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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

Remittance basis: exempt property used to make a qualifying business investment

Exempt property, or anything into which it is converted, can be invested directly into a company to make a qualifying investment under the business investment relief provisions (see RDRM34310 onwards). To qualify the property must be invested whilst it is still exempt or within a period of 45 days of it ceasing to be exempt. A valid claim for relief must be made if the foreign income and gains the property is derived from are to be treated as not remitted to the UK (ITA07/s809Y(6)).

Where exempt property, or anything into which it is converted, is invested under the business investment relief provisions, the foreign income and gains the property is derived from are not regarded as remitted to the UK, even though the property may no longer be exempt. Where this is the case the business investment provisions apply to the foreign income and gains as they would for any other investment (s809YA(8)).

Example

Günter has the opportunity to invest in a new target company dealing in modern art. Rather than invest cash Günter decides to invest three pieces from his own modern art collection which are currently displayed in a London museum.

The three pieces were originally bought using a combination of Günter’s relevant foreign income and foreign capital gains. Günter’s total investment is £475,000 for the three pieces and Günter receives shares in the qualifying company in exchange.

Günter removes the three pieces from the museum on 10 June 2013, they are invested in the qualifying company on 30 June 2013, 20 days later

Günter makes a claim to business investment relief on his 2013-14 Self Assessment return. As Günter has met all the conditions the exempt property (and the funds originally used to purchase them), which have been used to make the qualifying investment is not considered a taxable remittance