Bigtaff

I left the UK in December 2009, after filling out a P85 to inform the Revenue I was leaving and also completed a tax return form from which I received a bit of tax back. They have now sent me another tax return form, which may be done automatically by computer so may be in error. My question is, if I left in December 2009 and moved to Dubai, am I going to have to pay tax on my earnings from December 2009 to April 2010 that I earnt here in Dubai? It states on the Revenue site that if I'm in the UK for 183 days or more in a tax year then I'm resident in the UK for that tax year, so I'm guessing I may have to?

typical

You will want to read this FAQ:

http://www.hmrc.gov.uk/cnr/faqs_general.htm#16nr

It might be worth getting advice from someone who knows what they are talking about...

Bigtaff

Yeah, I know. I've tried contacting my accountant back in the UK but I think he is in hiding?! It doesn't explain on the website whether it means that if you return after working away for less than 183 or in general in that tax year, even if you continue to live abroad after that tax year. I guess I will need to ring the revenue directly

typical

What do you mean by 'return'?

You have to leave the country and stay non-resident (subject to the usual 90 day limit) for at least one full tax year.

By doing so, you effectively split the leaving year into 'resident' and 'non-resident' periods, paying UK tax* on the former and not on the latter.

I believe (but may well be wrong) that the 90 day limit is pro-rated during the split year, using the usual formula per HMRC6:

(Total days visiting the UK / Total days since leaving) * 365.



* I'm talking specifically income tax - stuff like CGT is different and I don't know a thing about it.

Bigtaff

By return I mean that, for example, I leave the UK on the 5th May 2009 and return on the 5th November 2009 and have worked abroad for those 183 days in the same tax year (just approx, for this example) and am back home at the end of it to continue as a UK resident. Where as, in my situation, I haven't returned, I am continuing to live abroad.

Or am I completely wrong on all this

I had forgotten about that 90 day rule and I think that is an average over 3 years, isn't it? i.e 90 per year, not 90 per 3 years. Or 183 in one tax year if you are only away for one tax year? I think the 90 day rule should apply to me then, as I don't intend on going home! I will ring the revenue, just to concrete it!

typical

If you leave 5th May and return 5th Nov the same year, you'd be UK resident for tax purposes throughout.

If you left 5th Nov 2009 for full time work and stayed out until at least 5th May 2011 (so spending the full 2010-2011 tax year as a non-resident), and HMRC agree you are non-resident, you would not be liable to UK tax for the period 5th Nov 2009 - 5th May 2011.

Yes, that's right (maximum of four years average, though).

You have to be under both the 91 average and the 183 yearly maximum. So if you're out for 18 months, your maximum stay in the UK would be 136 days: (136/548)*365 = 90.58.

You can see this more clearly from the example on page 52 of HMRC6, along with more of the nuance that I'm skipping over.

My advice is worth what you pay for it...

Bigtaff

Happy days then! I left 5th December 2009 and have been back for 1 week since (holiday), next will be Xmas (for 2 weeks) and thats it for the period 5th Dec 2009 ---> 1st April 2011. So I should be exempt?

Your advice is appreciated, honestly! Not in money form, no, but appreciated all the same

Meow

If you spend more than 90 days in the Uk in any tax year you can expect to pay UK income tax on all earnings, including overseas earnings. The split year rule (183 days you refer to) is a HMRC concession and you must assume that you are liable, unless you end up being UK non-resident for tax purposes for a full five tax years after which partial years like yours become exempt.

Take a look at my blog for general tax advise and contact me if you want specific information.

typical

That's not what my (company provided) advisor said. Also not how I'd read EIM42850.

Oh dear... *sigh*

Meow

The split year rule is a concession only and there is no guarantee that it will apply.

typical

Sure thing, but I'd read the text "This concession is extended..." as meaning the previous requirement "ceases to reside in the United Kingdom if he has left for permanent residence abroad" (which I assume is why you say the five year limit is in place) didn't have to apply.

Blah, good job I did some saving.

kittycat1

Meow- how do you get your head around all of this- its so confusing- you must be a genius! I bet you have a maths alevel!

Meow

It's my job & I've been doing it for more years than I care to admit to. Turning jargon & technical ramblings into normal English is what I do

gottheTshirt

Your contract of employment must cover from the day you left to the day you return and it must include a complete tax year. Providing you then spend no more than 90 days in the UK in the tax year then you do not pay tax from the day you left to the day you return.

Meow

Sorry, but that is not correct. You have not allowed for partial years.
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