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Finance Act 2012

Nominated Income

232.Part 4 of the Schedule amends the rules which determine the tax treatment of nominated income and gains remitted to the UK.

233.Paragraph 20 of the Schedule disapplies section 809I ITA where the new £10 test is not met.

234.Sub-paragraph (2) of paragraph 20 introduces the £10 test into section 809I(1).

235.Sub-paragraph (3) of paragraph 20 defines a ‘nomination year’ for the purposes of section 809I as any year in which an individual has nominated income and gains under section 809C ITA.

236.Sub-paragraph (4) of paragraph 20 introduces the £10 test as new subsections (5) and (6) of section 809I. An individual will breach the £10 test in a tax year where they have remitted any of their nominated income and gains and the amount of nominated income and gains from any one tax year which is remitted exceeds £10. Provided an individual never nominates more than £10 of their foreign income or gains from a particular tax year, they will never breach the £10 test.

237.Example: in year one, an individual nominates £15 of foreign income or gains and remits £5 of the nominated amount to the UK.  As the total amount of nominated income and gains remitted in year one is less than £10, they do not meet the £10 test and section 809I does not apply.  In year two the individual remits the balance of nominated income from year one consisting of £10 to the UK.  The cumulative total of nominated income and gains from year one remitted to the UK now exceeds £10, so the ordering rules in section 809I will apply.

238.Paragraph 21 of the Schedule provides that the amendments made by paragraph 20 apply for the tax year 2012-13 or any subsequent tax year.

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