Can I Use Split Year To Reduce My Tax Liability On Return To The UK?

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Can I Use Split Year To Reduce My Tax Liability On Return To The UK?

We are returning to the UK after 20 years in Dubai. My husband has taken redundancy and we were hoping that his salary plus end of service benefit was going to be received and transferred to the UK before our return, unfortunately due to the slow cancellation of Visas etc this is looking less likely. He has secured new employment in UK starting 12/3, not sure how all this will affect our tax implications. Will we be liable for split year taxation or for whole of tax year

Trevor Wilkes, Principal of Trewtax Services responded as follows:

As you may be aware, liability to UK tax whilst you are employed overseas is driven by your residence status and the Statutory Residence Test. As a result, you will either be non-resident or resident for a particular tax year. For the years of departure or arrival you will be resident unless you are able to meet the strict criteria which enables you to split a tax year into non-resident and resident parts. This will therefore have a direct bearing on liability in respect of income tax and I appreciate your concern is in respect of your husband’s employment income package.

This is a particularly complex aspect and not something which can be determined from the details provided. Consequently, your husband’s tax position should be reviewed in depth and as quickly as possible bearing in mind his imminent return to the UK within the coming 2 weeks.

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.