ATXP6 UK
Syllabus A1. Income tax A1b. The Scope of Income Tax

A1biii. Coming to and leaving the UK

Syllabus A1biii)

Advise on the tax position of individuals coming to and leaving the UK

Tax position of individuals

Splitting the tax year

Normally, the tax status of an individual is fixed for a whole year.

However, there are some circumstances where a tax year can be split and an individual is deemed to be UK resident for only part of the tax year (UK part) and not UK resident for a part of the year (overseas part).

For the split year basis to apply, the individual must be UK resident in the tax year under the automatic tests or sufficient ties tests. 

The way the split year basis works as follows:

Leaving the UK

The split year basis applies in the tax year if the individual:

- Is UK resident in the previous year and
- Is UK resident in the current tax year and
- Is not UK resident in the following tax year and
- Leaves the UK part way through the current tax year for one of three reasons below:

Reason 1

They begin to work abroad full time.

  • Conditions
    They do not spend more than a permitted number of days in the UK after they leave (less than 91 days per tax year, reduced proportionately in the year of leaving).

  • Date of start of overseas part
    The overseas resident part will start from the date that they start the overseas work.

Illustration

Seeta has been living in the UK since she was born and is UK resident for tax purposes. She has taken up a job in India as a teacher and signed a 2 year contract to work there. 

One week after she moved to India, she started her work there on 01/11/2018.

She visited her family in the UK for 2 weeks for Christmas. 

Will the split year basis apply? When will it be applicable from?

  • Solution

    Yes it will apply because, she has been UK resident in the current and previous tax years and she is ceasing to be UK resident in the following tax year. 

    She has left the UK for one of the acceptable reasons for the split year treatment to apply – working abroad full time and she spends a limited amount of time in the UK.

    It will be applicable from the date she starts the overseas work 01/11/2018. 

    UK Part 06/04/18-31/10/18

    Overseas Part 01/11/18-05/04/19

Reason 2

They accompany or later join their partner to continue to live with them.

  • Conditions

    Their partner must satisfy the first test above of working full time abroad.

    The partner must be a spouse/civil partner with whom they have lived with at some point during the tax year.

    They have no home in the UK or if they do, they spend the greater part of their time in the overseas home.

  • Date of start of overseas part
    The overseas resident part will start from the date they join their partner.

Illustration

As Seeta left the UK to start working in India (seen above), Seeta’s husband Vishan has been a UK resident since birth, for tax purposes. 

He sold their home in the UK and moved to India to live with her on 01/02/2019. 

Will the split year basis apply? When will it be applicable from?

  • Solution

    Yes it will apply because, he has been UK resident in the current and previous tax years and he is ceasing to be UK resident in the following tax year. 

    He has left the UK for one of the acceptable reasons for the split year treatment to apply – joining his wife to continue to live with her, and they have sold their home in the UK.

    It will be applicable from the date he moves to live with her on 01/02/2019. 

    UK Part 06/04/18-31/01/19

    Overseas Part 01/02/19-05/04/19

Reason 3

They cease to have any home in the UK.

  • Conditions
    They spend minimal time in the UK (less than16 days) and they establish ties with the overseas country, for example, they buy a home there.

  • Date of start of overseas part
    The overseas resident part will start from the date that they cease to have a UK home.

Illustration

Shane and Sophie have been UK residents for the last 5 years. 

They are moving to India on 01/02/2019, they sell their home in the UK and purchase one in India on 01/03/2019. 

Will the split year basis apply? When will it be applicable from?

  • Solution

    Yes it will apply because, they have been UK resident in the current and previous tax years and they are ceasing to be UK resident in the following tax year. 

    They have sold their home in the UK and formed a tie with India by purchasing a home there. 

    It will be applicable from the date the home is purchased on 01/03/2019. 

    UK Part 06/04/18-28/02/19
    
Overseas Part 01/03/19-05/04/19

Arriving in the UK

The split year basis applies in the tax year if the individual:

- Is not UK resident in the previous year and
- Is UK resident in the current tax year and
- Arrives in the UK part way through the current tax year for one of three reasons below

  1. Reason 1
    They begin to work in the UK full time.

    Conditions
    For >=365 continuous days and did not have sufficient ties in the UK to be UK resident prior to entry.

    Date of start of overseas part
    The UK resident part will start from the date that they start the UK work.

  2. Reason 2
    They accompany or later join their partner to continue to live with them in the UK.

    Conditions
    Their partner must satisfy the first test above.

    The partner must be a spouse/civil partner with whom they have lived with at some point during the tax year.

    They are resident in the following tax year. 

    Date of start of overseas part
    The UK resident part will start from the date they join their partner.

  3. Reason 3
    They buy a home in the UK. 

    Conditions
    They did not have sufficient ties in the UK to be UK resident prior to purchasing a home in the UK. 

    Date of start of overseas part
    The UK resident part will start from the date that they buy a home in the UK.

Illustration

Brenda has been working in Spain for many years but on 01/07/2018, she came to the UK in search of other employment. 

She has no ties in the UK and has not been UK resident in the past. 

She secured herself a three year contract of employment and started work on 22/08/2018. 

Will the split year basis apply? When will it be applicable from?

  • Solution

    Yes it will apply. 

    This is because she is not resident in the previous tax year and she is resident in the current tax year (she will spend at least 183 days in the UK). 

    The condition for working full time in the UK has been satisfied. 

    It will be applicable from the date she starts the overseas work 22/08/2018. 

    Overseas Part 06/04/18-21/08/18

    UK Part 22/08/18-05/04/19