I am spending some of this tax year working abroad and therefore I am not going to be a tax resident in the UK for the whole tax year. What is Split Tax Treatment, will it apply to me and how could I benefit from applying it?
Split Year Treatment is the special UK tax rule that can apply to people either moving to or from the UK during the UK tax year and may qualify to only be a UK tax-resident for part of the year.
Under the UK’s Statutory Residence Test, if you were deemed to be a tax resident for any given tax year, UK tax rules require you to apply UK tax rules to your worldwide income or gains.
If either you or your partner arrive or leave the UK during a tax year may be able to apply split year tax treatment to their situation and avoid paying tax in the UK on their worldwide income for the whole year, and only on the time that you were a tax resident in the UK.
This is particularly useful if the country you are moving to/from has a more favourable tax system than the UK as well as a double tax treaty with the UK – for example the UAE.
However, specific conditions have to be met for split year treatment to apply as highlighted below:
Split year treatment: conditions for UK leavers
The first three conditions specifically deal with people who were considered tax resident of the UK at the start of the tax year (i.e. on 6th April of any given year).
- Begin full time work outside the UK
- Your partner begins to work full time abroad and you join them
- You cease to have a home in the UK
Split year treatment: conditions for people arriving in the UK
If you begin the UK tax year as a non-resident, and were considered UK non-resident for the previous tax year and move to the UK during the tax year, you may be able to qualify for split year treatment using any of the following conditions.
- Begin working in the UK during the tax year
- You stopped working overseas, or are the partner of someone who stopped working overseas
- You establish a home in the UK
We have explained each of these conditions in more detail in our Split Year Treatment article. However, you will always need specialist advice from a tax consultant to determine if and how split year treatment could apply, including the implementation of the Statutory Residence Test to determine your UK tax residence status.
Request an initial free consultation
If you have left or arrived in the UK during the tax year and believe that you may benefit from split year treatment, we recommend requesting an initial free consultation with a tax consultant from our network to discuss your circumstances.
During this free initial 15-minute consultation the consultant will be able to listen to your case, answer any general questions and be able to provide an idea of whether you may benefit – however you may require further professional services to take full advantage.
In many cases, the key criteria for paying for any additional services is whether the tax savings will be sufficiently significant to cover any costs and earn you tax rebate. During the consultation, the consultant will be able to give you an approximation of whether this is worth pursuing and provide you with a fee quote for any services you may wish to take.
To request your free consultation, simply enter your details using the form and one of our team will select the most suitable tax consultant based on the information provided. We will then ask them to contact you directly to arrange a time to conduct your consultation.
