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HMRC internal manual

Capital Gains Manual

Effects of residence/domicile: change of residence: ESC D2 - for years up to and including 2012-13

For individuals for the years up to and including 2012/13 the strict treatment referred to in CG10970 is relaxed in certain circumstances by extra-statutory concession (ESC) D2, see CG25700+. Where the conditions of ESC D2 are satisfied the concession allows the year of commencement or cessation of residence in the United Kingdom to be split for Capital Gains Tax purposes. Gains accruing in those years at a time when an individual is not resident and not ordinarily resident are not charged.

The concessionary treatment under ESC D2 does not apply

  • to gains on assets related to the carrying on of a trade, profession or vocation in the UK in the period between departure and the following 5 April, see CG25770
  • to gains of certain settlements that are assessable on the settlor of the settlement, see CG34820
  • as with all concessions, if any attempt is made to use the concession for tax avoidance - see, for example, Regina v H M Inspector of Taxes, Reading ex parte Fulford-Dobson 60 TC 168. For further details see CG25793.

ESC D2 does not apply for 2013/14 and later years following the introduction of the Statutory Residence Test. Guidance on the Statutory Residence Test can be found in the RDR3 Guidance Note: Statutory Residence Test (SRT).