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HMRC internal manual

Capital Gains Manual

Losses: restriction of loss relief: non-domiciled individuals

Before 6 April 2008 losses accruing on the disposal of foreign assets by individuals with foreign domicile were not allowable losses. This was changed by Finance Act 2008 which introduced TCGA92/S16ZA. From 2008-09 onwards foreign losses are allowable losses in the hands of non UK domiciled individuals providing the individual has made a valid election under TCGA92/S16ZA but these losses are subject to certain restrictions on their use.

If an individual wishes to make an election, they must do so for the first tax year in which they claim the remittance basis of taxation, whether or not there are chargeable gains or allowable losses in that year. Once made, the election is irrevocable and has effect for that year and all subsequent years.

In the absence of an election, TCGA92/s16ZA(3) means that foreign losses of the year in which the election could have been made, and all subsequent years in which the individual is not domiciled in the UK, are not allowable losses.

See CG25330+ for guidance on the election under TCGA92/S16ZA and how foreign losses may be relieved given an election has been made.

From 6 April 2017, where an individual becomes deemed domiciled in the UK for a year they are entitled to losses in the same way as if they had actually become domiciled in the UK for the year.

For guidance on the remittance basis, domicile and deemed domicile see the Residence, Domicile and Remittance Basis (RDRM) Manual and CG25300+.

For periods up to 5 April 2012 special rules also applied in connection with losses from foreign currency bank accounts. See CG25393 for guidance.