Rules will be introduced to prevent gains on assets held before departure from escaping the charge, where the gains are rolled-over or otherwise deferred on the acquisition of assets during the period of absence. In applying the charge full regard will be had to the terms of any tax treaty with the country in which the taxpayer is resident at the time the gain is made. The revised extra statutory concession will apply to any individual who ceases to be resident or ordinarily resident in the United Kingdom on or after today, or becomes resident or ordinarily resident on or after 6 April 1998. The text of the revised concession is attached as an annex to this press release. The proposed new legislation will apply to gains arising in the tax years between a taxpayer's departure from, and arrival back, in the United Kingdom as a result of a period of temporary residence abroad.
Gains made in the tax years of departure and arrival are chargeable under the existing law.
It provides that any gains made by an individual after his departure for tax residence abroad are not chargeable to capital gains tax for the tax year of departure. It also provides that any gains made by an individual before arrival for tax residence here are not chargeable for the tax year of arrival, but only provided the individual has not been resident here at any time during the period of 36 months immediately preceding the date of arrival. The extra-statutory concession is being amended, with effect from today for departures and from 6 April 1998 for arrivals, broadly to reflect the terms of the proposed new legislation. An extra-statutory concession is a relaxation which gives taxpayers a reduction of liability to which they are not entitled under the strict letter of the law. Most concessions are made to deal with what are, on the whole, minor or transitory anomalies under the legislation and to meet cases of hardship at the margins of the code where a statutory remedy would be difficult to devise or would run to a length out of proportion to the intrinsic importance of the matter.