When an individual comes to or leaves the UK part way through a tax year, subject to certain conditions, the period can be split into resident and non-resident periods for the purpose of determining tax liability.

In the UK part of the period, the individual is taxed as a UK resident, and in the overseas part of the period the individual is taxed as non-resident.

Tax year will be a split year if:

• Individual is UK resident for that year under SRT (statutory residence test), and
• Circumstances fall within any of Cases 1 to 8 (see below).

If the individual is non-resident for the year, split year treatment is not required and the individual will be non-resident for the whole of the tax year.

Split year treatment is automatic; an individual cannot elect for the split year treatment not to apply. Split year rules apply to income tax and capital gains tax.

Cases 1 to 3 apply to individuals leaving the UK and Cases 4 to 8 apply when the individual arrives to the UK.

Case 1

Case 1 applies where the individual leaves the UK to start full time work overseas. Overseas part of the tax year starts on the day the individual starts work full-time overseas.

Case 2

Case 2 splits the year when the individual leaves the UK to join their partner while partner is working full time overseas (and partner’s circumstances are as Case 1 above)

Under case 2, overseas part of the tax year starts on the later of:

• The day an individual joins their partner overseas, or
• The day on which partner starts to work full-time overseas.

Case 3

Case 3 splits the year where an individual leaves the UK to live abroad; they must cease to have a home in the UK at some point in the tax year. Return to UK from date of departure to 5 April must be fewer than 16 days. Within six months of ceasing to have a home in the UK they must have sufficient links with an overseas country.

Under Case 3, overseas part of the tax year starts on the day an individual ceases to have a home in the UK.

Case 4

Case 4 splits the year where an individual starts to have their only home in the UK. This Case does not apply if an individual still has a home overseas.

Where the Case is split under Case 4 the UK part of the tax year starts on the day the individual has their only home in the UK.

Case 5

Case 5 splits the year where an individual starts full time UK work.

Where the year is split under Case 5 the UK part of the tax year begins on the day the individual starts full-time work in the UK.

Case 6

Case 6 splits the year where an individual comes to the UK after ceasing full-time work overseas.

Where the year is split under case 6 the UK part of the tax year will start the day after the overseas work ceases.

Case 7

Case 7 splits year where an individual returns to the UK with their partner who has ceased working overseas (under circumstances that fall within Case 6).

Where the year is split under Case 7 the UK part of the tax year starts on the later of:

• The day individual moves to the UK with their partner, or
• The day on which the partner becomes UK resident under Case 6.

Case 8

Case 8 splits the year where an individual acquires a home in the UK. This Case is different than Case 4 above in that as with Case 8 the individual retains a home overseas.

Where the tax year is split under Case 8 the UK part starts on the day the taxpayer acquires a home in the UK.

Priority

Note that if the taxpayer is leaving the UK Case 1 has priority over Case 2 and Case 3.

If the taxpayer is coming to the UK the Case which has priority is the one that results in the shortest overseas part of the tax year.

Speak to an Expert

Treatment of split year is complex and requires a good understanding of current legislation. If you’re uncertain about your eligibility for meeting split year treatment, reach out to our tax team for expert assistance.