What is split-year treatment for UK tax?

Full answer

Normally UK residence is decided for a whole tax year (6 April to 5 April) under the Statutory Residence Test -- you are either resident or not for the entire year. Split-year treatment is an exception: when you arrive in or leave the UK partway through a year, the year is split into a UK part and an overseas part, and your worldwide income is only within the UK tax net for the UK part. For the overseas part you are generally taxed only on UK-source income. This prevents the unfair outcome of being taxed in the UK on foreign income earned before you arrived or after you left. Split-year treatment is not optional or elective -- it applies automatically if your circumstances fall within one of the statutory cases. The cases cover situations such as starting full-time work abroad, your partner starting full-time work abroad, ceasing to have a UK home, coming to the UK to start full-time work, coming to the UK to live, or your only home becoming a UK home. Each case has strict conditions on timing, days spent in the UK and the existence of a home, and only one case can apply, with tie-breaker ordering rules where more than one could. Worked illustration: you leave the UK on 30 September to start a full-time job overseas. If you meet the relevant case, you are taxed as a UK resident on worldwide income only up to the split date and as non-resident afterwards, so your overseas salary from October onward is outside UK Income Tax (subject to UK-source rules and any double-tax treaty). Income Tax bands and the Personal Allowance still operate, but on the UK-part income. The rules are technical and fact-specific -- confirm your case against HMRC's RDR3 guidance or take advice. Use the income tax calculator to estimate UK tax on the income that falls in the UK part of the year.

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