Residence ― UK leavers

Produced by Tolley in association with Annette Morley

The following Employment Tax guidance note Produced by Tolley in association with Annette Morley provides comprehensive and up to date tax information covering:

  • Residence ― UK leavers
  • Introduction
  • Income tax
  • Split year treatment under the SRT
  • NIC on leaving the UK
  • Employment whilst overseas

Residence ― UK leavers


Changes to UK residence status affect employees leaving the UK in different ways depending on factors which include:

  1. the reason they are leaving

  2. their new location

  3. the location of their employer

  4. the nature of their employment

  5. the anticipated duration of their absence from the UK

The statutory residence test (SRT) determines an individual’s UK residency status. It is used for income tax purposes but not for NIC.

The SRT is examined in detail in the Statutory residence test guidance note, but main points of the rules are included here where relevant to explanations. Note that there is no longer any reference to ‘Ordinary Residence’ as that concept has been abandoned. The principles behind it have all been incorporated within the SRT.

For further action points when an employee leaves the UK, see the Outbound employees ― payroll issues and Reporting requirements on leaving the UK guidance notes.

Those leaving the UK ‘temporarily’ are covered in the Temporarily overseas guidance note. That note covers not only individuals leaving the UK for a relatively short term, but also the rules affecting individuals since 6 April 2013 who return within five years.

Income tax

The basic position is that where an individual is resident in the UK for any part of a tax year, he is taxed on his worldwide income and gains for the whole of that year as if UK resident throughout.

ITEPA 2003, s 20 sets out what taxable earnings are from an employment in a tax year in which the employee is non-UK resident (and where he is UK resident but non-UK domiciled).

Where an employee working abroad is not resident in the UK and all the duties of his employment are carried out overseas, there are no general earnings giving rise to a UK tax charge. It is therefore critical to determine whether or not there continue to be UK duties after the employee leaves to live abroad because, if so, UK tax will continue to

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