What is split-year treatment for UK income tax?

Full answer

Split-year treatment is a provision within the UK Statutory Residence Test (SRT) framework (introduced by Finance Act 2013, Schedule 45 FA 2013) that applies in certain years of arrival or departure from the UK. Without split-year treatment, the UK taxes residents on their worldwide income and gains for the entire tax year (6 April to 5 April) in which they are UK resident. Split-year treatment can divide that year so that only the UK part attracts full UK tax on foreign income and gains. There are 8 specific cases that can trigger split-year treatment. Cases for departure from the UK: Case 1 -- starting full-time work overseas; Case 2 -- the only or main home becomes overseas (partner leaves UK first); Case 3 -- ceasing to have a UK home. Cases for arrival in the UK: Case 4 -- starting to have only a UK home; Case 5 -- starting full-time work in the UK; Case 6 -- ceasing full-time work overseas; Case 7 -- the partner of someone in Case 5 or 6; Case 8 -- starting to have a UK home after having no UK or overseas home. The tax effect: in the overseas part of a split year, UK tax is only charged on UK-source income (employment income for UK duties, UK property income, etc.). Foreign income arising in the overseas part is not charged to UK Income Tax (though gains rules differ). For Capital Gains Tax: CGT applies only to gains on disposals in the UK part of the split year if you are non-UK resident in the overseas part. How to claim: split-year treatment is claimed on the Residence, remittance basis etc. (SA109) pages of the Self Assessment return. You must identify which of the 8 cases applies and state the date on which the UK part begins or ends. Interaction with double tax treaties: some UK tax treaties override the domestic split-year rules, so always check treaty provisions when leaving for a specific country.

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