SolvedCG25302 | Individual becoming deemed domiciled for 2017/18 only under condition B - rebasing
From HM Revenue & Customs · Capital Gains Manual
Changes from 6 April 2025
The concept of domicile as a relevant connecting factor in the tax system has been replaced by a system based on tax residence.
Please note that cases which occur from 6 April 2025 onwards will be determined in accordance with the new rules.
Part 3 Sch 8 FA(No2)2017
An individual who becomes deemed domiciled only under condition B of s835BA ITA2007 on 6 April 2017 will be entitled to rebase certain foreign assets to their market value at 5 April 2017 for the purposes of calculating the chargeable gain or loss on the disposal of that asset.
This is subject to a number of conditions.
For the individual:
Section s809H (claim for remittance basis and a charge applies) applied to the individual in relation to 2016/17 or an earlier year
The individual was resident in the UK for 2017/18
For 2017/18, and each year up to and including the year in which the disposal is made, condition B of s835BA is met (i.e. he is deemed domiciled under the 15 out of 20 rule) and the individual has not otherwise become domiciled in the UK
Condition A of s835BA ITA2007 does not apply to the individual (e.g. rebasing is not available where the individual is born in the UK with a domicile of origin in the UK)
For the year of disposal the individual is not domiciled in the UK at any time in that year under common law
It is important to consider each point but in particular points iii) and iv) will significantly restrict the number of cases where rebasing may apply.
For the asset:
It was held on 5/4/17
The disposal is made on or after 6/4/17
It was not situated in the UK at any time in the period from 16/3/16 (or acquisition if later) to 5/4/17
Additional points:
For c) above:
where under S127/TCGGA92 (including that section as applied by sections 132,135 and 136 of that Act) an original and a new holding of shares or other securities are treated as the same asset, the test is applied to both the original and new holding (see CG51805+ for guidance on S127)
certain periods when an asset was brought into the UK for repair or public access will be discounted when considering whether an asset was UK Situs. In addition certain personal items may not be considered UK situs. The rules in para 42 Sch 8 FA(No2) 2017 follow the general approach taken with the remittance basis. Guidance on the remittance basis is in the Residence, Domicile and Remittance Basis manual at RDRM34000+.
Rebasing of an asset only affects its base cost for the purposes of calculating the amount of the gain (or loss) arising on disposal. It does not act to remove any previously rolled over gains from the calculation of the gain arising. The rebased acquisition cost would be reduced by the roll-over relief previously allowed.
Rebasing applies for the computation of the gain or loss for the purpose of TCGA 1992 and so is available for units held personally in a non-reporting status offshore fund.
Rebasing can apply where non-UK situs assets are held under nominee arrangements or in a partnership that is transparent for capital gains tax purposes.
On disposal of an asset an election can be made for the rebasing not to apply to that asset. An election is irrevocable and can be made within normal time limits. There is no prescribed form for an election (e.g. it can be made with the computation submitted with the Tax Return).