Remittance Basis: Exemptions: Business Investment Relief: Relevant Events
Business investment relief allows foreign income and gains from years in which a person was taxed on the remittance basis to be treated as not remitted to the UK when money or other property is:
- used by a relevant person to make a qualifying investment [see RDRM34330], or
- brought to or received in the UK to be used by a relevant person to make a qualifying investment.
This is called a ‘relevant event’ (s809VA(3) ITA2007). A relevant event is also treated as occurring when:
- proceeds from the disposal of all or part of a previous qualifying investment are re-invested in another qualifying investment ((s809VL(4)(a) ITA2007)
- disposal proceeds from the sale of exempt property [see Guidance Note: Changes to the remittance basis] are used to make a qualifying investment (s809YC(5) ITA2007)
- all or any part of a tax deposit [see RDRM34500] made in relation to the business investment relief is withdrawn by the depositor and used to make another qualifying investment (s809VM(6) and (7) ITA 2007).
Dimitri sells a previously exempt property derived from foreign income in the UK. The funds from this sale are credited to one of Dimitri’s offshore bank accounts. Dimitri then gifts £220,000 of the sale proceeds to his wife Natalie who brings the money back to the UK and invests it in a qualifying company [see RDRM34340]. Prior to the business investment relief provisions such a remittance would have been liable to UK tax as Natalie is a relevant person [see RDRM33030] and money derived from foreign income or gains has been brought to the UK (s809L ITA2007).
|From 6 April 2012 as long as the funds are used to make an investment in a qualifying company and all the associated conditions are met the £220,000 is not a taxable remittance.|
Vitas previously invested in a qualifying company using his foreign income and gains and claimed relief. As the company is now well established Vitas decides to sell his share holding and re-invest the funds in a new venture. Vitas re-invests the whole of the funds he receives for his shares in another qualifying company.
|As Vitas meets all of the qualifying conditions under the business investment relief, the funds used in the re-investment are not a UK taxable remittance of his foreign income and gains. However any gain on the sale of the original investment is a taxable gain in the UK.|