Finance Act 2008

Attribution of gains to beneficiaries

111For section 90 substitute—

“90Sections 87 and 89(2): transfers between settlements

(1)This section applies if the trustees of a settlement (“the transferor settlement”) transfer all or part of the settled property to the trustees of another settlement (“the transferee settlement”).

(2)In this section “the year of transfer” means the tax year in which the transfer occurs.

(3)Treat the section 2(2) amount for the transferee settlement for any tax year (not later than the year of transfer) as increased by—

(a)the section 2(2) amount for the transferor settlement for that year (as reduced under section 87A as it applies in relation to that settlement for the year of transfer and all earlier tax years), or

(b)if part only of the settled property is transferred, the relevant proportion of the amount mentioned in paragraph (a).

(4)“The relevant proportion” is—

(a)the market value of the property transferred, divided by

(b)the market value of the property comprised in the transferor settlement immediately before the transfer.

(5)Treat the section 2(2) amount for the transferor settlement for any tax year as reduced by the amount by which the section 2(2) amount for the transferee settlement for that year is increased under subsection (3).

(6)If neither section 87 nor section 89(2) would otherwise apply to the transferee settlement for the year of transfer—

(a)section 89(2) to (4) apply to the settlement for that year (and subsequent tax years), and

(b)for this purpose, references there to the last non-resident tax year are to be read as the year of transfer.

(7)The increase under subsection (3) has effect for the year of transfer and subsequent tax years.

(8)The reduction under subsection (5) has effect for tax years after the year of transfer.

(9)When calculating the market value of property for the purposes of this section or section 90A in a case where the property is subject to a debt, reduce the market value by the amount of the debt.

(10)This section does not apply to—

(a)a transfer to which Schedule 4B applies, or

(b)any section 2(2) amount that is in a Schedule 4C pool (see paragraph 1 of Schedule 4C).

90ASection 90: transfers made for consideration in money or money’s worth

(1)Section 90 does not apply to a transfer of settled property made for consideration in money or money’s worth if the amount (or value) of that consideration is equal to or exceeds the market value of the property transferred.

(2)The following provisions apply if—

(a)section 90 applies to a transfer of settled property made for consideration in money or money’s worth, and

(b)the amount (or value) of that consideration is less than the market value of the property transferred.

(3)If the transfer is of all of the settled property, for the purposes of section 90 treat the transfer as being of part only of the settled property.

(4)Deduct the amount (or value) of the consideration from the amount of the market value referred to in section 90(4)(a).”