RDRM35290 - Remittance Basis: Amounts Remitted: Mixed Funds: Example 2 - sale proceeds

In Year 1 (2010-2011), Jason purchases shares in a foreign company for 拢8m. The 拢8m is accepted as representing Jason鈥檚 鈥榗lean鈥� capital, being perhaps an inheritance or similar such windfall.

In Year 3 (2012-2013), Jason later sells the shares for 拢10m, which produces a 拢2m chargeable gain. The sale proceeds are credited in Year 3 to his overseas bank account that contains some relevant foreign income from the last two tax years, but no other monies.

There is now a mixed fund, containing capital from Year 1, and a foreign chargeable gain from Year 3 and some relevant foreign income from Years 2 and 3.

Later in Year 3 Jason, a remittance basis user, brings 拢5m to the UK from that account. The ordering rules in ITA07/s809Q mean that all of the relevant foreign income and the 拢2m gain from Year 3 is treated as remitted before any of the capital can be considered as remitted.

If the mixed fund also included other amounts of income or capital gains for that tax year (Year 2 or 3), those amounts must also be taken into account before any of the 鈥榗apital鈥� element of the proceeds, (that is the 拢8m that is not a gain) realised by the sale of shares can be considered.