»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp transferor settlement’s assets consist of shares with a market value of £400,000 and cash of £100,000. All these assets are transferred to the transferee settlement in 2012-13. »Ê¹ÚÌåÓýapp transferee settlement pays £300,000 to the transferor settlement for these assets.

No capital payments have been made out of the transferor settlement. »Ê¹ÚÌåÓýapp transferor settlement has the following gains made by the trustees:

Year	-	Amount
2005-06	Trustees� gains (section 2(2) amount)	£20,000
2012-13	Section 2(2) amount on transfer of all settled property	£75,000

»Ê¹ÚÌåÓýapp transfer is treated as if it was a transfer of part only of the settled property. This is to bring in the ‘relevant proportionâ€� rules in section 90(3) and (4) TCGA in deciding how much of the unmatched section 2(2) amounts are transferred. In calculating the ‘relevant proportionâ€� you deduct the amount paid by the transferee settlement from the ‘market value of the property transferredâ€�. »Ê¹ÚÌåÓýapp relevant proportion is 2/5 ([£400,000 + £100,000 - £300,000] / [£400,000 + £100,000]).

Transferee settlement

»Ê¹ÚÌåÓýapp transferee settlement acquires the following unmatched section 2(2) amounts:

Year	Amount	-
2005-06	£8,000	(£20,000 x 2/5)
2012-13	£30,000	(£75,000 x 2/5)

»Ê¹ÚÌåÓýappy are added to any unmatched section 2(2) amounts it already has and can be matched with capital payments made from the transferee settlement in 2012-13 or a later year.

This applies whatever the residence status of the transferee settlement.

Transferor settlement

»Ê¹ÚÌåÓýapp unmatched section 2(2) amounts of the transferor settlement are reduced by the section 2(2) amounts that have been treated as transferred to the transferee settlement. »Ê¹ÚÌåÓýapp unmatched section 2(2) amounts become:

Year	Amount	-
2005-06	£12,000	(£20,000 - £8,000)
2012-13	£45,000	(£75,000 - £30,000)

This reduction has effect for matching in the year after the year of transfer (2013-14) and subsequent years.