section 86(1)(d) whether the settlor has an interest at any time during any year of assessment in a settlement created before 17th March 1998, paragraphs (da) and (db) of paragraph 2(3) above, and the reference to those paragraphs in paragraph 2(3)(e), shall be disregarded unless—

• (a) that year is a year in which one of the four conditions set out in the following provisions of this paragraph becomes fulfilled as regards the settlement; or

• (b) one of those conditions became fulfilled as regards that settlement in any previous year of assessment ending on or after 5th April 1998.

• (2) The first condition is (subject to sub-paragraph (3) below) that on or after 17th March 1998 property or income is provided directly or indirectly for the purposes of the settlement—

• (a) otherwise than under a transaction entered into at arm’s length, and

• (b) otherwise than in pursuance of a liability incurred by any person before that date.

• (3) For the purposes of the first condition, where the settlement’s expenses relating to administration and taxation for a year of assessment exceed its income for the year, property or income provided towards meeting those expenses shall be ignored if the value of the property or income so provided does not exceed the difference between the amount of those expenses and the amount of the settlement’s income for the year.

• (4) The second condition is that—

• (a) the trustees cease on or after 17 March 1998 to be resident in the United Kingdom, or

• (b) the trustees, while continuing to be resident ... in the United Kingdom, become on or after 17th March 1998 trustees who fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

• (5) The third condition is that on or after 17th March 1998 the terms of the settlement are varied so that any person falling within sub-paragraph (7) below becomes for the first time a person who will or might benefit from the settlement.

• (6) The fourth condition is that—

• (a) on or after 17th March 1998 a person falling within sub-paragraph (7) below enjoys a benefit from the settlement for the first time, and

• (b) the person concerned is not one who (looking only at the terms of the settlement immediately before 17th March 1998) would be capable of enjoying a benefit from the settlement on or after that date.

• (7) Each of the following persons falls within this sub-paragraph—

• (a) any grandchild of the settlor or of the settlor’s spouse or civil partner;

• (b) the spouse or civil partner of any such grandchild;

• (c) a company controlled by a person or persons falling within paragraph (a) or (b) above;

• (d) a company controlled by any such person or persons together with any person or persons (not so falling) each of whom is for the purposes of paragraph 2(1) above a defined person in relation to the settlement;

• (e) a company associated with a company falling within paragraph (c) or (d) above.

• (8) For the purposes of sub-paragraph (7) above the question whether a company is controlled by a person or persons shall be construed in accordance with sections 450 and 451 of CTA 2010; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (9) For the purposes of sub-paragraph (7) above the question whether one company is associated with another shall be construed in accordance with section 449 of CTA 2010; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (9A) For the purposes of sub-paragraphs (8) and (9) above a person is not to be regarded as a participator in a company controlled by the trustees of a settlement where the person has a share or interest in the capital or income of the company solely by virtue of an interest which the person has under the settlement.

• (10) In this paragraph—

• “child” includes a step-child;

• “grandchild” means a child of a child;

• “participator” has the meaning given by section 454 of CTA 2010.

Exceptions from section 86

3

Section 86 does not apply if the settlor dies in the year.

4

• (1) This paragraph applies where for the purposes of section 86(1)(d) the settlor has no interest in the settlement at any time in the year except for one of the following reasons, namely, that—

• (a) property is, or will or may become, applicable for the benefit of or payable to one of the persons falling within paragraph 2(3)(b) to (db) above,

• (b) income is, or will or may become, applicable for the benefit of or payable to one of those persons, or

• (c) one of those persons enjoys a benefit from property or income.

• (2) This paragraph also applies where sub-paragraph (1) above is fulfilled by virtue of 2 or all of paragraphs (a) to (c) being satisfied by reference to the same person.

• (3) Where this paragraph applies, section 86 does not apply if the person concerned dies in the year.

• (4) In a case where—

• (a) this paragraph applies, and

• (b) the person concerned falls within paragraph 2(3)(b), (d) or (db) above,

section 86 does not apply if during the year the person concerned ceases to be married to, or a civil partner of, the settlor, child or grandchild concerned (as the case may be).

5

• (1) This paragraph applies where for the purposes of section 86(1)(d) the settlor has no interest in the settlement at any time in the year except for the reason that there are 2 or more persons, each of whom—

• (a) falls within paragraph 2(3)(b) to (db) above, and

• (b) stands to gain for the reason stated in sub-paragraph (2) below.

• (2) The reason is that—

• (a) property is, or will or may become, applicable for his benefit or payable to him,

• (b) income is, or will or may become, applicable for his benefit or payable to him,

• (c) he enjoys a benefit from property or income, or

• (d) 2 or all of paragraphs (a) to (c) above apply in his case.

• (3) Where this paragraph applies, section 86 does not apply if each of the persons concerned dies in the year.

5A

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5B

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Old section 87 rebasing elections to apply in relation to section 86

5C

• (1) This paragraph applies if—

• (a) the trustees of the settlement made (at any time) an election under paragraph 126(1) of Schedule 7 to the Finance Act 2008 (remittance basis: capital gains rebasing), and

• (b) an amount of chargeable gains would (apart from this paragraph) be treated as accruing to the settlor under section 86(4) in a tax year (“the relevant tax year”).

• (2) The settlor is not charged to capital gains tax on so much of the chargeable gains as exceeds the relevant proportion of those gains.

• (3) For that purpose “the relevant proportion” is—

$$AB$where—A is the amount that would be treated under section 86(4) as accruing to the settlor in the relevant tax year if immediately before 6 April 2008 every relevant asset had been sold by the trustees and immediately re-acquired by them at its market value at that time, andB is the amount mentioned in sub-paragraph (1)(b).$

• (4) In sub-paragraph (3), “relevant asset” means an asset—

• (a) that was disposed of in the relevant tax year, and

• (b) that was comprised in the settlement from the beginning of 6 April 2008 until its disposal.

Right of recovery

6

• (1) This paragraph applies where any tax becomes chargeable on, and is paid by, a person in respect of gains treated as accruing to him in a year under section 86(4).

• (2) The person shall be entitled to recover the amount of the tax from any person who is a trustee of the settlement.

• (3) For the purposes of recovering that amount, the person shall also be entitled to require an inspector to give him a certificate specifying—

• (a) the amount of the gains concerned, ...

• (b) the amount of tax paid , and

• (c) the tax year in which gains were treated as accruing under section 86(4),

and any such certificate shall be conclusive evidence of the facts stated in it.

Meaning of “settlor"

7

For the purposes of section 86 and this Schedule, a person is a settlor in relation to a settlement if the settled property consists of or includes property originating from him.

Meaning of “originating"

8

• (1) References in section 86 and this Schedule to property originating from a person are references to—

• (a) property provided by that person;

• (b) property representing property falling within paragraph (a) above;

• (c) so much of any property representing both property falling within paragraph (a) above and other property as, on a just apportionment, can be taken to represent property so falling.

• (2) References in this Schedule to income originating from a person are references to—

• (a) income from property originating from that person;

• (b) income provided by that person.

• (3) Where a person who is a settlor in relation to a settlement makes reciprocal arrangements with another person for the provision of property or income, for the purposes of this paragraph—

• (a) property or income provided by the other person in pursuance of the arrangements shall be treated as provided by the settlor, but

• (b) property or income provided by the settlor in pursuance of the arrangements shall be treated as provided by the other person (and not by the settlor).

• (4) For the purposes of this paragraph—

• (a) where property is provided by a qualifying company controlled by one person alone at the time it is provided, that person shall be taken to provide it;

• (b) where property is provided by a qualifying company controlled by 2 or more persons (taking each one separately) at the time it is provided, those persons shall be taken to provide the property and each one shall be taken to provide an equal share of it;

• (c) where property is provided by a qualifying company controlled by 2 or more persons (taking them together) at the time it is provided, the persons who are participators in the company at the time it is provided shall be taken to provide it and each one shall be taken to provide so much of it as is attributed to him on the basis of a just apportionment;

but where a person would be taken to provide less than one-twentieth of any property by virtue of paragraph (c) above and apart from this provision, he shall not be taken to provide any of it by virtue of that paragraph.

• (5) For the purposes of sub-paragraph (4) above a qualifying company is a close company or a company which would be a close company if it were resident in the United Kingdom.

• (6) For the purposes of this paragraph references to property representing other property include references to property representing accumulated income from that other property.

• (7) For the purposes of this paragraph property or income is provided by a person if it is provided directly or indirectly by the person.

• (8) For the purposes of this paragraph the question whether a company is controlled by a person or persons shall be construed in accordance with sections 450 and 451 of CTA 2010; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (8A) But a person is not to be regarded as a participator in a company controlled by the trustees of a settlement where the person has a share or interest in the capital or income of the company solely because of an interest which the person has under the settlement.

• (9) In this paragraph “participator” has the meaning given by section 454 of CTA 2010.

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying settlements, and commencement

9

• (1) A settlement created on or after 19th March 1991 is a qualifying settlement for the purposes of section 86 and this Schedule in—

• (a) the year of assessment in which it is created, and

• (b) subsequent years of assessment.

• (1A) Subject to sub-paragraph (1B) below, a settlement created before 19th March 1991 is a qualifying settlement for the purposes of section 86 and this Schedule in—

• (a) the year 1999-00, and

• (b) subsequent years of assessment.

• (1B) Where a settlement created before 19th March 1991 is a protected settlement immediately after the beginning of 6th April 1999, that settlement shall be treated as a qualifying settlement for the purposes of section 86 and this Schedule in a year of assessment mentioned in sub-paragraph (1A)(a) or (b) above only if—

• (a) any of the five conditions set out in subsections (3) to (6A) below becomes fulfilled as regards the settlement in that year; or

• (b) any of those five conditions became so fulfilled in any previous year of assessment ending after 19th March 1991.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) The first condition is that on or after 19th March 1991 property or income is provided directly or indirectly for the purposes of the settlement—

• (a) otherwise than under a transaction entered into at arm’s length, and

• (b) otherwise than in pursuance of a liability incurred by any person before that date;

but if the settlement’s expenses relating to administration and taxation for a year of assessment exceed its income for the year, property or income provided towards meeting those expenses shall be ignored for the purposes of this condition if the value of the property or income so provided does not exceed the difference between the amount of those expenses and the amount of the settlement’s income for the year.

• (4) The second condition is that—

• (a) the trustees cease on or after 19 March 1991 to be resident in the United Kingdom, or

• (b) the trustees, while continuing to be resident ... in the United Kingdom, become on or after 19th March 1991 trustees who fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

• (5) The third condition is that on or after 19th March 1991 the terms of the settlement are varied so that any person falling within sub-paragraph (7) below becomes for the first time a person who will or might benefit from the settlement.

• (6) The fourth condition is that—

• (a) on or after 19th March 1991 a person falling within sub-paragraph (7) below enjoys a benefit from the settlement for the first time, and

• (b) the person concerned is not one who (looking only at the terms of the settlement immediately before 19th March 1991) would be capable of enjoying a benefit from the settlement on or after that date.

• (6A) The fifth condition is that the settlement ceases to be a protected settlement at any time on or after 6th April 1999.

• (7) Each of the following persons falls within this sub-paragraph—

• (a) a settlor;

• (b) the spouse or civil partner of a settlor;

• (c) any child of a settlor or of a settlor’s spouse or civil partner;

• (d) the spouse or civil partner of any such child;

• (da) any grandchild of a settlor or of a settlor’s spouse or civil partner;

• (db) the spouse or civil partner of any such grandchild;

• (e) a company controlled by a person or persons falling within paragraphs (a) to (db) above;

• (f) a company associated with a company falling within paragraph (e) above.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) For the purposes of sub-paragraph (7) above the question whether a company is controlled by a person or persons shall be construed in accordance with sections 450 and 451 of CTA 2010; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (10) For the purposes of sub-paragraph (7) above the question whether one company is associated with another shall be construed in accordance with section 449 of CTA 2010; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

• (10ZA) For the purposes of sub-paragraphs (9) and (10) above a person is not to be regarded as a participator in a company controlled by the trustees of a settlement where the person has a share or interest in the capital or income of the company solely by virtue of an interest which the person has under the settlement.

• (10A) Subject to sub-paragraph (10B) below, a settlement is a protected settlement at any time in a year of assessment if at that time the beneficiaries of that settlement are confined to persons falling within some or all of the following descriptions, that is to say—

• (a) children of a settlor or of a spouse or civil partner of a settlor who are under the age of eighteen at that time or who were under that age at the end of the immediately preceding year of assessment;

• (b) unborn children of a settlor, of a spouse or civil partner of a settlor, or of a future spouse or civil partner of a settlor;

• (c) future spouses or civil partners of any children or future children of a settlor, a spouse or civil partner of a settlor or any future spouse or civil partner of a settlor;

• (d) a future spouse or civil partner of a settlor;

• (e) persons outside the defined categories.

• (10B) For the purposes of sub-paragraph (10A) above a person is outside the defined categories at any time if, and only if, there is no settlor by reference to whom he is at that time a defined person in relation to the settlement for the purposes of paragraph 2(1) above.

• (10C) For the purposes of sub-paragraph (10A) above a person is a beneficiary of a settlement if—

• (a) there are any circumstances whatever in which relevant property which is or may become comprised in the settlement is or will or may become applicable for his benefit or payable to him;

• (b) there are any circumstances whatever in which relevant income which arises or may arise under the settlement is or will or may become applicable for his benefit or payable to him;

• (c) he enjoys a benefit directly or indirectly from any relevant property comprised in the settlement or any relevant income arising under the settlement.

• (10D) In sub-paragraph (10C) above—

• “relevant property” means property originating from a settlor; and

• “relevant income” means income originating from a settlor.

• (11) In this paragraph—

• “child” includes a step-child;

• “grandchild” means a child of a child;

• “participator” has the meaning given by section 454 of CTA 2010.

Information

10

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11

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12

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13

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14

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SCHEDULE 5A — Settlements with foreign element: information

1

In this Schedule “the commencement day” means the day on which the Finance Act 1994 was passed.

2

• (1) This paragraph applies if—

• (a) a settlement was created before 17th March 1998,

• (b) on or after the commencement day a person transfers property to the trustees otherwise than under a transaction entered into at arm’s length and otherwise than in pursuance of a liability incurred by any person before that day,

• (c) the trustees are not resident in the United Kingdom at the time the property is transferred, and

• (d) the transferor knows, or has reason to believe, that the trustees are not so resident ... .

• (2) Before the expiry of the period of twelve months beginning with the relevant day, the transferor shall deliver to the Board a return which—

• (a) identifies the settlement, and

• (b) specifies the property transferred, the day on which the transfer was made, and the consideration (if any) for the transfer.

• (3) For the purposes of sub-paragraph (2) above the relevant day is the day on which the transfer is made.

3

• (1) This paragraph applies if a settlement is created on or after the commencement day, and at the time it is created—

• (a) the trustees are not resident in the United Kingdom, or

• (b) the trustees are resident ... in the United Kingdom but fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

• (2) Any person who—

• (a) is a settlor in relation to the settlement at the time it is created, and

• (b) at that time fulfils the condition mentioned in sub-paragraph (3) below,

shall, before the expiry of the period of three months beginning with the relevant day, deliver to the Board a return specifying the particulars mentioned in sub-paragraph (4) below.

• (3) The condition is that the person concerned... is resident in the United Kingdom and is not a qualifying new resident within the meaning of Schedule D1.

• (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) The particulars are—

• (a) the day on which the settlement was created;

• (b) the name and address of the person delivering the return;

• (c) the names and addresses of the persons who are the trustees immediately before the delivery of the return.

• (5) For the purposes of sub-paragraph (2) above the relevant day is the day on which the settlement is created.

4

• (1) This paragraph applies if a settlement is created on or after 19th March 1991, and at the time it is created—

• (a) the trustees are not resident in the United Kingdom, or

• (b) the trustees are resident ... in the United Kingdom but fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

• (2) Any person who—

• (a) is a settlor in relation to the settlement at the time it is created,

• (b) where that time was before 6 April 2025, did not fulfil the condition mentioned in sub-paragraph (3) below at that time or at any time before 6 April 2025,

• (ba) where that time was on or after 6 April 2025, does not fulfil the condition mentioned in sub-paragraph (3A) below at that time,

• (c) first fulfils the condition mentioned in sub-paragraph (3A) below at a time falling on or after 6 April 2025,

shall, before the expiry of the period of twelve months beginning with 31 January after the end of the tax year in which the relevant day falls, deliver to the Board a return specifying the particulars mentioned in sub-paragraph (4) below.

• (3) The condition is that the person concerned is domiciled in the United Kingdom and is resident in the United Kingdom.

• (3A) The condition is that the person concerned is resident in the United Kingdom and is not a qualifying new resident within the meaning of Schedule D1.

• (4) The particulars are—

• (a) the day on which the settlement was created;

• (b) the name and address of the person delivering the return;

• (c) the names and addresses of the persons who are the trustees immediately before the delivery of the return.

• (5) For the purposes of sub-paragraph (2) above the relevant day is the day on which the person first fulfils the condition as mentioned in paragraph (c) of that sub-paragraph.

5

• (1) This paragraph applies if—

• (a) the trustees of a settlement cease at any time (the relevant time) on or after the commencement day to be resident in the United Kingdom, or

• (b) the trustees of a settlement, while continuing to be resident ... in the United Kingdom, become at any time (the relevant time) on or after the commencement day trustees who fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

• (2) Any person who was a trustee of the settlement immediately before the relevant time shall, before the expiry of the period of twelve months beginning with the relevant day, deliver to the Board a return specifying—

• (a) the day on which the settlement was created,

• (b) the name and address of each person who is a settlor in relation to the settlement immediately before the delivery of the return, and

• (c) the names and addresses of the persons who are the trustees immediately before the delivery of the return.

• (3) For the purposes of sub-paragraph (2) above the relevant day is the day when the relevant time falls.

6

• (1) Nothing in paragraph 2, 3, 4 or 5 above shall require information to be contained in the return concerned to the extent that—

• (a) before the expiry of the period concerned the information has been provided to the Board by any person in pursuance of the paragraph concerned or of any other provision, or

• (b) after the expiry of the period concerned the information falls to be provided to the Board by any person in pursuance of any provision other than the paragraph concerned.

• (2) Nothing in paragraph 2, 3, 4 or 5 above shall require a return to be delivered if—

• (a) before the expiry of the period concerned all the information concerned has been provided to the Board by any person in pursuance of the paragraph concerned or of any other provision, or

• (b) after the expiry of the period concerned all the information concerned falls to be provided to the Board by any person in pursuance of any provision other than the paragraph concerned.

SCHEDULE 5AZA — Meaning of “scheme of reconstruction”

Introductory

1

In sections 103H and 103I, “scheme of reconstruction” means a scheme within paragraph 2 which meets the conditions in paragraphs 3 and 4.

Form of scheme

2

• (1) A scheme (“the relevant scheme”) is within this paragraph if under the relevant scheme some or all of the property subject to one or more collective investment schemes becomes subject to one or more other collective investment schemes.

• (2) In this Schedule “original collective investment scheme” means a collective investment scheme property subject to which becomes subject to another collective investment scheme; and “successor collective investment scheme” is to be read accordingly.

First condition: issue of units

3

• (1) The first condition is that the relevant scheme involves the issue of units in a successor collective investment scheme or schemes or a feeder fund—

• (a) where there is one original collective investment scheme, to holders of units in that scheme or, if there are different classes of units in that scheme, to holders of one or more classes of units in that scheme (the classes “involved in the scheme of reconstruction”), or

• (b) where there is more than one original collective investment scheme, to holders of units in any of those schemes or, if there are different classes of units in one or more of those schemes, to holders of units in any of those schemes or of one or more classes of units in any of those schemes (the classes “involved in the scheme of reconstruction”),

and does not involve the issue of units in any successor collective investment scheme or feeder fund to anyone else.

• (2) In this Schedule, “feeder fund” means a collective investment scheme, 85% or more of the property subject to which is constituted by units in a successor collective investment scheme or schemes.

Second condition: equal entitlement to new units

4

• (1) The second condition is that under the relevant scheme the entitlement of any participant to acquire units in a successor collective investment scheme or schemes or a feeder fund by virtue of holding relevant units, or relevant units of any class, is the same as that of any other participant holding such units or units of that class.

• (2) For this purpose “relevant units” means units comprised—

• (a) where there is one original collective investment scheme, in the units of that scheme or, as the case may be, in the units of that scheme of a class involved in the scheme of reconstruction;

• (b) where there is more than one original collective investment scheme, in the units of any of those schemes or, as the case may be, in the units of any of those schemes of a class involved in the scheme of reconstruction.

Preliminary reorganisation of units to be disregarded

5

Where a reorganisation of the units in an original collective investment scheme or schemes within case 2 of section 103F(1) is carried out for the purposes of the relevant scheme, the provisions of the first and second conditions apply in relation to the position after the reorganisation.

Subsequent issue of units to be disregarded

6

An issue of units in any successor collective investment scheme or schemes or feeder fund after the latest date on which any units in any successor collective investment scheme or schemes or feeder fund are issued in consideration of property becoming subject to any successor collective investment scheme or schemes under the relevant scheme shall be disregarded for the purposes of the first and second conditions.

SCHEDULE 5AA — Meaning of “scheme of reconstruction”

Introductory

1

In section 136 “scheme of reconstruction” means a scheme of merger, division or other restructuring that meets the first and second, and either the third or the fourth, of the following conditions.

First condition: issue of ordinary share capital

2

The first condition is that the scheme involves the issue of ordinary share capital of a company (“the successor company”) or of more than one company (“the successor companies”)—

• (a) to holders of ordinary share capital of another company (“the original company”) or, where there are different classes of ordinary share capital of that company, to holders of one or more classes of ordinary share capital of that company (the classes “involved in the scheme of reconstruction”), or

• (b) to holders of ordinary share capital of more than one other company (“the original companies”) or, where there are different classes of ordinary share capital of one or more of the original company or companies, to holders of ordinary share capital of any of those companies or of one or more classes of ordinary share capital of any of those companies (the classes “involved in the scheme of reconstruction”),

and does not involve the issue of ordinary share capital of the successor company, or (as the case may be) any of the successor companies, to anyone else.

Second condition: equal entitlement to new shares

3

• (1) The second condition is that under the scheme the entitlement of any person to acquire ordinary share capital of the successor company or companies by virtue of holding relevant shares, or relevant shares of any class, is the same as that of any other person holding such shares or shares of that class.

• (2) For this purpose “relevant shares” means shares comprised—

• (a) where there is one original company, in the ordinary share capital of that company or, as the case may be, in the ordinary share capital of that company of a class involved in the scheme of reconstruction;

• (b) where there is more than one original company, in the ordinary share capital of any of those companies or, as the case may be, in the ordinary share capital of any of those companies of a class involved in the scheme of reconstruction.

Third condition: continuity of business

4

• (1) The third condition is that the effect of the restructuring is—

• (a) where there is one original company, that the business or substantially the whole of the business carried on by the company is carried on—

• (i) by a successor company which is not the original company, or

• (ii) by two or more successor companies (which may include the original company);

• (b) where there is more than one original company, that all or part of the business or businesses carried on by one or more of the original companies is carried on by a different company, and the whole or substantially the whole of the businesses carried on by the original companies are carried on—

• (i) where there is one successor company, by that company (which may be one of the original companies), or

• (ii) where there are two or more successor companies, by those companies (which may be the same as the original companies or include any of those companies).

• (2) The reference in sub-paragraph (1)(a)(ii) or (b)(ii) to the whole or substantially the whole of a business, or businesses, being carried on by two or more companies includes the case where the activities of those companies taken together embrace the whole or substantially the whole of the business, or businesses, in question.

• (3) For the purposes of this paragraph a business carried on by a company that is under the control of another company is treated as carried on by the controlling company as well as by the controlled company.

Section 1124 of CTA 2010 (meaning of “control") applies for the purposes of this sub-paragraph.

• (4) For the purposes of this paragraph the holding and management of assets that are retained by the original company, or any of the original companies, for the purpose of making a capital distribution in respect of shares in the company shall be disregarded.

In this sub-paragraph “capital distribution” has the same meaning as in section 122.

Fourth condition: compromise or arrangement with members

5

The fourth condition is that—

• (a) the scheme is carried out in pursuance of a compromise or arrangement—

• (i) to which Part 26 or 26A of the Companies Act 2006 (arrangements and reconstructions) applies,

• (ii) under any corresponding provision of the law of a country or territory outside the United Kingdom, and

• (b) no part of the business of the original company, or of any of the original companies, is transferred under the scheme to any other person.

Preliminary reorganisation of share capital to be disregarded

6

Where a reorganisation of the share capital of the original company, or of any of the original companies, is carried out for the purposes of the scheme of reconstruction, the provisions of the first and second conditions apply in relation to the position after the reorganisation.

Subsequent issue of shares or debentures to be disregarded

7

An issue of shares in or debentures of the successor company, or any of the successor companies, after the latest date on which any ordinary share capital of the successor company, or any of them, is issued—

• (a) in consideration of the transfer of any business, or part of a business, under the scheme, or

• (b) in pursuance of the compromise or arrangement mentioned in paragraph 5(a),

shall be disregarded for the purposes of the first and second conditions.

Interpretation

8

• (1) In this Schedule “ordinary share capital” has the meaning given by section 1119 of CTA 2010 and also includes—

• (a) in relation to a unit trust scheme, any rights that are treated by section 99(1)(b) of this Act (application of Act to unit trust schemes) as shares in a company, and

• (b) in relation to a company that has no share capital, any interests in the company possessed by members of the company.

• (2) Any reference in this Schedule to a reorganisation of a company’s share capital is to a reorganisation within the meaning of section 126.

SCHEDULE 5AAA — UK property rich collective investment vehicles etc

PART 1 — Introduction: key expressions

Meaning of “collective investment vehicle”, “participant” and “unit”

1

• (1) In this Schedule “collective investment vehicle” means—

• (a) a collective investment scheme,

• (b) an AIF,

• (c) a company which is a company UK REIT or is the principal company of a group UK REIT,

• (d) a company which—

• (i) is resident outside the United Kingdom,

• (ii) is not a member of a group, and

• (iii) meets the property income condition,

• (e) a company which—

• (i) is resident outside the United Kingdom,

• (ii) is the principal company of a group,

• (iii) is not a close company or is a close company but only because it has a qualifying investor as a direct or indirect participator, and

• (iv) meets the property income condition, or

• (f) a company which—

• (i) is resident outside the United Kingdom,

• (ii) is a member of a group but is not the principal company of the group,

• (iii) is a close company but only because it has a qualifying investor, or a company wholly (or almost wholly) owned by qualifying investors, as a direct participator, and

• (iv) meets the property income condition.

• (2) A company meets the property income condition for the purposes of sub-paragraph (1)(d) if—

• (a) it is not a close company or is a close company but only because it has a qualifying investor as a direct or indirect participator,

• (b) at least half of its income derives directly or indirectly from long-term property investments,

• (c) it distributes all, or substantially all, of its profits from long-term property investments on an annual basis, and

• (d) it is not liable to tax on its profits under the law of any territory in which it is resident so far as the profits derive directly or indirectly from long-term property investments.

• (2A) A company meets the property income condition for the purposes of sub-paragraph (1)(e) or (f) if—

• (a) at least half of the income of the group derives directly or indirectly from long-term property investments,

• (b) all, or substantially all, of the group’s profits from long-term property investments are distributed on an annual basis, and

• (c) the company is not liable to tax on its profits under the law of any territory in which it is resident so far as the profits derive directly or indirectly from long-term property investments.

• (2B) References to the group in sub-paragraph (2A) are to be read, in a case where that sub-paragraph applies for the purposes of sub-paragraph (1)(f), as references to—

• (a) the group that, if section 170(4) is ignored, would be the group of which the company is the principal company, or

• (b) the company (if there would be no group under paragraph (a)).

• (3) Paragraph 46 (meaning of “close company”, “qualifying investor” and “direct or indirect participator”) applies for the purposes of this paragraph but, for the purposes of sub-paragraph (1)(f)(iii), paragraph 46 has effect as if sub-paragraph (3)(c) were omitted.

• (4) For the purposes of this paragraph “long-term property investments” means direct or indirect investments in—

• (a) land, or

• (b) estates, interests or rights in or over land,

which are made on a long-term basis.

• (5) In this Schedule “participant” means—

• (a) in relation to a collective investment scheme or an AIF, a person who takes part in the arrangements or undertaking constituting the scheme or AIF, whether by becoming the owner of, or of any part of, the property that is the subject of or held by the arrangements or undertaking or otherwise, or

• (b) in relation to a company within (1)(c) or (d), a shareholder in the company.

• (6) In this Schedule “unit” means—

• (a) in the case of a collective investment scheme or an AIF, the rights or interests (however described) of the participant in the scheme or AIF, or

• (b) in the case of a company within (1)(c) or (d), a share in the company.

• (7) In this paragraph—

• “AIF” has the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013, and

• “profits” does not include profits of a capital nature.

• ...

• (8) For the purposes of this paragraph whether a company is a member of a group, or is the principal company of a group, is determined in accordance with section 170.

Meaning of “offshore collective investment vehicle”

2

• (1) In this Schedule “offshore collective investment vehicle” means—

• (a) a collective investment vehicle constituted as a body corporate resident outside the United Kingdom,

• (b) a collective investment vehicle under which property is held on trust for the participants where the trustees of the property are not resident in the United Kingdom, or

• (c) a collective investment vehicle constituted by other arrangements that create rights in the nature of co-ownership where the arrangements take effect as a result of the law of a territory outside the United Kingdom.

• (2) In this paragraph—

• “body corporate” does not include a limited liability partnership, and

• “co-ownership” is not restricted to the meaning of that term in the law of any part of the United Kingdom.

Meaning of a collective investment vehicle being “UK property rich” etc

3

• (1) For the purposes of this Schedule the question whether a collective investment vehicle is “UK property rich” at any time is determined by applying the rules in Part 2 of Schedule 1A (but without regard to paragraphs 5 and 6 of that Schedule) on the following assumptions.

• (2) The assumptions are—

• (a) that (so far as this would not otherwise be the case) the vehicle were a company, and

• (b) that a disposal were made at that time of a right or interest in that company.

• (3) If that disposal would be regarded for the purposes of Schedule 1A as a disposal of an asset deriving at least 75% of its value from UK land, the vehicle is regarded for the purposes of this Schedule as being UK property rich at that time.

• (4) For the purposes of this Schedule the question whether a company is “UK property rich” at any time is determined by applying the rules in Part 2 of Schedule 1A (but without regard to paragraphs 5 and 6 of that Schedule) on the assumption that a disposal were made at that time of a right or interest in the company.

• (5) If that disposal would be regarded for the purposes of Schedule 1A as a disposal of an asset deriving at least 75% of its value from UK land, the company is regarded for the purposes of this Schedule as being UK property rich at that time.

PART 2 — Basic rules

Application of Act to offshore CIV

4

• (1) This paragraph applies to an offshore collective investment vehicle—

• (a) which is not a company, and

• (b) which is not constituted by two or more persons carrying on a trade or business in partnership.

• (2) It is to be assumed that, for relevant purposes—

• (a) the vehicle is a company, and

• (b) the rights of the participants are shares in that company.

• (3) The reference here to “relevant purposes” means—

• (a) the purposes of this Schedule, and

• (b) the purpose of applying section 1A(3)(b) or (c) or 2B(4) (and the other provisions of this or any other Act so far as relevant to their application) in relation to the vehicle.

• (4) This paragraph does not apply to a collective investment vehicle in relation to which an election has effect under Part 3 of this Schedule (election for transparency).

• (5) This paragraph applies in relation to a collective investment vehicle to which section 103D applies (tax transparent funds) but does not affect the operation of the rules set out in—

• (a) section 103D(4) to (9) (calculation of gains on disposal of units etc), or

• (b) section 103DA (share pooling etc).

• (6) If this paragraph applies in relation to a collective investment vehicle, section 99 (application of Act to unit trust schemes) does not apply in relation to the scheme.

Units in certain co-ownership schemes treated as shares in a company

5

• (1) This paragraph applies to a unit in an authorised contractual scheme which is a co-ownership scheme , or a Reserved Investor Fund (Contractual Scheme), where, as a result of the application of section 103D (application of Act to tax transparent funds), the unit is treated as an asset for the purposes of this Act.

• (2) The asset is treated for the purposes of Schedule 1A as if it were a share in a company.

Disposals by non-UK residents

6

• (1) This paragraph applies if—

• (a) a person disposes of an asset that derives at least 75% of its value from UK land (as determined in accordance with Part 2 of Schedule 1A), and

• (b) the disposal has an appropriate connection to a collective investment vehicle (see sub-paragraphs (3) to (6) for the cases in which this test is met).

• (2) For the purposes of section 1A(3)(c) or 2B(4)(b) (disposals by non-UK residents of assets deriving 75% of value from UK land etc), the person is treated as having a substantial indirect interest in the UK land at the time of the disposal.

• (3) A disposal has an appropriate connection to a collective investment vehicle if the asset disposed of consists of a right or interest in—

• (a) a collective investment vehicle, or

• (b) a company at least half of whose market value derives from its being a direct or indirect participant in one or more collective investment vehicles.

• (4) A disposal has an appropriate connection to a collective investment vehicle if—

• (a) the vehicle is constituted by two or more persons carrying on a trade or business in partnership, and

• (b) the disposal is made by a person as a participant in the vehicle.

• (5) A disposal has an appropriate connection to a collective investment vehicle if the vehicle is a company and the disposal is made by it.

• (6) A disposal has an appropriate connection to a collective investment vehicle if—

• (a) a company (which is not the vehicle) makes the disposal,

• (b) the vehicle is UK property rich,

• (c) the vehicle together with one or more other collective investment vehicles have a 50% investment in the company, and

• (d) each of those other collective investment vehicles is also UK property rich.

• (7) Collective investment vehicles have a 50% investment in a company if, applying the rule in paragraph 9 (but without regard to paragraph 10) of Schedule 1A as if references to 25% were references to 50%, the vehicles would be regarded as having a 50% investment in the company at the time of the disposal.

• (8) For this purpose the collective investment vehicles are to be regarded as if they were a single person.

• (9) This paragraph is subject to paragraph 7 (collective investment vehicles expected to have no more than 40% investments in UK land) , paragraph 7A (overseas life insurance companies) and paragraph 7B (offshore collective investment vehicles (other than UK feeder vehicles) that meet the conditions in paragraph 7(2)(a) and (b)).

7

• (1) This paragraph applies to a disposal which would otherwise have an appropriate connection to a collective investment vehicle as a result of paragraph 6(3), (5) or (6).

• (2) A disposal does not have an appropriate connection to a collective investment vehicle if, at the time of the disposal, the vehicle mentioned in paragraph 6(3)(a) or (5), or each of the vehicles mentioned in paragraph 6(3)(b) or (6), meets—

• (a) the non-UK real estate condition, and

• (b) the genuine diversity of ownership condition or, if the vehicle is a company, the non-close condition.

• (3) If—

• (a) a disposal is made as mentioned in paragraph 6(6), and

• (b) the vehicle mentioned there is constituted by two or more persons carrying on a trade or business in partnership,

the condition in sub-paragraph (2)(b) is taken to be met if the company mentioned in paragraph 6(6) meets the non-close condition.

• (4) A vehicle meets the non-UK real estate condition at any time if, by reference to the prospectus for the vehicle as the prospectus has effect at that time, no more than 40% of the expected market value of the vehicle's investments is intended to derive from investments consisting of—

• (a) interests in UK land, or

• (b) rights or interests in companies which are UK property rich.

• (5) A vehicle meets the genuine diversity of ownership condition at any time if, at that time—

• (a) the vehicle meets or, if the vehicle is part of multi-vehicle arrangements, the arrangements meet the conditions in regulation 75(2), (3) and (4)(a) of the Offshore Funds (Tax) Regulations 2009, or

• (b) the vehicle meets, or those multi-vehicle arrangements meet, the condition in regulation 75(5) of those Regulations (assuming for this purpose that regulation 75(4)(b) is omitted),

...

• (5A) For the purposes of sub-paragraph (5), those Regulations have effect as if references to a fund included—

• (a) multi-vehicle arrangements, and

• (b) a collective investment vehicle which is not an offshore fund.

• (6) A company meets the non-close condition at any time if, at that time, it—

• (a) is not a close company, or

• (b) is a close company but only because it has a qualifying investor as a direct or indirect participator.

• (7) Paragraph 46 (meaning of “close company”, “qualifying investor” and “direct or indirect participator”) applies for the purposes of sub-paragraph (6).

• (8) In this Schedule “multi-vehicle arrangements” means arrangements comprising two or more vehicles under which an investor in one of those vehicles would reasonably regard that investment as an investment in the arrangements as a whole rather than exclusively in any particular vehicle.

Overseas life insurance companies

7A

• (1) Paragraph 6 does not apply if—

• (a) the person making the disposal (“D”) is an overseas life insurance company or would be such a company if it were carrying on its life assurance business in the United Kingdom through a permanent establishment there,

• (b) immediately before the disposal, no more than 40% of the market value of D’s assets derives from investments consisting of—

• (i) interests in UK land, or

• (ii) rights or interests in companies which are UK property rich,

• (c) the asset disposed of is a right or interest in a collective investment vehicle that is a company (whether as a result of paragraph 4 or otherwise) and is UK property rich, and

• (d) immediately before the disposal, D does not have a 10% investment in that vehicle.

• (2) D has a 10% investment in a collective investment vehicle if, applying the rule in paragraph 9 (but without regard to paragraph 10) of Schedule 1A as if references to 25% were references to 10%, D would be regarded as having a 10% investment in the vehicle.

Offshore collective investment vehicles (other than UK feeder vehicles) that meet the conditions in paragraph 7(2)(a) and (b)

7B

• (1) Paragraph 6 does not apply if—

• (a) the person making the disposal is an offshore collective investment vehicle which meets the conditions in paragraph 7(2)(a) and (b),

• (b) immediately before the disposal, the offshore collective investment vehicle is not a UK feeder vehicle,

• (c) the asset disposed of is a right or interest in a collective investment vehicle that is a company (whether as a result of paragraph 4 or otherwise) and is UK property rich (a “UK property rich vehicle”), and

• (d) immediately before the disposal, the offshore collective investment vehicle does not have a 10% investment in the UK property rich vehicle.

• (2) An offshore collective investment vehicle is a “UK feeder vehicle” at any time if at least 85% of the market value of the assets of the vehicle at that time derives from units in a single collective investment vehicle that is UK property rich.

• (3) An offshore collective investment vehicle has a 10% investment in a UK property rich vehicle if, applying the rule in paragraph 9 (but without regard to paragraph 10) of Schedule 1A as if references to 25% were references to 10%, the offshore collective investment vehicle would be regarded as having a 10% investment in the UK property rich vehicle.

PART 3 — Election for transparency

Election for collective investment vehicle to be treated as partnership

8

• (1) This paragraph applies to an offshore collective investment vehicle—

• (a) which is UK property rich, and

• (b) which is transparent for income tax purposes otherwise than as a result of being constituted by two or more persons carrying on a trade or business in partnership.

• (2) The manager of the vehicle may make an election for the vehicle to be treated for the purposes of—

• (a) this Act, and

• (b) the Management Act, and any other provision of the Corporation Tax Acts, so far as relating to the taxation of chargeable gains,

as if, in relation to all times on and after its constitution, it were to be regarded as a partnership.

• (3) Accordingly, as a result of sub-paragraph (2)(b), it follows that, in applying rules such as section 1154 of CTA 2010 (meaning of “75% subsidiary” etc) for the purposes of Part 12 of that Act (Real Estate Investment Trusts) so far as relating to the taxation of chargeable gains, the vehicle is to be regarded as a partnership.

• (4) Section 12AA of the Management Act applies as a result of sub-paragraph (2) but as if —

• (a) subsection (1) of that section authorised the giving of a notice under subsection (2) or (3) for the purpose of facilitating the amount in which each partner is chargeable to tax on chargeable gains,

• (b) that section authorised the giving of the notice to the manager of the vehicle, and

• (c) that section authorised a single notice under subsection (2) or (3) of that section requiring the making and delivery, in accordance with the notice, of a return every year (whether or not any partnership property has been disposed of in the period to which the return relates).

• (5) The election has effect whether or not the vehicle would, but for the making of the election, be regarded as a person chargeable to capital gains tax or corporation tax on chargeable gains.

• (6) For the purposes of this paragraph whether or not an offshore collective investment vehicle is regarded as being UK property rich may be determined by reference to the prospectus for the vehicle on the assumption that investments are made by the vehicle in accordance with the prospectus.

• (7) For the purposes of this paragraph a collective investment vehicle is “transparent for income tax purposes” if, on the assumption that there are participants who are individuals resident in the United Kingdom, any sums which form part of the income of the vehicle—

• (a) would be chargeable to income tax on those assumed participants under a provision specified in section 830(2) of ITTOIA 2005 in respect of such of those sums as would be referable to their interests, or

• (b) if any of that income is derived from assets within the United Kingdom, would be so chargeable had the assets been outside the United Kingdom.

• (8) If an election is made under this paragraph in relation to a collective investment vehicle—

• (a) section 99 (application of Act to unit trust schemes) does not apply in relation to the vehicle, and

• (b) section 103D (tax transparent funds) does not apply in relation to the vehicle.

Further provision about election

9

• (1) An election under paragraph 8 in relation to an offshore collective investment vehicle—

• (a) has effect only if the participants in the vehicle at the time at which it is made have consented to the making of the election,

• (b) must be made by notice given to an officer of Revenue and Customs, and

• (c) must be made before the end of the period of 12 months beginning with the relevant acquisition date.

• (2) For this purpose “the relevant acquisition date” means the earliest date on which—

• (a) an interest in UK land, or

• (b) a right or interest in a company that is UK property rich,

forms part of the property that is the subject of or held by the vehicle.

• (3) An election under paragraph 8 is irrevocable.

• (4) An election under paragraph 8 must include the following information in the case of each participant in the vehicle—

• (a) the participant’s name and, if the participant has one, the participant’s unique taxpayer reference,

• (b) the participant’s usual or last known place of residence or the participant’s place of business, and

• (c) in the case of a participant who is an individual, the participant’s date of birth.

Units in CIVs held by life insurance companies

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• (1) This paragraph applies if an election under paragraph 8 has effect in relation to an offshore collective investment vehicle.

• (2) The election is treated as having no effect for the purposes of this Act in relation to any units in the vehicle which are held by an insurance company for the purposes of its long-term business.

Relationship to re-basing rules under Schedule 4AA for non-UK residents

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• (1) This paragraph applies if—

• (a) an election under paragraph 8 has effect in relation to an offshore collective investment vehicle, and

• (b) as a result of the election, Part 3 or 4 of Schedule 4AA would (but for this paragraph) apply in relation to a disposal made by a participant in the vehicle.

• (2) The disposal is to be regarded for the purposes of Schedule 4AA as if it were one to which Part 2 of that Schedule applies.

PART 4 — Exemption

Exemption for qualifying offshore CIV that is UK property rich etc

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• (1) An election may be made for a collective investment vehicle, or a company which is not a collective investment vehicle, to be exempt from corporation tax on chargeable gains accruing to it on—

• (a) all direct disposals of UK land, and

• (b) all indirect disposals of UK land.

• (2) An election may be made in respect of a collective investment vehicle if each of the following entitlement conditions is met—

• (a) the vehicle is offshore,

• (b) the vehicle is a company (whether as a result of paragraph 4 or otherwise),

• (c) the vehicle is UK property rich,

• (d) the vehicle meets all of the qualifying conditions set out in paragraph 13, and

• (e) if the vehicle is an AIF, it would also meet the definition of a collective investment vehicle for another reason.

• (3) An election may be made in respect of a company which is not a collective investment vehicle if each of the following entitlement conditions is met—

• (a) the company is wholly (or almost wholly) and directly owned by a collective investment scheme which is constituted by two or more persons carrying on a trade or business in partnership or is constituted by a CoACS or a RIF,

• (b) the appropriate entity is UK property rich, and

• (c) the company meets all of the qualifying conditions set out in paragraph 13,

and it does not matter where the company is resident.

• (3A) In sub-paragraph (3)(a) the reference to direct ownership by a collective investment scheme is to ownership otherwise than through—

• (a) a company, or

• (b) a partnership, trust or other entity or arrangements.

• (4) In sub-paragraph (3)(b) the “appropriate entity” means—

• (a) in a case where the collective investment scheme is constituted by two or more persons carrying on a trade or business in partnership, the company, and

• (b) in a case where the collective investment scheme is constituted by a CoACS or RIF, the CoACS or RIF.

• (5) If an election is made under this paragraph in respect of a collective investment vehicle—

• (a) the vehicle is referred to in this Part of this Schedule as “a qualifying fund”, and

• (b) any reference in this Part of this Schedule to a qualifying fund, in relation to any time after the election is made (including any time after the election ceases to have effect), is to be read as a reference to the arrangements, undertaking or company which met the definition of collective investment vehicle when the election was made.