RDRM31340 - Remittance Basis: Introduction to the Remittance Basis: Comparisons with pre-April 2008 regime: Other changes - capital gains foreign losses

Before tax year 2008-2009 the remittance basis automatically applied to non domiciled individuals in respect of their foreign gains. These individuals were only taxed when they remitted any gains to the UK. However, they could not get capital gains tax relief for losses arising on foreign assets for those years.

For years from 2008-2009 remittance basis users may make an election under TCGA92/s16ZA if they wish to offset foreign losses against foreign chargeable gains. The election must be made for the first tax year for which the individual makes a remittance basis claim under s809B. There are specific rules which deal with the ordering of the use of these losses. Also refer to RDRM31170 foreign chargeable gains.

You should refer to the Capital Gains Manual (CG25330+) for full details of the election, and how such losses may be utilised.

For years from 6 April 2017 (2017-2018 tax year), with the introduction of deemed domicile, the rules governing foreign loss elections have been amended.

From 2017-2018 losses on the disposal of foreign situs assets will be allowable losses if the individual is deemed domiciled for the year. If a s16ZA election was in place and that individual becomes deemed domiciled any losses that have accrued but not been used will be available to offset against gains.

If any individual loses their deemed domiciled status - by being non-UK resident for six years or more - and subsequently becomes UK resident again, but not domiciled, then a fresh foreign loss election can be made. The normal rules apply, so this is triggered (as now), by the first year in the later period, for which remittance basis is claimed. The election is irrevocable but would only apply to the later period.

This will not apply to individuals who became deemed domiciled because they were born in the UK with a UK domicile of origin, because they are unable to claim the remittance basis.

For years when the election was in force the special rules concerning the allocation of allowable losses are unaffected.