When you leave the UK during a tax year, you still have reporting responsibilities with HMRC for the year you leave and perhaps beyond.
It can be a confusing bunch of affairs but hopefully this guide will help alleviate those headaches. It is worth noting that Residency is not simple and therefore it is always best to ensure you fully understand your tax position before submitting your Tax Return to HMRC.
If you have left the UK during a tax year, it is possible to split the tax year into two parts – part 1; resident in the UK, before leaving, and part 2; non-resident, after leaving.
This effectively means you will be taxed on worldwide income during the resident period, as normal, however, once you leave the UK you will only be taxed on income sources that are within the UK.
A tax year will be a “split year” if:
You are resident in the UK for that year; and
Your circumstances fall within any of Cases 1 to 3 below.
CASE 1: Starting to work overseas.
CASE 2: Accompanying a partner overseas.
CASE 3: Ceasing to have a home in the UK.
As straight forward as they sound, they all have further requirements to satisfy. More detail on each case can be found below. It is worth noting, that you should check each case in priority order, 1 to 3.
Please note to have a split year, you must first be UK resident for the year under either the automatic residence test or the “sufficient ties” test. Which you can find more information on here
CASE 1: STARTING TO WORK OVERSEAS.
The tax year will be a split year provided that ALL of the following conditions are met:
You are resident in the UK for the previous tax year; and
You must be non-UK resident in the following tax year under the third automatic overseas test; ie, he must satisfy the “work abroad” condition; and
You must satisfy the “overseas work” criteria; ie
Work “sufficient hours abroad” (at least 35 hours per week on average);
Have no “significant breaks” from the overseas work (being 31 or more continuous days);
Spend no more than 30 days working in the UK; and
Be present in the UK for no more than 90 days.
A “completed month” here means a whole completed calendar month except from the start of the tax year (6th) to the end of April is counted as a complete month.
Where the year is split under Case 1, the overseas part of the tax year will start on the first overseas workday (being the first day on which more than 3 hours work is carried out abroad). This date is usually different from the date of departure from the UK.
CASE 2 – ACCOMPANYING A PARTNER OVERSEAS
You must have been UK resident in the previous tax year;
You have a partner** who satisfies the conditions for Case 1 (either for the tax year or the previous year);
You and your partner** must have been living together in the UK either at some point in the tax year or the previous tax year;
You join your partner** overseas in order to continue to live with them while they are working overseas;
From the point of departure, your only or main home must be outside the UK for the remainder of the tax year;
Any days spent in the UK following departure are within the “permitted limit” (being a maximum of 90 days of presence in the UK scaled down as appropriate in the year of departure); and
You must be non-resident in the tax year following departure.
**A partner will be a spouse, civil partner or a person with whom you are living together as if you were spouses or civil partners.
Where the tax year is split under Case 2, the overseas part of the tax year will start with the day on which your partner starts to work overseas or the date on which you join them overseas (whichever is later).
CASE 3 – CEASING TO HAVE A HOME IN THE UK
In this case, to be eligible for split year treatment:
You must have been UK resident in the previous tax year;
You must be non-resident in the tax following year;
You must have one or more homes in the UK at the start of the tax year and at some point in the year cease to have any home in the UK for the rest of the tax year;
Return visits to the UK between ceasing to have a home in the UK and the end of the tax year must be fewer than 16 days; and
Within 6 months of ceasing to have a home in the UK, you have a “sufficient link” with a country overseas. A “sufficient link” means that you have either;
Become resident for tax purposes in that overseas country; or
Been present in that overseas country at the end of every day for 6 months after ceasing to have a home in the UK; or
your only home is in that overseas country (or all your homes are in that overseas country).