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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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Remittance Basis: Accessing the remittance basis: Exceptions to the claim requirements: Below £2,000 threshold users: Years of arrival and departure - interaction with Extra Statutory Concession (ESC) D2

ESC D2 may apply to an individual for the year in which they arrive or leave the year.

Broadly speaking an individual arriving in the UK who has not been resident or ordinarily resident in the United Kingdom for five years before the year of arrival is not chargeable on capital gains made between the start of that tax year (6 April) and their date of arrival - refer to Capital Gains Manual CG10974.

An individual leaving the UK who was not resident and not ordinarily resident in the United Kingdom for at least four out of seven years before the year of departure is not chargeable on capital gains made between the date of departure and the following 5 April - refer to Capital Gains Manual CG10976.

However in considering whether the ‘below £2,000 threshold’ RDRM32110 limit applies under ITA07/s809D, the level of un-remitted foreign income and gains for the entire tax year must be taken into account.

Example

Niamh comes to the UK on the 27 July 2010. She is resident in the UK for the tax year 2010-11 but has not been resident in the UK at any time previously.

She has no foreign income in that year.

Niamh’s foreign chargeable gains for the period 6 April to 26 July 2010 total £13,000. No foreign chargeable gains accrue in the period 27 July 2010 to 5 April 2011.

Niamh remits £8,500 of her chargeable gains to the UK in that year.

At the end of the year her total un-remitted foreign chargeable gains are £4,500. Note that even though Niamh’s gains for the period 6 April 2010 to 26 July 2010 are not chargeable to tax by virtue of ESC D2, she still has to include any foreign chargeable gains that arose before she entered the UK in considering the £2,000 threshold.

As Niamh’s un-remitted foreign income and gains are above the threshold she cannot use the remittance basis under s809D. If she wishes to use the remittance basis she will need to claim under ITA07/s809B, and will lose her personal allowances and the annual exempt amount.