Income Tax Act 2007 section 809YC

Effect of disapplying section 809Y

Section 809YC explains what happens to the tax treatment of foreign income and gains when exempt property is sold in the UK but the usual deemed remittance rules under section 809Y are disapplied because the sale proceeds are taken offshore or used to make a qualifying investment.

• When exempt property is sold and section 809Y is disapplied (by virtue of section 809YA), the foreign income and gains originally used to acquire the property continue to be treated as not remitted to the UK, despite the property losing its exempt status.
• However, if any part of the sale proceeds is subsequently brought back to the UK or otherwise dealt with after being taken offshore or invested, this can trigger a remittance of the underlying foreign income and gains at that point.
• The sale proceeds are treated as containing the same composition of income and gains (by type and amount) as the exempt property contained when it was originally brought to or received in the UK — any clean capital or UK gains on the sale are disregarded for this purpose.
• Where the sale proceeds are used to make a qualifying business investment, the business investment relief provisions apply to the continuing non-remitted income and gains, but only to the portion of the investment funded by the disposal proceeds.