Application of split year treatment to component income and gains (2013/14 onwards)

Produced by Tolley
Application of split year treatment to component income and gains (2013/14 onwards)

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Application of split year treatment to component income and gains (2013/14 onwards)
  • Overview of the split year test
  • Application of split year treatment to component income and gains
  • Employment income
  • Pension income
  • Trading income
  • Partnership income
  • Property income
  • Savings and investment income
  • Relevant foreign income
  • More...

A person’s liability to UK tax is determined by his residence and domicile status. From 6 April 2013, a person’s residence is determined using the statutory residence test. See the Determining residence status (2013/14 onwards) guidance note. For details of domicile and why it is important for UK tax purposes, see the Domicile guidance note.

Although residence is usually determined for the tax year as a whole, it may be possible to split the year into periods of UK residence and non-residence if the person comes to the UK or leaves the UK and meets certain conditions.

Overview of the split year test

Since 6 April 2013 split year treatment for residence status has been codified. Previously the treatment was available by the application of extra-statutory concessions and these concessions have been replicated as closely as possible in the legislation.

It is possible to split the tax year into periods of residence and non-residence if the individual is resident in the UK in that tax year (using the statutory residence test) and his circumstances fall within one of eight ‘Cases’:

  1. Case 1 ― loses UK residence by virtue of working abroad

  2. Case 2 ― the partner joins the individual overseas where the individual satisfies Case 1

  3. Case 3 ― leaves the UK and no longer has a home in the UK

  4. Case 4 ― starts to have a home in the UK and has no home overseas

  5. Case 5 ― starts to work in the UK

  6. Case 6 ― comes to the UK after ceasing work abroad

  7. Case 7 ― accompanies a partner who satisfies Case 6

  8. Case 8 ― starts to have a home in the UK, which continues throughout the following tax year

FA 2013, Sch 45, Part 3, paras 44–51

Split year treatment is not relevant for those who are not resident in the UK under the statutory residence test. Instead the individual will be not resident for the whole tax year of arrival or departure.

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