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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Non residents with a UK branch or agency: deemed disposals

TCGA92/S25

Without additional legislation an individual could avoid the charge under TCGA92/S10 in certain cases by either transferring assets abroad before disposing of them or by delaying disposal until after the end of the year of assessment in which the branch or agency activities ceased. To prevent this, TCGA92/S25 deems a disposal to take place on the happening of certain events.

TCGA92/S25 only applies to chargeable assets, as defined by TCGA92/S25 (7). An asset is a chargeable asset in relation to a person at any point in time if, on a disposal at that time, a gain would be chargeable on that person only by reason of TCGA92/S10. In other words to be such an asset in relation to an individual, that individual must be not resident and not ordinarily resident* in the UK and the conditions set out in CG25510 must be satisfied as regards the asset.

There is a deemed disposal if an asset that is a chargeable asset in relation to an individual

  • becomes situated outside the UK (except in the case of exploration or exploitation assets as defined in TCGA92/S25 (6)), or
  • ceases to be such an asset because the individual ceases to carry on the trade, profession or vocation in the UK through a branch or agency.

But in the latter case there is no deemed disposal if, before the end of the chargeable period in which the cessation occurs, the asset is used in another trade, profession or vocation carried on by that individual in the UK through a branch or agency.

In both cases the asset is deemed to have been disposed of at its market value immediately before the chargeable occasion and then immediately reacquired at that value. You should therefore include that value in the computation as the disposal consideration. The acquisition cost of the asset should be determined according to the guidance at CG25520.

If the individual ceased to carry on the trade, profession or vocation and the asset is transferred abroad there is only one deemed disposal, with the transfer abroad being ignored (TCGA92\S25 (2)).

  • For 2013/14 and subsequent years ordinary residence does not need to be considered.