What does section 265 of the Taxation of Chargeable Gains Act 1992 do?

Section 265 empowers the Treasury to designate certain international organisations so that any securities they issue are treated as situated outside the United Kingdom for capital gains tax purposes. This affects how gains on those securities are taxed, particularly for non-UK-domiciled individuals on the remittance basis.

What conditions must be met for an international organisation to be designated under section 265?

Two conditions must be satisfied: the United Kingdom or any of the Communities must be a member of the organisation, and the membership agreement must include provisions for tax exemption. The Treasury also has a separate power to designate any of the Communities or the European Investment Bank without meeting those conditions.

Which organisations have been designated under section 265 TCGA 1992?

Designated organisations include the International Bank for Reconstruction and Development, the Asian Development Bank, the African Development Bank, the European Investment Bank, the European Bank for Reconstruction and Development, the European Economic Community, the European Coal and Steel Community, and the European Atomic Energy Community. The list is established by Treasury order.

How does section 265 affect non-UK-domiciled individuals taxed on the remittance basis?

Because securities issued by designated organisations are treated as situated outside the United Kingdom, gains arising on their disposal may fall outside the scope of UK capital gains tax for remittance basis taxpayers. If the proceeds are not remitted to the UK, the gain would not be chargeable to UK CGT.

Taxation of Chargeable Gains Act 1992 section 265

Designated international organisations

Section 265 allows the Treasury to designate certain international organisations so that securities they issue are treated as situated outside the UK for capital gains tax purposes.

The Treasury may designate international organisations of which the UK or any of the Communities is a member, provided the membership agreement includes a tax exemption provision.
The Treasury may also separately designate any of the Communities or the European Investment Bank.
Once an organisation is designated, any security it issues is deemed to be situated outside the UK for CGT purposes.
Designated organisations include bodies such as the International Bank for Reconstruction and Development, the Asian Development Bank, the African Development Bank, the European Investment Bank, and the European Bank for Reconstruction and Development.

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