Why were the Rebasing Election rules introduced?
The rules were included in the 2008 ‘non-dom’ changes’ to restrict the retroactive effect of those changes. Prior to 6 April 2008 a non-dom beneficiary of a non-UK resident trust could have trust gains attributed him if he received a capital payment from the trust, but those gains did not trigger a UK capital gains tax (CGT) charge in his hands. From 6 April 2008 that non-dom beneficiary can be chargeable to CGT but only if the capital payment he receives is matched with trust gains realised after 5 April 2008. A rebasing election ensures that gains accrued but not realised before 6 April 2008 will also escape a CGT charge in the hands of the non-dom beneficiary. Without such election the whole gain will be chargeable when matched, regardless as to when the asset disposed of was acquired and the non-dom beneficiary could end up paying more tax than necessary.
