The financial secretary to the treasury announced the Governments' intention to include changes in Finance Bill 2010 to the corporation tax rules for capital gains on companies. The changes, which took effect from 6 January 2010, will ensure that a postponed charge on gains arising where assets of an overseas branch are transferred to a non-resident company is brought back into charge at the appropriate time.

According to HMRC the changes will affect UK companies that transfer assets of an overseas branch to a non-resident company in exchange for securities consisting of shares or loan stock. In these circumstances the gains arising on the transfer of the securities are postponed until the securities are disposed of.

In certain instances the securities received can be exempt assets and as a result the postponed gain arising on transfer of an overseas branch's assets are exempt on the subsequent sale of the securities. The proposed legislative change will correct this defect and further details are available from http://www.hmrc.gov.uk/drafts/transfer-assets.htm