IR20 - Residents and non-residents liability to tax in the United ...

This guidance does not apply from 6 April 2009. The guidance it contains is replaced by the
guidance provided in HMRC6 – Residence, Domicile and the Remittance Basis. It is kept
available for those people who need to make reference to IR20 for their tax affairs before
5 April 2009.
the UK during that year or if you are resident in the UK for any part of it.
If any of these conditions is not met, there is no charge to capital gains tax on gains
arising on the disposal of assets during your temporary non-residence. Similarly, losses
arising in these circumstances will not be allowable losses for capital gains tax
purposes.
8.6 Where the special rules apply, you may be able to claim relief from tax in the year in
which you resume residence in the UK, if at the time you disposed of the assets you
were a resident of a country with which the UK has a double taxation agreement. Any
such relief (which may take the form of credit for the overseas tax or, in some cases,
exemption from UK tax) will depend on the terms of the relevant agreement. In certain
circumstances you may also be able to claim credit for overseas tax against UK tax
where there is no double taxation agreement.
Non-residents with a UK branch or agency
8.7 If you are neither resident nor ordinarily resident in the UK and carry on a trade,
profession or vocation through a branch or agency in the UK, you will be liable to capital
gains tax on any gains on the disposal of assets in the UK which were used in the trade,
profession or vocation, or by the branch or agency. You may also be liable to capital
gains tax if the activity ceases or you transfer the assets outside the UK.
Overseas assets
8.8 An overseas asset is one situated outside the UK under the capital gains tax rules. For
assets such as land and most types of movable property the asset is situated where it is
located. For other assets (for example shares and securities) the rules are more
complex. Your Tax Office will be able to advise you further.
If you are resident or ordinarily resident in the UK, and dispose of overseas assets, you
will normally be liable to capital gains tax on any gains arising. But if you are not
domiciled in the UK, and the remittance basis applies either by default (for years up to
and including 6 April 2008) or, for years from 6 April 2008 onwards, because of an
election you are taxed on such gains only to the extent that they are received in or
remitted to the UK in a tax year for which you are resident or ordinarily resident in the
UK. There is no capital gains tax charge on gains remitted to the UK before you become
resident in the UK. (See also paragraph 5.12 on the remittance basis.) Where the
proceeds of a disposal are remitted, an appropriate proportion of the proceeds is treated
as a remittance of the gain.
Gains in a foreign currency
8.9 Where prices are expressed in a currency other than sterling, we calculate gains on the
basis of sterling equivalents of the considerations for acquisition and disposal,
converted at the date of purchase or sale as appropriate. Except where it is for personal
expenditure outside the UK, foreign currency is a chargeable asset for capital gains tax
purposes. Its disposal in return for any other asset will normally give rise to a
chargeable gain or allowable loss.
Exempt assets
8.10 Gains on the disposal of gilt-edged securities and qualifying corporate bonds are exempt
from capital gains tax.
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HMRC 03/09