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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am returning to UK in December after working full time (5

Resolved Question:

I am returning to UK in December after working full time (5 weeks annual holiday split between UK and USA) in the UAE and Qatar for the past 14 years. My wife remained uk resident and we have a home in UK throughout this period. I have no CGT issues. Will I be able to claim split year for income tax?
Submitted: 8 months ago.
Category: UK Tax
Expert:  Tony Tax replied 8 months ago.

Hi.

So long as you have you have been treated as non-UK resident for the period that you have been working in the UAE and Qatar you can claim split year treatment for the 2013/14 tax year if you retun to the UK in that year. The 2013/14 tax year will be split into an overseas period and a UK period. The dates that split the tax year into two may vary depending on which criteria you qualify for split year treatment.

The split year treatment rules used to be in a concession called Extra Statutory Concession D2 but this ceased to have effect from 6 April 2013. The new rules for split year treatment are now part of the tax legislation and the details can be found in the Statutory Residence Test Guidance Note here (section 5, para 5.28 onwards). A summary of the qualifying criteria can be found here (section 4).

If you look at page 29 of the guidance note, it tells you how many ties to the UK you will have needed to have avoided having based on the number of days you spent in the UK (on a pro-rata basis for part of a tax year). You only had two ties to the UK, a home and your wife.

You should qualify for split year treatment for 2013/14 under either Case 4 (if your only home is in the UK, paras 5.26 to 5.29 of the guidance note) or Case 5 (if you start a job in the UK in 2013/14, paras 5.3 to 5.32 of the guidance note). You cannot qualify under Case 6 (section 5 paras 5.33 to 5.39 of the guidance note) as you were not UK resident in any of the four tax years prior to 2012/13, the year before your proposed return to the UK. Cases 7 and 8 do not apply at all.

If you meet the criteria in Case 4, the 2013/14 tax year will be split into two periods. The first (the overseas period) will start on 6 April 2013 and end on the day before the earliest date that you only have one home, ie no home abroad. The second period (the UK period) will start on the date the overseas period ends and will run to the end of the 2013/14 tax year on 5 April 2014.

If you meet the criteria in Case 5, the 2013/14 tax year will be split into two periods. The first (the overseas period) will start on 6 April 2013 and end on the date you start a full time job in the UK and meet the automatic third UK test for UK residence. The second period starts on the day in 2013/14 that the overseas period mentioned above ends and will run to the end of the 2013/14 tax year on 5 April 2014.

If you meet the criteria in both Cases 4 and 5, the UK part of the 2013/14 tax year will start from the earlier of the two dates in 2013/14 that your residence in the UK is deemed to start.

I hope this helps but let me know if you have any further questions.

Customer: replied 8 months ago.


Many thanks for your excellent reply.


Just an afterthought - I have been in receipt of a small private pension income during the past 14 years which was below my annual allowance. Since February 2011, I have also received state pensions which, when added to my private one, has meant that I have been paying about 50 pounds per month tax.


Would this have any effect on my situation?


 

Expert:  Tony Tax replied 8 months ago.

No, it won't, though the pensions for non-residents are usually taxable in the country of residence.

Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14012
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and 2 other UK Tax Specialists are ready to help you

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