The non-resident tax rules provide that an individual’s non-resident tax status is determined by HMRC’s statutory residence test (SRT).
This test considers the amount of days physically spent in the UK along as well as other factors including the number of ‘ties’ or connections you have to the UK.
Just because you are not resident in the UK under the SRT, this does not mean that you will not be subject to UK tax for non-residents.
Whether or not you are UK-domiciled is entirely separate from your residency status. For those that are non-UK domiciled, there are specific tax advantages.
When returning to the UK, it is important to ensure that your UK tax residence status is considered. The tax treatment of income and gains is different for a UK tax resident and non-UK tax resident.If you are returning to the UK part way through the tax year, the ‘split year’ rules may mean that the year can be split into a period of residence and non-residence.
Leaving the UK can have a significant impact on your UK tax position.. You may be considered non-UK resident for tax purposes and so only taxable on your UK-sourced income and/or UK workdays.
Determining your residence status correctly is essential to working out the tax treatment of any income you earn following your departure. If you leave the UK part way through a tax year, the ‘split year’ rules need to be considered.
Significant changes took effect from 6 April 2017 that reduced the advantages of being non-UK domiciled and the length of time those advantages could be obtained. However, being non-domiciled for UK tax purposes can still offer beneficial tax treatment.
Non-UK nationals coming to work in the UK can benefit from several favourable tax reliefs. Ensuring residence and domicile is considered is crucial to determining the UK tax treatment of any income and gains. Preparing a self-assessment tax return can help you to claim the relevant reliefs and correctly report any taxable income to HMRC.
Reviewing the Statutory Residence Test (SRT) can be complex as there is a lot of detail packed into each of the cases and there can be a very fine line between residence and non-residence.
The client had personal family issues in the UK and wanted to ensure that he could spend the maximum time with his family before having a negative impact on his UK tax status. He was planning to spend a large period of time overseas for work purposes and was keen to learn how much time he could spend in the UK before becoming a UK tax resident. Generally speaking, as a UK tax resident, you are taxable on your worldwide income. However, as a non-UK tax resident, you are only taxable on your UK workdays and any UK sourced income (such as rental income).
Using the client’s anticipated travel pattern for the tax year in question, along with their ties to the UK, we were able to provide advice in advance of the tax year to clearly set out guidance around days allowed back in the UK, whilst still being considered a non-UK tax resident and therefore minimising the risk of any double taxation with the other countries the client was working in.
The client was able to clearly understand the days that they could spend back in the UK for work and personal reasons prior to triggering UK tax residence and was able to maximise the time spent back visiting his family, without worrying about his UK tax position.
Dr H had been working full-time for the NHS, but was retiring in 2018. He had been offered a fixed position in Qatar and was going to continue with some consultancy work, honorary assignments and lecturing.
How an individual is taxed in the UK will depend on whether they are considered a UK tax resident or not. Dr H needed tax advice to ensure he understood the tax implications associated with the move and any associated compliance requirements.
We advised Dr H on the application of the Statutory Residence Test and the potential for split year treatment prior to his move.
By working with us in advance of his move to Qatar, and the start of the tax year, he was able to understand his potential UK tax residence position, the impact of this on his taxable income. He was also able to structure his movements and lecturing assignments to mean that he would not be treated as resident for UK tax purposes in the relevant tax year. Thisultimately meant that his Qatar employment income would not be subject to UK tax, and so giving him a substantial saving.
Reviewing the Statutory Residence Test (SRT) can be complex as there is a lot of detail packed into each of the cases and there can be a very fine line between residence and non-residence.
The client had personal family issues in the UK and wanted to ensure that he could spend the maximum time with his family before having a negative impact on his UK tax status. He was planning to spend a large period of time overseas for work purposes and was keen to learn how much time he could spend in the UK before becoming a UK tax resident. Generally speaking, as a UK tax resident, you are taxable on your worldwide income. However, as a non-UK tax resident, you are only taxable on your UK workdays and any UK sourced income (such as rental income).
Using the client’s anticipated travel pattern for the tax year in question, along with their ties to the UK, we were able to provide advice in advance of the tax year to clearly set out guidance around days allowed back in the UK, whilst still being considered a non-UK tax resident and therefore minimising the risk of any double taxation with the other countries the client was working in.
The client was able to clearly understand the days that they could spend back in the UK for work and personal reasons prior to triggering UK tax residence and was able to maximise the time spent back visiting his family, without worrying about his UK tax position.
Residence refers to where you live and spend time during the tax year, while the concept of domicile was historically more about where you consider your permanent home. The concept of domicile has recently been removed for UK tax purposes and the test is now one of long-term residence, but domicile may still apply to historic matters which we can assist with.
