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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Non-resident companies: examples of relief under TCGA92/S13(5A) on a distribution to participators

This example illustrates the operation of TCGA92/S13(5A) if the company realises a gain and distributes an amount in respect of the gain to participators.


  • A UK resident shareholder owns half the shares in a non-resident close company. The company structure is straightforward and the UK resident is a 50% participator. The shareholder does not claim the remittance basis.
  • In January 2009 the non-resident company sells an asset realising a gain of £100,000.
  • The UK resident has no other gains in 2008-09 but is chargeable to Capital Gains Tax at 18%.
  • In June 2009 the company makes a distribution of £100,000 to its shareholders. The UK resident is chargeable at 40% on the amount received.

Capital Gains Tax treatment

January 2009 - The ordinary rules of TCGA92/S13 apply. Half the gain of £100,000 is attributable to the shareholder and is chargeable to Capital Gains Tax in 2008-09. The tax due is

  Section 13 gain   £50,000
less annual exempt amount   £ 9,600
    CGT @ 18% £ 7,272

June 2009 - The tax paid under section 13(2) is available for set off. The Income Tax due on the distribution for 2009-10 is

  Distribution   £50,000
  IT @ 40%   £20,000
less Section 13 tax   £ 7,272
  Tax due   £12,728