Policy paper

Statement of Practice 4 (1992)

Published 14 May 1992

Persons becoming resident in the UK after 6 April 1988

A person who is non UK resident on 6 April 1988 may make a disposal which will count as a first relevant disposal between then and the date on which they first become UK resident. The Commissioners for HM Revenue and Customs (HMRC) will generally give sympathetic consideration to extending the time limit to the end of the second year of assessment or, in the case of companies, accounting period after the year in which the first disposal is made after taking up UK residence. The extension will not normally be available where the taxpayer has disposed of an asset, held on 31 March 1982, within TCGA 1992 s 10 in the period between 6 April 1988 and the date of becoming UK resident.

Other situations in which the statutory time limit may be extended

There are a variety of other circumstances in which the Commissioners for HMRC may exercise their discretion to extend the statutory time limit. In all cases an extension will depend on the particular facts and circumstances of each individual case.

What may be regarded as a first relevant disposal?

There are also some circumstances where it may help to clarify what is regarded as a first relevant disposal.

(i) Capacity in which a person makes an election under TCGA 1992 s 35(5).

Where a person makes an election under s 35(5) in relation to assets held in one capacity the election does not apply to assets held in another capacity. This is because of the provisions of s 35(7). For this purpose a person may hold assets in several capacities as, for example, an individual, trustee, partner or member of a European Economic Interest Grouping. It follows that there will be a first relevant disposal and a separate time limit for making an election for each holding of assets which a person holds in different capacities.

Individuals who hold assets in different capacities should indicate at the time they make an election in what capacity it should be regarded as applying.

(ii) Disposals of non UK assets by an individual resident but not domiciled in the UK

In the case of individuals who are resident but not domiciled in the UK a disposal of an asset situated outside the UK may be a first relevant disposal. For TCGA 1992 s 35(5) purposes the date on which the proceeds are remitted to the UK is taken to be the date on which the disposal occurs and not the date when the asset was disposed of. This means that the date of the first relevant disposal will therefore be the date on which remittances are received from an overseas gain after 5 April 1988 or the date of the first disposal of a UK asset, whichever occurs first.

(iii) Disposals by a UK resident during a period of non-residence

An individual who is UK resident on 6 April 1988 may then have a period of non-residence before resuming UK residence. In these circumstances the first relevant disposal will be treated as the first disposal after 5 April 1988 on which the individual is chargeable to UK Capital Gains Tax. So if, for example, a disposal was made between 6 April 1988 and the date the individual became non-resident that will be treated as the first relevant disposal. If there was no disposal in this period the first relevant disposal will be the first disposal after residence is resumed. Where an individual is not entitled to be treated as resuming residence part-way through a tax year by virtue of extra-statutory concession D2, the first disposal will be the first made in the year in which residence is resumed.

This statement of practice provides an indication of the main circumstances where, and the extent to which, the Commissioners for HMRC will or may exercise their discretion under TCGA 1992 s 35(6)(b). It is not intended to be an exhaustive list of disposals where, having regard to the individual facts and circumstances, such discretion may be exercised.

Annex to SP 4/92

Disposals on which any gain would not be a chargeable gain by virtue of specific statutory provisions are:

• (i) private cars (TCGA 1992 s 263) [formerly CGTA 1979 s 130]
• ii) chattels, including household goods, and personal belongings, but excepting commodity futures and foreign currency, worth less than the chattel exemption at the date of disposal (TCGA 1992 s 262(1)) [formerly CGTA 1979 s 128(1)]
• (iii) all chattels that are wasting assets, except plant and machinery used in business (but see also (ii) above and para 7(i) of the statement of practice) and commodity futures (TCGA 1992 s 45(1)) [formerly CGTA 1979 s 127(1)]
• (iv) government non-marketable securities, including savings certificates, premium and British Savings bonds (TCGA 1992 s 121) [formerly CGTA 1979 s 71]
• (v) gilt-edged securities and qualifying corporate bonds, except those received in exchange for shares or other securities (TCGA 1992 s 115) [formerly CGTA 1979 s 67]
• (vi) life assurance policies and deferred annuity contracts unless purchased from a third party (TCGA 1992 s 210(2)) [formerly CGTA 1979 s 143(2)]
• (vii) foreign currency acquired to meet personal or family expenditure abroad (TCGA 1992 s 269) [formerly CGTA 1979 s 133]
• (viii) rights to compensation or damages for any wrong or injury suffered by an individual in his person, profession or vocation (TCGA 1992 s 51(2)) [formerly CGTA 1979 s 19(5)]
• (ix) debts, other than debts on a security, held by the original creditor, his personal representative or legatee (TCGA 1992 s 251(1)) [formerly CGTA 1979 s 134(1)]
• (x) business expansion scheme shares in respect of which relief has been given and not withdrawn (TCGA 1992 s 150(2)) [formerly CGTA 1979 s 149C(2)]
• (xi) shares held as part of a personal equity plan investment (SI 1989/469 reg 1 as amended)
• (xii) gifts of eligible property, including works of art, for the benefit of the public (TCGA 1992 s 258(1), (2)) [formerly CGTA 1979 s 147(1), (2)]
• (xiii) decorations for valour or gallantry (TCGA 1992 s 268) [formerly CGTA 1979 s 131]
• (xiv) rights to or any part of an allowance, annuity or capital sum from a superannuation fund or any other annuity (except under a deferred annual policy) or annual payments receivable under a covenant which is not secured on property (TCGA 1992 s 237) [formerly CGTA 1979 s 144)]

The disposal of sterling, which is not an asset for capital gains tax purposes (TCGA 1992 s 21(1)) [formerly CGTA 1979 s 19(1)] does not count as a first relevant disposal.

Concession D2

Residence in the UK: year of commencement or cessation of residence.

Note

This statement supersedes SP 2/89.