Personal Tax

UK income tax liability of temporary non-residents (departure from 2013/14 onwards)

Produced by Tolley
  • 19 Oct 2021 22:38

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

  • UK income tax liability of temporary non-residents (departure from 2013/14 onwards)
  • General rule ― UK income tax liability of a non-resident
  • Anti-avoidance provisions ― temporary non-residence
  • Meaning of ‘temporary non-resident’
  • Types of income affected by the temporary non-residence rules
  • Relevant foreign income
  • Provisions relating to close companies
  • Distributions from UK close companies
  • Dividends from overseas ‘close’ companies
  • Write-off of loans from a UK close company
  • More...

UK income tax liability of temporary non-residents (departure from 2013/14 onwards)

The general rule is that a UK non-resident individual remains chargeable in the UK on his UK source income, subject to the limit discussed below and any provisions to the contrary in the relevant double tax treaty between the UK and the country in which the individual is resident.

As far as foreign income is concerned, usually a UK non-resident is not chargeable on this income in the UK.

However, this is not the end of the matter: the general rule on the liability to UK income tax is extended by specific anti-avoidance legislation that prevents the individual leaving the UK for a short period of time and realising income without paying UK tax. If these rules apply, certain types of income received during the period of non-residence are taxable in the year of return. These are known as the temporary non-residence rules and they changed with effect from 6 April 2013. This means that individuals leaving the UK need to be categorised depending on whether the ‘year of departure’, as defined by FA 2013, Sch 45, Part 4, is 2013/14 (or later) or a year of departure of pre-2013/14.

This guidance note considers the income tax position where the individual left the UK on or after 6 April 2013. For details of the UK capital gains tax liability of a temporary non-resident, see the UK capital gains tax liability of temporary non-residents guidance note.

Before 6 April 2013, temporary non-residence rules existed for income tax, however their scope was much more limited. For details of the old rules, see the Temporary non-residence guidance note.

General rule ― UK income tax liability of a non-resident

As discussed in the Limit on income tax liability of non-residents guidance note, the UK income tax liability of non-residents is usually limited to the sum of:

  1. tax deducted at source (including tax treated as paid on dividends from UK companies)

  2. tax on property income, and

  3. tax on

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