I5.1217 Capital gains tax—trustees' emigration charge
Emigration charge on non-resident trusts
Where UK resident trustees become non-resident, for example due to the resignation of UK resident trustees who are replaced by non-resident trustees, they are deemed to have disposed of all the assets held in the trust at the time of emigration and to have reacquired them at their market value1. If this deemed disposal gives rise to a capital gain then, immediately before the trustees cease to be resident, they are chargeable to a CGT emigration, or 'exit', charge on that gain.
Trust assets are subject to the exit charge unless they:
• continue to be used for the purposes of a trade carried on by the trustees in the UK through a branch or agency2 or, in the case of corporate trustees, through a permanent establishment3, or
• are exempt from CGT under a double taxation agreement4
A similar charge arises where trustees remain UK resident but are also treated as resident in another country by virtue of a double taxation agreement, ie they become 'dual resident', so that they are not liable to UK tax on gains on the disposal of trust assets5.
Emigration charge reliefs
Deferral of emigration charge for UK interests in land
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