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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Private residence relief: deemed not a residence: residences in another territory: tax years

TCGA92/S222B

Period for which nomination applies

How to determine if an individual is treated as resident in another territory for the purposes of nomination

 

Period for which nomination applies

Where an individual holds an interest in a residence for a whole tax year any nomination applies to the nominated residence for the whole tax year.

 

Where an individual holds an interest in a residence for only part of a tax year a nomination in favour of that residence would apply to that part of the tax year.

 

Example

If the interest was acquired on 6 October the part of the year would start on 6 October. The day count tests CG64582 would be applied to that property for that part year period.

 

It is possible that an individual may retain an interest in a property that ceases to qualify as a residence. In such a case the nomination could only apply for the period that the property qualified as a residence.

 

            Example

An individual ceases to use a property as a residence from 6 October, any nomination could only apply up to 6 October.

 

How to determine if an individual is treated as resident in another territory for the purposes of nomination

The rules of the Statutory Residence Test (SRT) determine if an individual is resident in the UK for a tax year (see RDR1).

In many other territories an individual’s tax residency status will be determined by reference to a different period e.g. a calendar year.

When an individual is resident in another territory for part but not the whole of a UK tax year then they are only regarded as being resident in the other territory for a UK tax year if they are tax resident in the other territory for more than half of the UK tax year.

 

Example

Mr C is a UK resident for all years up to and including 2016-17.

On 1 January 2017 he moves to Spain where he stays for two years.  The tax residency rules of the Spain are based on a calendar year and he is tax resident in Spain for both the year ended 31/12/2017 and 31/12/2018.

He returns to the UK on 1/1/2019 and is regarded as resident in the UK for the tax year 2018-19.

For the purposes of the nomination rules Mr C would be regarded as resident as follows:

2016-17            resident in the UK only

2017-18            resident in Spain only

2018-19            resident in UK and Spain

 

Where for a UK tax year an individual is regarded as resident in both territories then for the purposes of nomination they may not need to satisfy the day count for the property they wish to nominate.

 

            Example

After returning to the UK from Spain, Mr C acquires a residence in the UK on 1 February 2019. He also acquires a holiday home in Spain on 1 March 2019.

 

As a UK resident the normal time-limits for nomination apply (see CG64495) but the day count would not need to be met for 2018-19 for the residence in Spain for it to be eligible for nomination. This is because he is also regarded as resident in Spain for these purposes. For later years the day count (see CG64582) would need to be met for the nomination to continue to endure

 

If Mr C had acquired a residence in France he would not be resident in that territory for 2018-19 so the day count (see CG64582) would need to be considered.

 

If there are no rules for determining residence in a territory for tax purposes then the rules of the SRT are applied as if the other territory was the UK.

Example

if the individual was resident in that territory for 183 or more days in the UK tax year they would be regarded as resident in that territory for the year.