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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Remittance from mixed fund and section 91 - income and gains - example

A is a UK resident but non-domiciled beneficiary of a non-UK resident settlement and claims the remittance basis. At the start of 2014-15 the trustees have an unmatched section 2(2) amount of £500,000 for the year 2008-09. In 2014-15 the trustees accrue a further section 2(2) amount of £500,000 and make a capital payment of £1 million. A pays the £1 million into an overseas bank account that already includes £750,000 relevant foreign income that arose in 2008-09.

The bank account is a mixed fund as defined in ITA 2007/S809Q(6) because it includes different kinds of income and gains, £750,000 relevant foreign income for the year 2008-09 and £1 million foreign chargeable gains for the year 2014-15.

In 2015-16 A remits £600,000 to the UK. You use the rules in ITA 2007/S809Q(3) to determine if the remittance is from the income or gains. The last-in first-out basis applies and A is treated as having remitted £600,000 of the 2014-15 gain. You then use the section 809B(3) rules again to determine which part of the £1 million gain is remitted first. On a last-in first-out basis A is treated as having remitted all of the 2014-15 section 2(2) amount, £500,000, and £100,000 of the 2008-09 section 2(2) amount. Only the £100,000 is subject to TCGA92/S91.