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HMRC internal manual

Capital Gains Manual

Arrival in and departure from UK: temporary non-residence: section 10A example - year of departure 2012-13 or earlier

Mr Smollett, who has lived all his life in the UK, leaves the UK on 5 August 2009 for a three year contract of employment abroad.

He resumes tax residence in the UK on 2 September 2012.

He realises a chargeable gain (on an asset acquired before he left the UK) of £15,000 on 20 April 2010.

Mr Smollett fulfils all the conditions in TCGA92/S10A(1).

  • He has resumed UK tax residence ( 2012-13 is the year of return: TCGA92/S10A(1)(a)).
  • There is at least one tax year immediately prior to the year of return when he was not tax resident in the UK (the intervening years: 2010-11 and 2011-12) and immediately prior to that there are earlier years of UK residence (TCGA92/S10A(1)(b)).
  • The intervening years are less than five full tax years (TCGA92/S10A(1(c)).
  • His year of departure is 2009-10 (TCGA92/S10A(8)) and he had been resident in the UK for at least four out of the seven tax years immediately prior to his year of departure (in this example he was resident for all of the previous years, TCGA92/S10A(10(d)).

A chargeable gain accrues to Mr Smollett in an intervening year (not in the year of departure or year of return), TCGA92/S10A(2)(a). In this example Mr Smollett will be chargeable under Section 10A in the tax year of return to UK residence (2012-13) on the gain of £15,000.

If the gain had instead accrued on 20 April 2012 then section 10A could not apply because the gain did not accrue in an intervening year but rather in the year of return, 2012-13. You would have to consider whether the conditions for the treatment afforded by ESC D2 were met.