What is Split Year Treatment?
If an individual leaves the UK or Arrives in the UK part way through the Tax Year they may be able to claim split year treatment.
An individual may be considered as UK Tax Resident for the whole year and therefore Taxable on their Worldwide Income and Gains (including the part of the year when overseas). By claiming a Split Tax Year you can be cosnidered as Non Resident for the part of the year you were living or working overseas. Meaning the foreign income generated during that period would not come into Tax here in the UK.
You need to make a claim via your Tax Return for Split Year Tax Treatment.
How their Tax Return will be split:
a UK part for which their will be charged UK tax as a UK resident
an overseas part for which, the individual will be charged to UK tax as a non-UK resident. Therefore, only taxable on UK sourced income.
Benefits of Split Year Treatment
Reduced Tax Liability: As per split year treatment it only requires them to pay tax on foreign income earned while they were resident in the UK.
Avoid Double Taxation: They aren't required to pay tax on the same income twice in two different countries.
Avoiding Penalties: Split Year Treatment ensures that they report their Tax Residency situation accurately and avoids penalties for HMRC expecting Tax to be paid on Foreign Income.
Circumstances for Split Year Treatment
Beginning Full-time Work Overseas
Partners of people working abroad full-time
Leaving the UK permanently to live abroad
Moving to the UK to live or work full-time
Check Eligibility for Split Year Treatment By Checking What Case Applies to You Cases 1-8 can be found via the link below:
Split Year Treatment can be quite complex, if you think you meet any of the criteria it may be worth getting in touch with us to help make sure you aren't paying more Tax than you should be.
If you require any advice/guidance when claiming split year treatment, we would be more than happy to assist. Book a free consultation below.
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