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HMRC internal manual

Lloyd's Manual

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Syndicate accounts: taxation: premium trust fund assets: FOTRA gilts

FOTRA (Free of Tax to Residents Abroad) gilts

FOTRA securities are gilt-edged securities issued on ‘Free of Tax to Residents Abroad’ terms.

FOTRA gilts issued before 29 April 1996 were issued subject to the condition that where held by persons who are neither ordinarily resident nor domiciled in the UK no tax would ever be chargeable on them, except in relation to interest received on them as part of a UK trade.

‘Capital’ gains and losses on buying and selling such FOTRA securities (including amounts of interest accrued at the year end) have to be excluded from the syndicate result, to the extent that the syndicate members are entitled to the domicileand residence exemption. In practice this is done by agreeing a separate figure for the amount to be excluded, which is then adjusted for at member level where appropriate. It is usually referred to as ‘Exempt.’

A specific exemption for PTF assets used to be given in FA93/S174, but the same exemption is now given by more widely-applicable legislation in FA96/S154 (2).

FOTRA gilts first issued after 29 April 1996 have this condition amended, so that any capital gains or losses can be taken into account in trading computations.

After 6 April 1998, all gilts are FOTRA gilts, whenever they were issued.