Since April 2008, non-UK domiciled individuals who claim the remittance basis can elect to utilise foreign capital losses in the UK (“the loss claim”). The loss claim is irrevocable once made (unless the individual becomes UK domiciled or deemed domiciled) and must be made from the first year that a non-domiciled individual claims the remittance basis as otherwise the relief is lost.
The loss claim must be made within four years after the end of the tax year in which you want to make the election, meaning an election for 20/21 must be made by 5 April 2025. The loss claim can be made on your self-assessment tax return.
Non-domiciled individuals can elect to be taxed on either the arising basis or the remittance basis:
Arising basis – individual is subject to tax on their worldwide income and gains, regardless of whether such income or gains are remitted to the UK or not.
Remittance basis – individual is only subject to tax on foreign income and gains when it is remitted to the UK.
The remittance basis is an annual election, meaning a non-domiciled individual could choose to be taxed on the arising basis one year and the remittance basis the next.
Under the arising basis, losses arising on foreign assets can be relieved against UK gains. However, once the remittance basis has been claimed, such foreign losses are not eligible for relief in the UK unless this loss claim has been made.
Once the loss claim has been made, there is a specific order in which the losses can be relieved:
- Against foreign chargeable gains, to the extent they are remitted to the UK.
- Against unremitted foreign chargeable gains.
- Against other chargeable gains (i.e. UK chargeable gains).
Due to the above strict ordering, UK gains can only be offset against foreign losses once all current year and brought forward losses (both UK and foreign) have been utilised against both remitted and unremitted foreign chargeable gains. Therefore under the loss claim, UK losses must first be offset against foreign gains before they can be utilised against UK gains. However, any unremitted foreign chargeable gains offset against available losses will not give rise to a UK tax charge if they are subsequently remitted to the UK.
So would it be beneficial for you to make the election? Please get in contact with us to discuss your options on 0207 306 9100 or email us on firstname.lastname@example.org