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Finance Act 2012

Sales of Exempt Property

251.Sections 809X to 809Z6 ITA contain certain exceptions to the remittance basis which permit an individual to bring property purchased out of unremitted foreign income and gains to the UK without being taxed on the remittance of those income and gains. These exceptions are where the property is:

  • a work of art, collectors’ item or antique brought to the UK for the purposes of public display at an approved establishment;

  • an item of clothing, footwear, jewellery or watch for personal use;

  • brought to the UK for the purposes of repair or restoration;

  • imported into the UK temporarily for a period of no more than 275 days; or

  • worth less than £1,000.

252.Such property is defined as ‘exempt property’ in section 809X ITA. Under section 809Y ITA, these exceptions cease to be available where the property is sold or otherwise converted into money whilst in the UK. This can be a disincentive to remittance basis taxpayers who wish to sell such property in the UK. The changes introduced by Part 3 of the Schedule seek to remove this disincentive by allowing exempt property to be sold in the UK without a tax liability arising.

253.In order to qualify for the exemption, the entire sale proceeds must be paid to the seller by the first anniversary of the 5 January following the tax year in which the sale takes place. This is in order to ensure that the exemptions can operate within the Self Assessment system.

254.This part of the Schedule also introduces a new rule which treats gains arising on sales of exempt property as foreign chargeable gains where the conditions are met for the exemption from the tax on the remittance of exempt property.

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