UK Residence vs. Working Abroad
26th April 2013
By Lyndsey Hall
If you spend any length of time working abroad, you may be used to the idea that such periods, provided they cover a full tax year, are periods of non-UK residence, and that HMRC are not interested in your income while you are out of the country. What happens is that the year in which you leave and the year in which you return are effectively split into two parts for tax purposes, so that any overseas income after you leave and before you return falls out of the UK tax net.
What has changed?
On the surface, not a lot: if you work abroad for more than a full tax year you will still be non-resident, and split year treatment can still be claimed – in fact it is now included in the legislation rather than simply as an “Extra-Statutory Concession”. But here comes the rub – the rules for UK residence or non-residence are now so much more than just an exercise in counting days: you have to look at factors such as whether you have been UK resident in the past, whether you have accommodation available in the UK, whether you have a wife or partner here, and how many work days you spend here.
Each of these factors is a “UK tie”, and the number of UK ties you have determines the number of days you can spend here without becoming UK resident. For split years, these numbers are reduced in proportion to the part of the year when you were abroad. The calculation can become quite complicated, and if you don’t do the sums before the year when you are due to come back to the UK, you could find yourself unexpectedly UK resident, with a large tax bill.
If you think you might be affected we can help you work out the position, and advise you how to stay outside the UK tax net.