Resident / non-resident

[3sixty]

I have a question for my upcoming self assessment.

The fact pattern is this:

• I am not British but have Permanent Residency in UK
• I left the UK end of July 2016, so for the tax year was only residing in UK for 117 days (April 26 days + full month of May, June & July)
• I was employed in the UK during that time, but was on sabbatical prior to being on maternity leave, so although employed, hadn't worked for the previous calendar year up to the date we left the UK
• My income is from my employment (sabbatical + maternity pay) plus rental from our UK property (separate property to the one we lived in, and owned and rented out for the whole tax year in question)

I tried to follow the SRT as best as a non-tax literate person could but:
I fail the automatic UK test as had < 183 days in UK
I fail the three automatic overseas tests

I then move on to the second automatic UK test, where 

• I did have a UK home for at least 30 days and 30 or more days fall in the tax year, so I have a qualifying UK home.
• There is a period of at least 91 consecutive days, 30 in the tax year, when we had a qualifying UK home and no overseas home (April - July 2016)

I therefore believe I should be UK resident under second residence test

However, if I read page 18 of the guidance (https://www.gov.uk/government/uploads/s ... 078500.pdf) then I would fail the 'permitted amount of time' as I left the UK and I rented a house in Malaysia for August 2016 to present day, which would mean I spent more than 30 days in the tax year in an overseas home.

I need some advice if my analysis is correct, and I should be UK Resident based on the above? I've tried to consult an accountant (3 local firms who we used before when I was in UK) but they can't advise on residency, and also spoke to HMRC who, although I am using their guidelines, cannot discuss it with me.

[GlobalTaxAdviser]

Hi

Are you working full time overseas ?

Kind Regards

GTA

[3sixty]

Thanks for your prompt reply.

No, I am not working while overseas, although technically still employed in UK as I am still on maternity leave

[GlobalTaxAdviser]

Hi

You need to look if you meet any of the criteria of split year cases maybe look at case 2 and case 3 (ceasing to have a UK home) or partner working overseas full time

Kind Regards

GTA

[3sixty]

Forgive my ignorance, but I thought Split Year was automatically applied so no need to consider?

[GlobalTaxAdviser]

You need to look at the split cases and see if they fit your circumstances and then complete the necessary pages on the tax return including only income earned while resident in the UK

[3sixty]

Yes, it appears Case 2 and 3 is relevant

So I just fill in the relevant parts in the split year part of the form? May I ask, what is the difference in rates between being taxed as UK resident and taxed as UK non-resident.

My income will be very small (as statutory maternity pay) but will also have my income from the rental of our house

[GlobalTaxAdviser]

Hi

There are no difference in tax rates between residence and non residence

You will need special software or getting an accountant to complete the return as the relevant pages for residency and split year as these pages are not available on HMRC software.

I always wondered why they did not include it

Kind Regards

GTA

[3sixty]

So the only difference is then my PA will be split on pro-ration basis on my split year basis? e.g. 90 days in UK so 90/365 x Personal allowance?

HMRC can't advise me on their own residency test criteria, and now I need specialist software as the accountants I speak to can't do Non-Resident returns... great!

[jason13]

For this year, you were a resident (with split treatment) so you get the full personal allowance. For the next year, it depends on your nationality whether you get the personal allowance. See https://www.gov.uk/tax-uk-income-live-a ... -allowance

Since you mention rental (for property in the UK?), you should also look into the non-resident landlord scheme: https://www.gov.uk/topic/personal-tax/n ... ord-scheme

You can purchase TaxCalc which is not too expensive and which supports non-resident and split treatment returns.