I have been a UK resident since birth but am temporarily in Canada on secondment from my UK employer so need to determine my tax residency situation.
I left the UK on 13 July 2017 and am due to return to the UK a year later. I remain employed by my UK employer and my income is from this and savings/investments in the UK. I own my home in the UK (currently rented out) and am renting furnished accommodation in Canada.
It would be easiest if I remained a UK tax resident so I qualify for personal allowance and don’t have to deal with tax in Canada (they would consider me a deemed non-resident if UK tax resident and planning to return). Looking at RDR3, this appears to be the case for 2017/18 tax year:
- First automatic UK test – fail as only 99 days in the UK
- All 3 automatic overseas tests – fail as too much time in the UK already
- Second automatic UK test – PASS as spent many years in home in the UK of which > 30 fall in the tax year without an overseas home
I would not qualify for split year treatment as I plan to return to the UK (so would meet the first automatic UK test in 2018/19). Is that correct?
However, if I decide to move to Canada permanently instead, I will likely return for a short period to the UK (in July-August 2018) before emigrating permanently. What is the best tax approach to this?
I could work for fewer than 31 days and spend less than 91 days such that I meet the third overseas test and become a UK non-resident in 2018/19. I think then split year treatment case 1 would apply to the prior tax year (2017/18). Alternatively, I could work a bit longer then leave so the split year treatment starts from 2018/19. I’m not sure how this affects my taxation and being able to claim personal allowance (since income is at present from UK).
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