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Capital payments not charged on original beneficiary—overview

From 2018/19, there are a number of situations where a capital payment is not taxed on the original recipient, but instead treated as received by another beneficiary or even the settlor. These are when capital payments are:

1. Ìý

   •ÌýÌýÌýÌý made to a UK resident settlor's close family member¹

2. Ìý

   •ÌýÌýÌýÌý made to the original beneficiary who intends to pass it on to a UK resident person ('onward payments')²

Capital payments to UK resident settlor's close family member

From 2018/19, a capital payment is treated as received by the settlor of the settlement if the beneficiary who receives the payment is a close family member (CFM) of the settlor, and the settlor is UK resident in the tax year of payment³. The residence status of the CFM is irrelevant for the purpose of this provision.

For this purpose a CFM is⁴:

1. Ìý

   •ÌýÌýÌýÌý the settlor's spouse or civil partner, or

2. Ìý

   •