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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Remittance basis: election for foreign losses to be allowable: TCGA92/S16ZA

An election for losses on disposals of non-UK assets (“foreign losses”) to be allowable losses must be made by an individual for the first tax year in which they claim remittance basis, see CG25312, and in which they are not domiciled in the UK. This is known as the relevant tax year.

The procedure and time limit for making an election are governed by the rules for claims to relief etc in the Taxes Management Act. (TMA70/S42 and TMA70/S43).

If no election has been made, foreign losses of the relevant tax year and all subsequent years except years in which the individual is domiciled in the United Kingdom are not allowable losses.

Note that TCGA92/S16ZA does not itself provide for foreign losses to be allowable: that is achieved by TCGA92/S16. The effect of section 16ZA is to prevent foreign losses being allowable, unless an election is made.

The immediate effect of an election is to ensure that foreign losses remain allowable losses and that the special rules governing how those losses may be relieved apply for the relevant year and all subsequent years (TCGA92/S16ZB and TCGA92/S16ZC). See CG25330B-CG25330E.