Call for Assistance: 02033 259 341
Spondoo Accounting
Call for Assistance: 02033 259 341
Spondoo Accounting

Split Year Treatment Explained- do I need to report Non-UK Income During Partial Residency

February 3, 2024

If you’ve recently relocated to the United Kingdom or departed the country midway through a tax year, and you qualify as a UK tax resident under the Statutory Residence Test, then you may be eligible to apply for the Split Year Treatment. This unique tax provision allows individuals to categorise a portion of the tax year as overseas/non-resident and the remaining part as a UK resident.

Understanding Split Year Treatment:

The concept of Split Year Treatment is a beneficial tax strategy for taxpayers undergoing transitions in their residency status within a tax year. By utilising this approach, individuals can streamline their tax obligations and ensure that they only report and pay taxes on the income relevant to the UK portion of the year.

Clarifying Income Reporting:

When opting for Split Year Treatment, it is essential to note that individuals are only obligated to report income associated with the UK-resident portion of the year. This means that non-UK income earned during the non-resident part of the year does not need to be included in the tax reporting process for the United Kingdom. Instead, only the income generated during the UK-resident period is subject to UK taxation.

Navigating the Statutory Residence Test:

To qualify for Split Year Treatment, individuals must satisfy the criteria outlined in the Statutory Residence Test. This test considers factors such as the number of days spent in the UK, connections to the country, and other relevant circumstances. Meeting these criteria establishes one’s eligibility to claim Split Year Treatment and determines the tax obligations for the respective periods of residency.

For expatriate tax experts, please get in touch today.

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Information provided on the site is merely guidance that may change in line with UK law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Spondoo is a trading name for Accounting SQL Limited, authorised & license accounting firm under the Institute of Financial Accountants.
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