Long-Term Residents – Rebasing Print
Rebasing allowed a non-domicile who had paid the Remittance Basis Charge for any year before 6 April 2017, and who became deemed domiciled in the UK under the 15 out of 20 year rule on 6 April 2017 to rebase all overseas assets owned personally to their market value on 5 April 2017.
If deemed domicile occurs at a date after 6 April 2017, then rebasing is not available to that individual.
The effect of rebasing is that for disposals after 5 April 2017 CGT will only be payable on the increase in market value of the asset from 6 April 2017 up to the date of disposal.
Rebasing is only available in respect of assets held personally, and not those held within trusts or companies. It was initially unclear whether rebasing extends to gains chargeable to income tax such as offshore funds which do not have reporting status in the UK. However, HMRC has confirmed that gains chargeable to income tax may also be rebased to 5 April 2017.
The asset must have been situated outside the UK throughout the period 16 March 2016, or date of acquisition, if later, and have remained outside the UK until after 5 April 2017. This is most likely to affect chattels such as artwork which can be transported from territory to territory.
Rebasing is available on all overseas assets acquired before 6 April 2017.
Rebasing is withdrawn if the non-domicile acquires a domicile of choice of the UK prior to the disposal of the asset.
Where rebasing applies, the gains accruing in respect of the period before 6 April 2017 can be remitted to the UK tax-free as clean capital. However tax-free remittance does not extend to the funds used to purchase the asset where the purchase was made using overseas income or gains. In these circumstances if the entire proceeds are remitted to the UK, then a remittance of the funds used for the purchase is likely to give rise to a UK tax liability.
Rebasing is automatic, but applies on an asset-by-asset basis, so if the historical cost is greater than the value in April 2017, then on disposal, the individual may elect to use the historical cost of that asset instead of the rebased value.