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
|IT @ 40%||£20,000|
|less||Section 13 tax||£ 7,272|