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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: interaction with DTA’s - is gain within s10A- year of departure 2013-14 or later

It can be seen from CG26680 and the examples at CG26690 that an individual can be resident in the UK for a tax year and that year (or a residence period in that year) could fall within the period of temporary non-residence. This could in some circumstances give rise to a double charge.

A double charge is prevented by TCGA92/S10A(5).

There are two main effects of subsection (5).

  1. Preference is given to any existing charge and any gains that are charged do not fall within the scope of TCGA92/S10A.
  2. Where an existing charge is (or would be by a claim) prevented from applying because of the operation of a DTA the gain remains within the scope of TCGA92/S10A. Any such gain would be treated as falling within the period of return.

Example:

Mr Smith realises a gain of £20,000 on 2 April 2020. He also left the UK in this year.

Split year treatment does not apply for 2019-20. From 1 April 2020 Mr Smith becomes treaty resident in another country.

Mr Smith subsequently returns to the UK and his period of return is in the 2022-23 tax year.

The gain of £20,000 would be chargeable for 2019-20 unless the terms of the DTA prevent a charge for 2019-20.

If the terms of the DTA prevented a charge for 2019-20 the gain would be charged in the period of return i.e. 2022-23.

Where a gain arises in the period of temporary non-residence and it is not chargeable under a different provision the gain it will be chargeable in the UK for the period of return. This is unaffected by the terms of the DTA, TCGA92/S10AA(4). This applies even if the gain has been charged to tax in another country for the year that it arose.

See CG26710 if foreign tax paid has been paid on the gain.