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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

Remittance Basis: Introduction to the Remittance Basis: Comparisons with pre-April 2008 regime: Changes to old regime - gifts and deemed disposals

Before tax year 2008-09 an individual who was not domiciled in the UK was able to dispose of an asset or assets located outside the UK for less than full market value without incurring a UK tax charge. Any gain was calculated by treating the asset as having been disposed of at market value but it was not possible for the individual to remit that gain as it did not represent money or money’s worth in his hands.


Julian assigns a painting to his trust for nil consideration. Although a gain may have accrued based on the market value of the painting, at the date of transfer it was not possible for Julian to remit that gain as no consideration was received.

Following the new rules in Chapter A1 Part 14 ITA 2007 an asset that was disposed of for otherwise than for full consideration is itself treated as deriving from the gain which accrues on its own disposal. So there will be a remittance of part or all of the gain if the original asset is disposed of, the proceeds from the sale of that asset or any funds derived from the sale are remitted to the UK for the benefit of a relevant person RDRM33030.

If in the above example, assume that the painting cost Julian £10,000 but the market value when he gave it to the trust was £100,000. The deemed gain on disposal to the trust is £90,000; but as no actual cash changed hands the gain itself cannot be remitted. Section 809T therefore treats the painting as derived from the gain, so that if the painting is remitted to the UK the deemed gain is also treated as remitted. So if the trustees of Julian’s trust assign the painting to him and he brings the painting to the UK and hangs it on the wall of his home there is a remittance of Julian’s gain, because the painting is treated as deriving from his gain.

Note: The examples in this and later Chapters below are designed simply to illustrate the basic principles. The Chapters use the phrase remittance of ‘foreign chargeable gains’, or refer to such gains being ‘remitted’. This phrase is used throughout as convenient shorthand. Foreign chargeable gains will usually be part of the proceeds from the sale of an asset, which will likely be a mixed fund. You will need to refer to this Chapter together with RDRM35000.

Refer to the Capital Gains Manual for further information about capital gains computations on assets disposed of other than by way of bargain at arms length.