Transitional provisions
27.Paragraphs 18 to 22 provide transitional rules for certain cases affected by the alteration in the rates of CGT part-way into the year 2010-11.
28.Paragraph 18 ensures that for 2010-11 gains arising before 23 June 2010 are charged at the single 18 per cent rate that applied before that date, and are not taken into account in determining which gains arising on or after 23 June 2010 are set against any unused amount of the income tax basic rate band.
29.Paragraph 19 provides a rule in relation to section 10A of TCGA. Section 10A provides that, where an individual ceases to be resident in the UK and then resumes residence within a specified time, certain gains that they realised during the period of non-residence are treated as arising in the year they again become resident. Where the resumption of residence is during 2010-11, all gains arising under section 10A are treated as arising before 23 June 2010, and are therefore chargeable at the single rate of 18 per cent.
30.Paragraph 20 provides a rule for individuals who are taxed on the “remittance basis”. This basis is available to individuals who are resident in the UK but are not domiciled here. One aspect of the remittance basis is that gains on the disposal of assets situated outside the UK are chargeable only when they are remitted (brought into) the UK.
31.Paragraph 20(1) provides that for individuals taxed on the remittance basis for 2010-11, gains remitted to the UK are treated as arising at the time they are remitted (so that the time of remittance determines whether the gains are treated as arising before 23 June 2010 or on or after that date). The provision is subject to sub-paragraph (2).
32.Paragraph 20(2) addresses the case where section 809J of the Income Tax Act 2007 applies so that a remittance is not treated as a remittance of the actual income or gains being remitted, but instead is treated as a remittance of other income or gains in accordance with a special rule. This can occur if an individual who elects for remittance basis has to pay a “remittance basis charge” of £30,000. Any gains treated under section 809J as remitted during 2010-11 are deemed to arise before 23 June 2010, so that they are chargeable at the single rate of 18 per cent.
33.Paragraph 21 deals with cases where section 86 of TCGA applies. Section 86 applies in cases where the trustees of a settlement are not resident in the UK, and the settlor of the settlement is resident and domiciled in the UK and has an interest in the settled property. The effect of section 86 is that the trustees’ gains of the year (net of losses) are effectively charged on the settlor. Paragraph 21 has the effect that where section 86 applies for 2010-11, all the gains chargeable on the settlor by virtue of that section are treated as arising before 23 June 2010, so that they are chargeable at the single rate of 18 per cent.
34.Paragraph 22 applies where trustees of a settlement are not resident in the UK and their gains are effectively charged on UK-resident beneficiaries who receive capital payments from the trust. The amount of such a charge is determined by “matching” capital payments received with trustees’ gains (net of losses). Paragraph 22 has the effect that where the receipt of capital payments in 2010-11 results in gains being charged to beneficiaries for that year, the gains matched with each capital payment are treated as arising when the capital payment was received. So gains matched with capital payments received between 6 April and 22 June 2010 will be chargeable at the single rate of 18 per cent, while gains matched with capital payments received on or after 23 June 2010 will be chargeable at 18 per cent or 28 per cent, dependent upon how much of the beneficiary’s income tax basic rate band is unused.