CG25430 | Disposal of assets situated abroad: Example 2
From HM Revenue & Customs · Capital Gains Manual
An individual resident but not domiciled in the UK has a foreign bank account in a foreign currency, F. The rate of exchange is 2F = £1 throughout this example. The account contains the following entries:
| Date | - | Amount |
|---|---|---|
| January 2009 | Balance | Nil |
| January 2009 | Deposit: sale of foreign shares A | 90,000F |
| - | (cost 48,000F in December 2005) | - |
| February 2009 | Withdrawal: purchase of foreign | 30,000F |
| - | shares B | - |
| March 2009 | Withdrawal: brought to UK | 30,000F |
The gain arising is first calculated in sterling, thus:
| - | - | £ |
|---|---|---|
| Proceeds | 90,000F | 45,000 |
| less Cost | 48,000F | 24,000 |
| - | Foreign Chargeable Gain | 21,000 |
Next, the account is analysed into capital and gains to give the composition of the balance of the account (90,000F - 30,000F = 60,000F) immediately before the March transfer, turning the gain back into foreign currency thus:
| - | - | Capital | Capital Gain | Total |
|---|---|---|---|---|
| January 2009 | Deposit | 48,000F | 42,000F | 90,000F |
| February 2009 | Withdrawal to buy foreign shares | 16,000F | 14,000F | 30,000F |
| - | Balance | 32,000F | 28,000F | 60,000F |
The transfer of 30,000F is then split between capital and foreign chargeable gains according to the mixed fund rules (see CG25380+), so it is treated as containing 28,000F (£14,000) of gains and 2000F (£1000) capital. There is therefore a remittance of £14,000 of the gain on foreign shares A.