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HMRC internal manual

Investment Funds Manual

Offshore Funds: deduction of offshore income gains in computing capital gains: treatment of the disposal - general

Regulation 45 of SI 2009/3001

Section 37(1) TCGA 1992 gives relief where the consideration for a disposal of assets has been subject to a charge to tax on income (as an Offshore Income Gain) in other circumstances and there is also a disposal for the purposes of TCGA 1992. Regulation 45 has effect in substitution for that part of TCGA, so that an offshore income gain is deducted from the sum that would otherwise be taken as the value of the consideration on disposal for TCGA purposes. In many cases this will eliminate any charge to tax on a capital gain.

Where there is a part-disposal so that section 42 TCGA applies to determine the apportionment of acquisition costs to the disposal, the full amount of disposal consideration is taken into account for the purposes of the calculation of the fraction required by that section. In other words, the offshore income gain is not deducted from the disposal consideration for the purposes of calculating the part-disposal fraction at section 42(2) - for further details relating to part-disposals see the Capital Gains Manual.