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HMRC internal manual

International Manual

Non-residents trading in the UK: profits of the PE: PE capital gains chargeable on the non-resident

For detailed guidance on the circumstances when non-residents are chargeable on capital gains and the scope for their relief or roll-over of capital gains see CG13550+. The EU Mergers Directive may also apply affecting the tax consequences of cross-border mergers and demergers, transfers of assets and share exchanges (CG45700 - CG45739).

In general, a disposal of an asset will be an occasion of charge and the non-resident will be chargeable to Capital Gains Tax or Corporation Tax as appropriate in respect of the gain if:

  • at the time of the disposal the trade, profession or vocation continues to be carried on through the UK PE


  • the asset is situated in the UK


  • at or before the time of the disposal the asset has been

    • used in or for the purposes of the trade, profession or vocation


* used or held or acquired for the purposes of the PE. 

TCGA92/S275 defines where different types of asset are situated for the purpose of that Act.

Furthermore, disposals are deemed to have occurred if an asset that is a chargeable asset is transferred abroad or ceases to be used in the UK because of the cessation of the non-resident’s activities in the UK.

UK tax liability will not arise in respect of any capital gains if the profits of the non-resident’s activities in the UK are exempt under a double taxation agreement. Our double taxation agreements normally preserve the UK taxing rights on capital gains on assets situated in the UK or forming part of the business property of a permanent establishment in the UK.