SAIM4230 | Accrued Income Scheme: other excluded persons: non- residents

Non-residents

ITA07/S643 (1) excludes a person from being a transferor or transferee where they are non-UK resident throughout the tax year in which a transfer occurs and not ordinarily resident in that tax year.

Non-resident traders

ITA07/S643 (2) also excludes a non-resident who carries on a trade in the UK through a branch or agency, but not where

• the securities are situated in the UK and used for the purposes of the UK branch or agency before the transfer, or

• the securities are situated in the UK at the time of the transfer and were acquired by it for use by or for the purposes of the branch.

The rules that apply for capital gains tax purposes (TCGA92/S275 and S275C) determine where the securities are situated.

FOTRA (Free of Tax for Residents Abroad) Securities

These are securities issued by the British Government on terms that any profits or gains arising from them are exempt from UK tax provided they are beneficially owned by persons not ordinarily resident in the UK (FA96/S154).

With effect from 6 April 1998, FA98/S161 changed the status of gilts issued without FOTRA conditions. Subject to transitional provisions for the Accrued Income Scheme in FA98/S161 (2)(a), all gilts are now FOTRA securities whenever they were issued, including those issued before 6 April 1998. Persons not ordinarily resident in the United Kingdom, who dispose of or acquire the securities as beneficial owners, are therefore excluded from the AIS on transfers of such securities. See also SAIM1180.