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HMRC internal manual

Capital Gains Manual

Arrival in and departure from UK: temporary non-residence: interaction with DTA’s - year of departure 2012-13 or earlier


The Finance Act 2005 made certain changes to how S10A operates, including the introduction of S10A(9C). This was to counter tax avoidance schemes which exploited the terms of double taxation agreements and resulted in little or no tax charged on gains. The new provisions apply where the date of departure from the UK was after 16 March 2005.

In practice this means that where the departure was after 16 March 2005 and a gain arises in an intervening year, that gain will always be chargeable in the UK for the year of return. This applies even if the gain has been charged to tax in another country for the year that it arose. If this occurs a measure of relief for foreign tax paid will be due.


At some point after 16 March 2005 Mr Smith leaves the UK in year 1 to take up residence in another country.

He continues to reside in the other country throughout years 2 and 3.

In year 3 he disposes of shares (acquired before originally leaving the UK) and realises a gain of £1m. This gain is charged to tax in the other country.

He then returns to the UK to live in year 4.

Year 3 is an intervening year and so the gain of £1m can be charged to capital gains tax for year 4, the year of return and a measure of relief for foreign tax paid will be due.


If S10A applies to a gain that has also been taxed in another country in the period of temporary non residence

  • any claim to relief for foreign tax paid

and / or

  • any difficulties in dealing with claims in respect of exemptions under a double taxation agreement

should initially be referred to Capital Gains Technical, see the section Technical Help Request in CG99998.