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TCGA92/S86A deals with this problem by reducing the amount of the section 86 gains charged under section 10A* by the amount charged on those gains under section 87. A feature of section 87 is that the trustees� gains are matched to any beneficiary who receives a capital payment. Whether there is a charge to UK Capital Gains Tax depends on whether the beneficiary is UK resident. Only the amounts charged to tax reduce the section 86 gains.

»Ê¹ÚÌåÓýapp basic conditions for section 86A to apply are:

• gains chargeable under section 86 for a year of absence, year A, are treated by section 10A* as accruing to the settlor in the year of return
• amounts have been charged under section 87 for years before the year of return
• the amounts taxed under section 87 are in respect of matched capital payments.

A matched capital payment is a capital payment that is matched with the trusteesâ€� gains for year A. »Ê¹ÚÌåÓýapp capital payment could have been received in, before or after year A. »Ê¹ÚÌåÓýapp purpose of this rule is to match the gains charged under s86 with the trusteesâ€� gains that are taxed under section 87.

*This was re-written for disposals from 6 April 2019 to sections 1M and 3E see CG10150.