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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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Remittance Basis: Exemptions: Business investment relief: Amount of foreign income or gains remitted

Where a potentially chargeable event occurs and the appropriate mitigation steps are not taken [see RDRM34440], a taxable remittance of foreign income or gains occurs immediately after the end of the relevant grace period [see RDRM34480]. The amount of foreign income or gains remitted is the amount that relates to the part of the holding affected by the potentially chargeable event. (s809VG(5) ITA2007)

Where that potentially chargeable event is something other than a part disposal of the holding, for example if either the extraction of value [see RDRM34420] or the 2-year start-up rule [see RDRM34430] is breached, the affected amount is the whole of the investment. (s809VG(6)(b) ITA2007)

Where the potentially chargeable event is a part disposal of the holding, the investment affected is equal to the portion disposed of. (s809VG(6)(a) ITA2007)

Example 1

On 31 May 2012, Yuvi acquires 1000 shares in an eligible trading company, using £250,000 of his foreign income and gains. His investment meets all the conditions for business investment relief.

On 27 October 2013 Yuvi sells 500 shares and takes the appropriate mitigation steps. None of his foreign income and gains is treated as remitted.

On 19 April 2014 Yuvi sells the remainder of his holding (the other 500 shares) and fails to take the appropriate mitigation steps.

The underlying foreign income and gains are treated as remitted to the UK. The amount of foreign income or gains to be treated as a taxable remittance is half the amount originally invested, i.e. £125,000.