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Where Taxpayers and Advisers Meet

Split Year Treatment with Time deposit income while come to UK

kingbirdogd
Posts:3
Joined:Thu Apr 22, 2021 8:46 pm
Split Year Treatment with Time deposit income while come to UK

Postby kingbirdogd » Thu Apr 22, 2021 8:57 pm

I start a time deposit in Hong Kong on 20th February 2020, the source of funds is from Hong Kong, I was a Hong Kong tax resident at that time. The time deposit maturity date is 22nd February 2021 and I will get the interest HKD 30,000 , around 3000 pounds on that day(22nd February)

I arrived UK on 19th August 2020 because I got a job in UK, I became UK tax resident on that day, but I can't withdraw my time deposit before I came to UK

I receive my interest in my Hong Kong account on 22nd February 2021, the amount is HKD 30000, around 3000 GBP.


I am quality for Split Year Treatment. So can I split this saving interest income to UK tax resident part and non-UK resident part? because my saving interest date of the resolution is 20th February 2020 which I was still HK tax resident but not UK tax resident. And I have no plan and no intention to go to the UK on 0th February 2020


Thanks & Regards.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Split Year Treatment with Time deposit income while come to UK

Postby maths » Fri Apr 23, 2021 3:10 pm

The interest is subject to UK income tax on 22 Feb 2021 on its receipt despite split year treatment for tax year 20/21.

If you are non-UK domiciled albeit UK resident which seems likely, so long as you don't remit the interest to the UK no UK tax charge should arise.

kingbirdogd
Posts:3
Joined:Thu Apr 22, 2021 8:46 pm

Re: Split Year Treatment with Time deposit income while come to UK

Postby kingbirdogd » Fri Apr 23, 2021 6:50 pm

The interest is subject to UK income tax on 22 Feb 2021 on its receipt despite split year treatment for tax year 20/21.

If you are non-UK domiciled albeit UK resident which seems likely, so long as you don't remit the interest to the UK no UK tax charge should arise.
I must pay UK tax although I don't remit the interest to the UK because it's over 2000 pounds
Meanwhile I can't choise 'remittance basis' because I will lost all personal allowance in UK.

Can I paid tax and claim back by dual resident?
https://www.gov.uk/government/publications/dual-residents-hs302-self-assessment-helpsheet/dual-residents-2021-hs302

I still have Permanent home in Hong Kong and my nationality and citizenship is still in Hong Kong

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Split Year Treatment with Time deposit income while come to UK

Postby maths » Sun Apr 25, 2021 2:23 pm

Either for the UK tax year 20/21 you were UK resident only; HK resident only; or dual resident.

If your were dual resident the UK/HK taxation agreement would resolve this. If it was resolved in favour of the UK you would be subject to UK tax on the interest (unless you elected for remittance treatment).

If your dual residence was resolved in favour of HK then no UK tax charge would arise.

kingbirdogd
Posts:3
Joined:Thu Apr 22, 2021 8:46 pm

Re: Split Year Treatment with Time deposit income while come to UK

Postby kingbirdogd » Mon Apr 26, 2021 1:34 am

Either for the UK tax year 20/21 you were UK resident only; HK resident only; or dual resident.

If your were dual resident the UK/HK taxation agreement would resolve this. If it was resolved in favour of the UK you would be subject to UK tax on the interest (unless you elected for remittance treatment).

If your dual residence was resolved in favour of HK then no UK tax charge would arise.
I am sure I am a dual residence in both UK and HK because I spend more than 300 days in Hong Kong in the past 2 tax years. Hong Kong IRD had given me a residency certification for the tax year 2020/2021. And I still have tax returns from UK dual 1st April 2020 - 18th August 2020, most of HK income had taxed there.
And I still have a permanent home in Hong Kong which I own it for more than 8 years and I lived there before I came to UK.
But I just holding a 5-year working visa in UK and I don't have a permanent home here(I moved home twice in the past 6 months)
So If I claim my permanent home still in Hong Kong, my UK home(short term rental) is just temporary for I am working here with a working visa, I should be resolved as Hong Kong resident regarding the hong kong uk double tax treaty by tier break a said:

"he shall be deemed to be a resident only of the Party in which he has a
permanent home available to him; if he has a permanent home available
to him in both Parties, he shall be deemed to be a resident only of the
Party with which his personal and economic relations are closer
(“centre of vital interests”)";

Is any possible for HMRC to challenge me if I declare.
"I just have a permanent home in Hong Kong which I own and live there for 8 years, but my UK accommodation is temporary rent because I must work in UK and I just hold a 5 year limited working visa. And at this moment(tax year 2020/2021) I have no intention to settle down(domiciled) in the UK in the future."

And If I make this declaration to HMRC, do I still have right to change my intention in future tax years like 2021/2022 or 2022/2023?


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