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HMRC internal manual

Capital Gains Manual

Non-resident companies: tax adjustment and reliefs: disposal of interest by UK resident participator: TCGA92/S13(7)

A UK resident who has incurred a charge under TCGA92/S13 may later dispose of their shares or other interest in the non-resident company. Any tax paid by the UK resident in pursuance of subsection (2) should be allowed as a deduction in computing the gain on the disposal of the shares or other interest. No deduction is due if the tax was paid by the non-resident company, see CG57390. Indexation allowance is not given on the tax paid. Although the tax is allowed as a deduction in computing the gain it is not expenditure within TCGA92/S38(1)(a) or TCGA92/S38(1)(b). Therefore it is not relevant allowable expenditure for indexation allowance purposes, see CG17240.

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. For indexation allowance see CG17207+ and for taper relief see CG17895+.