An offshore trust wishes to make a capital distribution to a UK beneficiary. If that trust has made past capital losses, can those losses be carried forward and set against subsequent years’ gains for the purposes of calculating the s.87 pool? Or is the loss simply treated as being a ‘nil’ gain for matching purposes?
Thank you
Chris
Yes generally they can, provided they arose in the trust itself and not an underlying corporation. Cumulative losses can be carried forward but not back.
The unmatched capital payment will also be carried forward until such time as there are net cumulative gains in the trust against which to match it, at which time it will be matched and taxable in the hands of the UK beneficiary.
Maxine
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The so-called “s 2(2)” TCGA 1992 amounts computed for each tax year for the trust are the total capital gains of the tax year less capital losses of that tax year plus any brought forward capital losses.
The position wrt gains/losses of underlying non-resident “close” companies can be complex. The position changed in 2013. Very broadly, pre 2013 capital gains are attributed upwards but not typically for post 2013 capital gains. Some relief for company capital losses may be available, albeit restricted.
Malcolm Finney
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