Finance Act 2008

Chargeable gains

62 After that section insert—

“16ZA Losses: non-UK domiciled individuals

(1) In this section “the relevant tax year”, in relation to an individual, means the first tax year for which—

(a) section 809B of ITA 2007 (claim for remittance basis) applies to the individual, and

(b) the individual is not domiciled in the United Kingdom.

(2) An individual may make an election under this section for the relevant tax year (in which case sections 16ZB and 16ZC have effect in relation to the individual for the relevant tax year and all subsequent tax years).

(3) If an individual does not make such an election, foreign losses accruing to the individual in—

(a) the relevant tax year, or

(b) any subsequent tax year except one in which the individual is domiciled in the United Kingdom,

are not allowable losses.

(4) Sections 42 and 43 of the Management Act (procedure and time limit for making claims), except section 42(1A) of that Act, apply in relation to an election under this section as they apply in relation to a claim for relief.

(5) An election under this section is irrevocable.

(6) In this section “foreign loss” means a loss accruing from the disposal of an asset situated outside the United Kingdom.

16ZB Individual who has made election under section 16ZA: foreign chargeable gains remitted in tax year after tax year in which accrue

(1) This section applies to an individual for a tax year (“the applicable tax year”) if—

(a) the individual has made an election under section 16ZA,

(b) foreign chargeable gains accrued to the individual in or after the relevant tax year (within the meaning of section 16ZA) but before the applicable tax year, and

(c) by reason of the remission of any of the foreign chargeable gains to the United Kingdom, chargeable gains are treated under section 12 as accruing to the individual in the applicable tax year (“the relevant gains”).

(2) Section 2(2) or (4) has effect for the applicable tax year as if the relevant gains had not accrued.

(3) The amount on which the individual is charged to capital gains tax for the applicable tax year is (instead of the amount given by section 2(2) or (4)(b), as reduced under section 3) the sum of—

(a) the adjusted taxable amount, and

(b) the amount of the relevant gains.

(4) “The adjusted taxable amount” is—

(a) if section 3(1) (annual exempt amount) does not apply to the individual for the applicable tax year, the amount given by section 2(2) or (4)(b) as it has effect by virtue of subsection (2), and

(b) otherwise, so much of that amount as exceeds the exempt amount for the applicable tax year (within the meaning of section 3).

(5) In subsection (1) “foreign chargeable gains” has the meaning given by section 12(4).

(6) For the purposes of subsection (1)(c) foreign chargeable gains are remitted to the United Kingdom if they are regarded as so remitted for the purposes of section 12.

16ZC Individual who has made election under section 16ZA and to whom remittance basis applies

(1) This section applies to an individual for a tax year if—

(a) the individual has made an election under section 16ZA for the tax year or any earlier tax year,

(b) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for the tax year, and

(c) the individual is not domiciled in the United Kingdom in the tax year.

(2) The following steps apply for the purpose of calculating the amount on which the individual is to be charged to capital gains tax for the tax year.

• Step 1

  Deduct any relevant allowable losses from the chargeable gains referred to in subsection (3) in the order in which they appear there (starting with paragraph (a) of that subsection).

  If allowable losses are deductible from the chargeable gains referred to in subsection (3)(b) but are not enough to exhaust them all—

  (a)

  those chargeable gains are to be ordered according to the day on which they accrued,

  (b)

  the losses are to be deducted from those gains in reverse chronological order (starting with the last chargeable gain to accrue), and

  (c)

  if allowable losses are deductible from chargeable gains that accrued on a particular day but are not enough to exhaust all of the chargeable gains that accrued on that day, the amount deducted from each of those chargeable gains is the appropriate proportion of the losses.

  In paragraph (c) “the appropriate proportion”, in relation to a chargeable gain, is the amount of that gain divided by the total amount of the chargeable gains that accrued on the day in question.

• Step 2

  Treat the amount referred to in section 2(2) or (4)(a) or 16ZB(3)(a) as being equal to—

  (a)

  the amount it would be if there were no relevant allowable losses, minus

  (b)

  the total amount deducted under Step 1 from chargeable gains within subsection (3)(a) or (c).

(3) The chargeable gains are—

(a) foreign chargeable gains accruing to the individual in the tax year, to the extent that they are remitted to the United Kingdom in that year,

(b) foreign chargeable gains accruing to the individual in that year, to the extent that they are not so remitted in that year, and

(c) chargeable gains accruing to the individual in that year (other than foreign chargeable gains).

(4) Chargeable gains treated as accruing under section 87 or 89(2) (read, where appropriate, with section 10A) are not within any paragraph of subsection (3).

(5) Chargeable gains treated as accruing under section 12 are not within subsection (3)(c).

(6) For the purposes of subsection (3) foreign chargeable gains are remitted to the United Kingdom if they are regarded as so remitted for the purposes of section 12.

(7) In this section—

• “relevant allowable losses” means the allowable losses that section 2(2) provides may be deducted from chargeable gains accruing to the individual in the tax year, and

• “foreign chargeable gains” has the meaning given by section 12(4).

16ZD Section 16ZC: supplementary

(1) This section applies if section 16ZC applies to an individual for a tax year.

(2) Any allowable loss deducted under step 1 of section 16ZC(2) is to be regarded (for the purposes of section 2(2)(b)) as allowed as a deduction from chargeable gains accruing to the individual in the tax year.

(3) If a deduction is made under step 1 of section 16ZC(2) from a foreign chargeable gain within section 16ZC(3)(b), the amount of the foreign chargeable gain is reduced by the amount deducted.”