CG13400 - Introduction and computation: occasions of charge: migration and exit charges
No general exit charge
Capital Gains Tax is charged
- on the disposal of assets
- on certain events giving rise to deemed disposals
- on certain events causing held over gains to be brought into charge.
A person moving abroad and ceasing to be resident and ordinarily resident* ceases, in general, to be within the charge to Capital Gains Tax. But if that person retains the ownership of their assets they do not make a disposal on leaving the UK. Therefore there can be no CGT charge unless legislation deems the departure to be an event giving rise to a deemed disposal or causing held over gains to be brought into charge.
There is no legislation applying to all categories of person which deems the cessation of residence and ordinary residence in the UK to be an event giving rise to a deemed disposal. It is therefore necessary to consider separately the legislation applying to:
- individuals, see below
- companies, see below
- trustees, see below
Certain assets remain within the scope of charge when a person leaves the UK e.g. an interest in UK resdential property. Guidance on the interactions with any exit charge that would arise is at CG73834 and CG73769 where the exit was before 6 April 2019 and at CG73988 where the exit was on 6 April 2019 or later.
* For 2013/14 and subsequent years ordinary residence does not need to be considered.
Recovery - held over gains - change of residence
Where there has been a claim to hold-over a gain on a gift under
- FA80/S79, as extended by FA81/S78, and FA82/S82
or
- CGTA79/S147A
or
- TCGA92/S165 and SCH7
or
- TCGA92/S260
and the individual or trustee who is the transferee becomes neither resident nor ordinarily resident in the United Kingdom, there are provisions for the whole or part of the held-over gain to be assessed on the transferee, see CG67270+. Such a charge should be considered immediately non-resident status is known or suspected.
* For 2013/14 and subsequent years ordinary residence does not need to be considered.
Individuals
There is no specific legislation creating an occasion of charge for individuals ceasing to be resident. They are therefore not subject to an exit charge on emigration.
Even if they become both not resident and not ordinarily resident* they will remain within the charge to Capital Gains Tax until the following 5 April, see CG10970+ and CG25750. However they may be treated as outside the charge from the date of departure by concession or if split-year treatment applies, see CG10972+ and CG10978+.
* For 2013/14 and subsequent years under the Statutory Residence Test rules an individual is either resident or not resident in the UK for a year. Also ordinary residence does not need to be considered.
Companies
TCGA92/S185 & TCGA92/S186
For a detailed explanation of when a company is resident in the UK, of when it is treated as dual resident or as treaty non-resident, of the tests for residence and of when it is treated as migrating see CTM34100 onwards and INTM120000 onwards. See also CG42300+.
Until 1993 a company incorporated in the UK was normally treated as resident here. It was therefore exceptional for such a company to be able to migrate. However it was also possible for it to become resident elsewhere so that it was dual resident. On becoming dual resident a company sometimes also became treaty non-resident, see CG42321. After 1993 a UK registered company that is treaty non-resident is treated as not resident, see CG42303.
A company incorporated elsewhere may be resident in the UK because its central management and control are exercised here. Such a company may be dual resident if it is also resident elsewhere, for example, under an incorporation rule in the country of incorporation. It could then be treaty non-resident, see CG42321. Since 1993 such a company is treated as not resident, see CG42303.
There is an occasion of charge imposed by TCGA92/S185 if a company ceases to be resident in the UK. The occasion of charge occurs immediately before the company ceases to be resident. Subject to exclusions for assets which relate to any trade the company continues to carry on in the UK through a permanent establishment, the company is deemed to have disposed of and immediately reacquired its chargeable assets at market value at that time. See CG42370 for further details.
Settlements
TCGA92/S80 & TCGA92/S83
The residence status of a body of trustees of a settlement is determined by rules set out in TCGA92/S69, see CG33370+. This status can be changed by changing the persons who are actually trustees. So if trustees who are resident in the UK resign and are replaced by trustees who are not resident in the UK the trust will change from being UK resident to being non-resident. It is also possible for the trustees to be treated as resident elsewhere under the terms of the legislation of another country even though they are regarded as resident here. If so the trustees are then dual resident and may also be treaty non-resident.
To counter the opportunities for avoidance an occasion of charge is imposed by TCGA92/S80 if the trustees of a settlement become not resident in the UK. The occasion of charge occurs immediately before the trustees cease to be resident. Subject to exclusions for assets related to any trade that the trustees continue to carry on in the UK through a branch or agency, the trustees are deemed to have disposed of, and immediately reacquired the chargeable assets of the settlement at market value at that time, see CG38215.
A similar occasion of charge may be imposed by TCGA92/S83 if the trustees become treaty non-resident; that is the trustees become dual resident but taxing rights are given to another country under a double taxation agreement. Again, see CG38215 for details.
All cases where the occasions of charge referred to above may apply must be reported to Specialist PT Trusts and Estates under CG38400+