Doreen is R/NOR and UK domiciled. 45% of her employment duties
are in the UK, the other 55% are overseas. She elects to use the
remittance basis.
Year 1: On 1 May, Doreen acquires forfeitable shares in the
US parent of her employer worth £50 for nil cost. There is no
income tax charge because of ITEPA03/S425(2).
Year 3: On 1 October the forfeiture condition lifts when the
shares are worth £100.
The full £100 counts as employment income under
ITEPA03/S426. But the remittance basis applies so only £45 of
the £100 is immediately chargeable. The remaining £55 is
foreign specific income, chargeable to income tax if it is
remitted.
Year 4: On 1 November Doreen sells the shares for £200
in the US. On 1 December she remits £50.
Of the £50 remitted, the first £45 is employment
income that is not relevant foreign earnings, foreign specific
employment income or employment income that has been subject to
foreign tax (ITA07/S809Q(4)(a). There is an income tax charge on
the remaining £5 under the remittance basis (by virtue of
ITEPA03/S41A(6)).
The CGT position is as follows:
| Consideration
| £200
|
|
| Less s426 charge Year 3
| (£45)
| - by virtue of TCGA92/S119A(3)(a) and S119B
|
| Less s426 chargeYear 4
| (£5)
| - remitted in the year, even though after the date
of disposal
|
| Chargeable gain | £150 |
Year 10: On 1 June, Doreen remits a further £80,
£50 of which is subject to income tax under the remittance
basis, being the outstanding amount of foreign specific income from
the £55 arising in Year 3.
The revised CGT position is now as follows:
| Chargeable gain as Year 4 above | £150 |
| Less Year 10 remittance | (£50) - if a claim is made under s119B(4) TCGA |
| Revised Chargeable gain Year 4 | £100 |
