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Moving back to UK - split tax year?

Moving back to UK - split tax year?

Old Feb 19th 2015, 4:34 am
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Default Moving back to UK - split tax year?

Good Morning,

we have decided to return to the UK this year, and need clarification regards the split tax year. The key details are:

1) I have been non-resident/working overseas in the Middle East continuously since September 1st 2001
2) I will be flying into UK on 3rd July 2015
3) My work contract does not end until 31st August 2015 (I am a teacher, so July/August are Summer holidays!). I don't think this makes a difference as I think my residency will begin at the point I return,, but wanted to check.
4) I will be sending my final 3 months salary - for June/July/August - plus my gratuity, to the UK around mid June, so all of my final Dubai salary will arrive in UK before I have returned.

My understanding is:
1) All of my UAE income including gratuity will be free from an income or capital gains tax
2) I will only be taxed on income which I gain after my return on 3rd July

Is anybody familiar with the above? Meow gave me some useful advice on this about 3 years ago, but I am not sure if things have changed since then. I have asked my friend Google, but want to double check.

Thanks for any help or advice
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Old Feb 19th 2015, 7:24 am
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Default Re: Moving back to UK - split tax year?

I've been looking into this too, as I might be returning to the UK after the turn of the tax year. Near 5 years in Doha has been enough fun for now...

Have a read here to see if the Split Year Concession may be available to you. There are eight cases where the concession may apply and your eligibility will depend upon your particular circumstances.

In any event, make sure you are paid your gratuity before you become UK Resident again, which will likely be the day you return to the UK.

Regarding Capital Gains Tax, you might want to sell any significant assets (shares, investment funds, etc.) before you return to the UK, then buy them again after you return and become UK Resident again. Otherwise, from April you will have an Annual Exempt Amount of £11k to play with, and any disposals above that will attract CGT on any gains you made, including those made during your time overseas.

One last suggestion, since April 2013 you need to be able to prove you were working full-time overseas (an average of at least 35 hours per week), so bring with you a copy of your work timesheets or similar, in case HMRC call for these.

Hope this helps.

[J]
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Old Feb 19th 2015, 7:48 am
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Default Re: Moving back to UK - split tax year?

Another couple of thoughts...

If you do find yourself liable for UK Income Tax and NI for a part year, or on your gratuity, you can always salt away sufficient monies into a UK Personal Pension (online SIPP or similar) and get full income tax relief. The down side is that your pension fund is only accessible after age 55, but you can withdraw 25% tax-free then and your remaining pension will be taxed at your marginal rate (likely the 20% basic rate) when you draw it. Not sure how NI liability works, but there is probably a way of avoiding this as well.

Regarding NI, you might want to review how many qualifying years you need to secure a full UK state pension. You can pay arrears of up to 5 years, which is usually a wise investment if you will have a shortfall before you reach state retirement age. But one caveat, remember that NI contributions are mandatory if you start working again in the UK, even if you have already exceeded the required number of qualifying years. So look carefully at your own circumstances.
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Old Feb 20th 2015, 8:31 am
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Default Re: Moving back to UK - split tax year?

Originally Posted by Johnnyboy11 View Post
Another couple of thoughts...

If you do find yourself liable for UK Income Tax and NI for a part year, or on your gratuity, you can always salt away sufficient monies into a UK Personal Pension (online SIPP or similar) and get full income tax relief. The down side is that your pension fund is only accessible after age 55, but you can withdraw 25% tax-free then and your remaining pension will be taxed at your marginal rate (likely the 20% basic rate) when you draw it. Not sure how NI liability works, but there is probably a way of avoiding this as well.

Regarding NI, you might want to review how many qualifying years you need to secure a full UK state pension. You can pay arrears of up to 5 years, which is usually a wise investment if you will have a shortfall before you reach state retirement age. But one caveat, remember that NI contributions are mandatory if you start working again in the UK, even if you have already exceeded the required number of qualifying years. So look carefully at your own circumstances.
hello Johnny,

thanks for your replies, both of which are useful. I am already over 55, so OK with SIPPS, and have paid 30 years NI, so can pay the remaining 5 years if I do not get employment in UK (hoping that I do though!)

All of my final salary and gratuity will have been paid and transferred before I fly back

Thanks
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Old Feb 20th 2015, 8:33 am
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Default Re: Moving back to UK - split tax year?

Is it worth meeting with an accountant/tax adviser/IFA before I go back - ie soon!

Thanks
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Old Feb 22nd 2015, 4:30 am
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Default Re: Moving back to UK - split tax year?

Originally Posted by Victor Meldrew View Post
Is it worth meeting with an accountant/tax adviser/IFA before I go back - ie soon!

Thanks
Not really sure why getting paid your gratuity before landing in the UK prevents you from being taxed on it. Technically, aren't you taxed on all your earnings received from the start of the tax year in April? I thought the splitting of the tax year is something they might allow but is not definite. I may be wrong.

Last edited by mentalist; Feb 22nd 2015 at 4:34 am.
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Old Feb 23rd 2015, 8:03 am
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Default Re: Moving back to UK - split tax year?

isnt your eosb not liable as it was earnt overseas?
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Old Feb 24th 2015, 8:26 am
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Default Re: Moving back to UK - split tax year?

Originally Posted by mentalist View Post
Technically, aren't you taxed on all your earnings received from the start of the tax year in April?
Not if you meet the criteria for split year treatment to apply in that tax year.
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Old Feb 24th 2015, 9:42 am
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Default Re: Moving back to UK - split tax year?

Originally Posted by busybee2 View Post
isnt your eosb not liable as it was earnt overseas?
Unless they refuse to apply the split tax year, which is not impossible
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