CG25330A - Remittance basis: election for foreign losses to be allowable: TCGA92/S16ZA
Source: gov.uk (2025-09-29)


Changes from 6 April 2025

The remittance basis has been abolished and new rules have been introduced from the 2025/26 tax year.

The latest guidance can be found in RFIG (https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual) for Residence and RDRM (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis) for Domicile manuals.

Please note that cases which occur from 6 April 2025 onwards will be determined in accordance with the new rules.

An election for losses on disposals of non-UK assets (“foreign losses”) to be allowable losses must be made by an individual for the first tax year in which they claim remittance basis, see CG25312 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg25312), and in which they are not domiciled in the UK. This is known as the relevant tax year.

The procedure and time limit for making an election are governed by the rules for claims to relief etc in the Taxes Management Act. (TMA70/S42 and TMA70/S43).

If no election has been made, foreign losses of the relevant tax year and all subsequent years except years in which the individual is domiciled in the United Kingdom are not allowable losses.

Note that TCGA92/S16ZA does not itself provide for foreign losses to be allowable: that is achieved by TCGA92/S16. The effect of section 16ZA is to prevent foreign losses being allowable, unless an election is made.

The immediate effect of an election is to ensure that foreign losses remain allowable losses and that the special rules governing how those losses may be relieved apply for the relevant year and all subsequent years (TCGA92/S16ZB* and TCGA92/S16ZC*). See CG25330B (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg25330b)-CG25330E.

A non-domiciled individual who becomes deemed domiciled for 2017/18, or a later year, and subsequently loses their deemed domicile status but remains non-domiciled in the UK, can make an election for foreign losses in relation to this later period. The normal rules apply so this is triggered by the first year in this later period to which s809B ITA 2007 applies. The election is irrevocable but only applies to the later period. See example 1 and 2 below.

For the years when the election was in force the special rules concerning the allocation of allowable losses are unaffected.

Example 1

Mr A is a non-domiciled individual who has claimed the remittance basis since 2008/09. He made a foreign loss election for 2008/9 onwards. The effect of the foreign loss election will continue up to 2016/17. A is deemed domiciled in the UK from 6/4/17 (only as a result of being a long-term UK resident).

In 20019/20 he leaves the UK returning in 2026/27. He is not deemed domiciled from 6/4/26 and he claims the remittance basis for 2026/27. If Mr A wants to be able to claim foreign capital losses he will need to make a foreign loss election. The normal time limit applies. That is four years from the end of 5 April 2027 (so prior to 6 April 2031).

Example 2

Mr B. Facts are the same as A except B didn’t make a foreign loss election in 2008/09. B will have an opportunity to make a foreign loss election for 2026/27 and subsequent years.

*These provisions were re-written for disposals from 6 April 2019 see CG10150 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg10150).

Pre 6 April 2025, Non Domiciled Individuals could make an election under s16ZA TCGA 1992 to allow for Foreign Capital Losses to qualify for UK Capital Gains Relief.

As a result of the abolishment of the Remittance basis, the s16ZA election no longer applies.