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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Arrival in and departure from UK: temporary non-residence: concessionary treatment - year of departure 2012-13 or earlier

Extra statutory concession D2 (ESCD2)

This is a summary: for detailed guidance on ESCD2, see CG25720+.

For the years up to and including 2012-13, under the provisions of TCGA92/S2, a person is chargeable on gains accruing in a year of assessment if that person is resident or ordinarily resident during any part of that year. ESCD2 allows the years of commencement and cessation of residence in the United Kingdom to be treated in such a way that gains accruing in those years at a time when an individual is not resident and not ordinarily resident are not charged. This concessionary treatment will not apply:

  • for the year of departure from the UK, i.e. cessation of residence and ordinary residence, if an individual was resident or ordinarily resident in the UK for the whole of four or more of the seven years of assessment immediately preceding the year of assessment in which he or she left the UK. (So a long-term UK resident cannot claim the concessionary treatment by becoming non-resident in, say, February, disposing of their assets in March and then resuming residence in May.)
  • for the year of return to the UK, i.e. resumption of residence or ordinary residence, if an individual was resident or ordinarily resident in the UK at any time during the five years of assessment immediately preceding the year of assessment in which he or she arrived back in the United Kingdom. (So a former UK resident cannot claim the concessionary treatment in the year they resume residence unless they were non-resident for more than five years.)

Furthermore, ESCD2 does not apply to gains on assets used for the purposes of a trade or profession carried on in the UK through a branch or agency (CG25770) or to trustees of a settlement or to settlors of a settlement in relation to gains on which they are chargeable under TCGA92/S86 and TCGA92/SCH5.