Consequential amendments: capital gains tax
197.Paragraph 119 replaces existing section 10A of TCGA with new sections 10A and 10AA. The new section 10A replaces the concepts of intervening year, year of departure and year of return in the existing section with temporary period of non-residence (defined in paragraph 113), year of departure (defined in paragraph 114) and period of return (defined in paragraph 115).
198.The amendment to section 2 of TCGA in paragraph 93 means that gains arising in the overseas part of a split year will not be charged under that section but will instead be charged under new section 10A of TCGA if the individual meets the temporary non-resident conditions set out in this Part.
199.Subsection (1) of new section 10A restricts the scope of the section so that it only applies if an individual is temporarily non-resident (as defined in paragraph 110).
200.Subsection (2) of new section 10A provides that the individual’s gains or losses within subsection (3) are chargeable to capital gains tax as if they were chargeable gains or losses accruing to the individual in the period of return.
201.Subsections (3) to (5) of new section 10A replace the existing subsections (2), (5) and (9B) and take into account split years. The more general carve-out in subsection (5) enables the structure of the legislation to be simplified and also corrects a defect in the current legislation which prevents a charge in certain cases of treaty non-residence.
202.Subsection (6) of new section 10A provides that subsection (2) is subject to sections 10AA and 86A of TCGA.
203.Subsections (7) and (8) of new section 10A replicates the effect of the existing rules in subsection (6) that limit the losses available in accordance with section 13 of TCGA.
204.Subsection (9) of new section 10A replicates the effect of the existing subsection (9ZA).
205.Subsection (10) of new section 10A provides that the terms temporarily non-resident, temporary period of non-residence and the period of return are as defined in Part 4 of this Schedule.
206.Subsection (11) of new section 10A provides the meanings of foreign chargeable gains, remitted to the United Kingdom and year of return.
207.New section 10AA of TCGA contains provisions supplementary to new section 10A of TCGA.
208.Subsection (1) of new section 10AA replicates the effect of the existing section 10A paragraphs (3)(a), (b), (c) and (d).
209.Subsection (2) of new section 10AA defines the term “relevant disposal” for the purposes of section 10AA.
210.Subsection (3) of new section 10AA replicates the effect of subsection (4) of the existing section 10A.
211.Subsection (4) of new section 10AA replicates the effect of subsection (9C) of the existing section 10A.
212.Subsection (5) of new section 10AA replicates the effect of subsection (7) of the existing section 10A.
213.Paragraph 120 substitutes a new section 86A of TCGA to make it compatible with new section 10A of TCGA and to correct for consequential amendments that were missed in FA 2008. New section 86A ensures that gains that are taxed under section 86 of TCGA in a period of return because section 10A applies do not include gains that have already been charged to tax under section 87 of TCGA. This may happen if non-UK resident trustees make capital payments to beneficiaries that section 87A of TCGA matches to trustees’ gains that accrued in a period of temporary non-residence for the settlor.
214.Subsection (1) of new section 86A gives the conditions for the section to apply.
215.Subsection (2) of new section 86A gives the definition of “matched capital payment”.
216.Subsection (3) of new section 86A provides for the amount charged on the returning settlor under section 86 of TCGA to be reduced if new section 86A applies.
217.Subsection (4) of new section 86A sets out the amount of the reduction.
218.Subsection (5) of new section 86A sets out the amount by which the trustees’ gains available to be matched under section 87 of TCGA are reduced if those gains have been taxed under section 86 of TCGA as modified by new section 86A.
219.Subsections (6) and (7) of new section 86A also deal with the reduction of the trustees’ gains. The rules ensure that the reduction cannot take the gains below zero. It will apply if capital payments have been made to which the reduction in new section 86A does not apply because they are not charged to tax.
220.Subsection (8) of new section 86A provides various definitions.
221.Paragraph 121 amends section 96 of TCGA. The changes are consequential to the changes made to section 10A of TCGA.
222.Paragraph 122 amends section 279B of TCGA. The changes are consequential to the changes made to section 10A of TCGA.
223.Paragraph 123 amends Schedule 4C to TCGA. The changes are consequential to the changes made to section 10A of TCGA.
224.The remaining provisions in this Part insert new rules into ITEPA, ITTOIA and ITA concerning the taxation of certain income and gains arising in a temporary period of non-residence.
