CG57370 | Non-resident companies: tax adjustment and reliefs: disposal of interest by UK resident participator
From HM Revenue & Customs · Capital Gains Manual
A UK resident who has incurred a charge under TCGA92/S13* may later dispose of their shares or other interest in the non-resident company. Any tax paid by the UK resident in pursuance of subsection (2) should be allowed as a deduction in computing the gain on the disposal of the shares or other interest. No deduction is due if the tax was paid by the non-resident company, see CG57390.
Example
Facts
June 2016 a taxpayer buys 500 out of the 750 issued shares in X Ltd, a non- resident close company, at a cost of £100,000.
March 2017 X Ltd realises a gain of £6,000. 500/750 x £6,000 = £4,000 is apportioned to the taxpayer. The amount is included in the 2016-17 Self Assessment return. The taxpayer was liable at 20 per cent and tax of £800 was due.
August 2017 the taxpayer sells the shares for £130,000.
Chargeable Gain
| - | - | - | £ |
|---|---|---|---|
| - | Disposal proceeds | - | 130,000 |
| Less | Cost | 100,000 | - |
| Less | Section 13(7) deduction | 800 | 100,800 |
| - | Chargeable gain | - | 29,200 |
* TCGA92/S13 was re-written for disposals from 6th of April 2019 see CG10150.