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HMRC internal manual

Capital Gains Manual

Arrival in and departure from UK: temporary non-residence: gains or losses excluded from scope of section 10A - year of departure 2013-14 or later

An individual who leaves and subsequently returns to the UK may have acquired assets in a period of temporary non-residence. If such assets are disposed of during a period of temporary non-residence (see CG26540) any gains or losses on such assets are, in general, excluded from the scope of Section 10A, but see CG26610 which tells you about the exceptions to this general rule.


Section 10AA(1)(a) provides that a gain or loss on an asset that was acquired by the taxpayer in the period of temporary non-residence in the UK shall not be treated as chargeable in the period of return.

You should note that the general exclusion of gains on assets acquired and disposed of in a period of temporary non-residence relates only to gains and losses which would otherwise be chargeable or allowable by virtue of TCGA92/S10A.

The exclusion from charge, does not apply to assets acquired within an offshore trust, TCGA92/S86 or TCGA92/S87, or by a non-resident closely controlled company, TCGA92/S13.

Example 1

Example 2

Example 1

Mr Smith, who has lived all his life in the UK, leaves the UK on 10 July 2018 for a four year contract of employment abroad.

He resumes tax residence in the UK on 15 August 2022.

On 8 May 2019 Mr Smith buys 20,000 shares in a UK Company. He sells all of the shares on 10 January 2021, realising a gain of £12,000.

Mr Smith fulfils all of the conditions for Section 10A to apply, see CG26540, but because the shares were acquired in a period of temporary non-residence the gain is not treated as chargeable in the period of return.

There may be occasions when shares are acquired overseas and they must be added to a pool of existing shares. Detailed guidance on share pooling can be found in Appendix 10.

A pool of shares may contain shares whose disposal would otherwise fall outside of the scope of Section 10A. There is no statutory rule for identifying which shares have been disposed of for the purposes of section 10A, so the allocation shown in the return should be accepted provided adequate records are kept by the taxpayer so that the identification of later disposals is consistent with what has gone before.

Whilst the taxpayer can decide which shares may have been disposed of, the shares are still subject to the normal pooling rules with the gain on the shares disposed of that would be outside of the scope of s10A being determined on a proportionate basis. In particular, the makeup of the pool isn’t altered to allow the shares to be identified to specific costs.

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Example 2

A taxpayer owns 200 shares.

Year 1 - He leaves the UK.

Year 2 - Whilst abroad he acquires 200 shares.

Year 3 - Whilst abroad he sells 100 shares.

Year 4 - He returns to the UK and later in the year purchases a further 100 shares.

Year 5 - He goes abroad again and sells 200 shares.

Year 6 - He finally returns to the UK where he remains.

When looking at the section 104 pool, on the first disposal in year 3 he has sold 100 of the 400 held at that time and on the disposal in year 5 he has sold 200 of the 400 held at that time. The computations of any gain or loss arising would be made in the normal way.

The taxpayer could decide that the sale in year 3 should be regarded as the disposal of 100 of the shares that were acquired when overseas in year 2. This would mean that any gain would not be caught by section 10A. If this was done, on the second sale in year 5 only 100 of the 200 shares could then be regarded as having been acquired while overseas so half of the gain from year 5 would be caught by section 10A and would be charged in year 6.