ARTICLE · 16 MAY 2014

Splitting The Tax Year

Smith & Williamson

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The new statutory residence test, applying from 6 April 2013, contains provisions allowing the tax year to be spilt into ‘overseas’ and ‘UK’ parts.

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The new statutory residence test, applying from 6 April 2013, contains provisions allowing the tax year to be spilt into 'overseas' and 'UK' parts. Specified items such as capital gains realised and foreign income received in the overseas part are not taxable in the UK.

Determining whether an individual coming to live in the UK qualifies for split year treatment is not for the faint hearted. In most cases, where the treatment is allowed, it is also necessary to look at conditions applying in the year before and after arrival. All the relevant split-year cases must be checked, as more than one may apply.

Consider an individual returning to live in the UK after working in Dubai for four years. Logic would suggest that the year would be split on the day they left Dubai. However, this will almost never be the relevant date.

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