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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Remittance basis: consequences

If the remittance basis applies to an individual for a year, chargeable gains accruing in that year from the disposal of assets situated outside the UK are known as foreign chargeable gains: TCGA92/S12(4).

Chargeable gains which are treated as accruing to an individual to whom the remittance basis applies as a result of gains accruing to another person (e.g. a gain on a non-UK situs asset made by a non-UK resident company, see CG57200+, or gains made by non-resident settlements, see CG11030) may also be foreign chargeable gains. If they are, then the remittance basis applies to them and they are not charged to Capital Gains Tax until they are remitted to the United Kingdom.

Capital Gains Tax is not charged on those foreign chargeable gains as such, that is to say they are not taxed when they accrue, but a chargeable (i.e. taxable) gain is treated as accruing in any tax year in which any of the foreign chargeable gains are remitted to the United Kingdom (TCGA92/S12(2)).

In tax year 2010-11 the rate of Capital Gains Tax changed part way through the year. Chargeable gains which accrued on or before 22 June 2010 are taxed at 18%, whilst chargeable gains accruing after 22 June may be charged at 28%. For that year, therefore, it can be important to know exactly when during the year a remitted gain is deemed to accrue. There are transitional rules in Finance (No.2) Act 2010 which ensure that chargeable gains treated as accruing in 2010-11 under TCGA92/S12 because a foreign chargeable gain is remitted will normally be deemed to accrue at the time that foreign chargeable gain is remitted. There is an exception to this rule where a gain remitted in 2010-11 is identified with a foreign chargeable gain - other than one which is nominated to meet the remittance basis charge - under ITA07/S809J. Any foreign chargeable gains so identified are treated as remitted before 23 June 2010.

There is guidance on the tax rates applying after 22 June 2010 at CG21200+.

The individual’s domicile status (although not his or her residence status) at the date of the remittance is irrelevant.

The meaning of “remitted to the United Kingdom” is given by Chapter A1 of Part 14 of ITA 2007. In most instances the meaning is the same for both foreign chargeable gains and foreign income. Detailed guidance is contained in the Residence, Domicile & Remittances Manual. (CG25340+ contains a summary of that material, but for detailed guidance you should refer to the Residence, Domicile & Remittances Manual.)

The annual exempt amount (TCGA92/S3) is not allowed to an individual in a year in which he or she claims the remittance basis.