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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Arrival in and departure from the UK: ESCD2: departures - to 5 April 2013

In order for the concessionary treatment described in CG25720 to apply to the year of assessment in which an individual ceases to be resident and ordinarily resident in the UK (the ‘year of departure’), the individual must have been not resident and not ordinarily resident in the UK for the whole of at least four of the seven years of assessment immediately preceding the year of departure.

Example

Rudolph was resident in Finland until he came to the UK on 24 December 2005. He was resident in the UK after that date, but between 1 June 2007 and 31 January 2008 he took a career break back in Helsinki. He then returned to the UK and stayed until he moved back to Helsinki for good on 1 October 2011. On 1 December 2011 he sold his house in Manchester and realised a gain of £120,000.

Under TCGA92/S2 the gain would be chargeable on Rudolph in his year of departure 2011-12 because he is resident in the UK for part of that year. Paragraph 2 of ESCD2 does not permit the concessionary treatment to apply in this case because out of the seven years immediately preceding the year of departure (ie years 2004-05 to 2010-11 inclusive), he was resident in the UK for the whole of exactly four (2006-07, 2008-09, 2009-10 and 2010-11). Note that we are assuming his sabbatical meant that he was not resident in the UK for the whole of 2007-08.