Split year treatment

An individual’s residency status in the UK undergoes specific considerations, especially regarding taxation, particularly during periods of arrival or departure from the country within a tax year. However, the Statutory Residency Test (SRT) allows for split year treatment under certain circumstances, effectively dividing the tax year into two segments:

1. UK Part: Where the individual’s UK and worldwide income are assessed in the UK.
2. Overseas Part: Where only the individual’s UK income is assessed in the UK.

Split year treatment eligibility is determined by meeting specific criteria, and once applicable, it must be claimed as it’s not optional.

Eight distinct cases govern split year treatment, categorized based on whether the individual is leaving or arriving in the UK:

For individuals leaving the UK:
1. Starting full-time work overseas.
2. Partner of someone starting full-time work overseas.
3. Ceasing to have a home in the UK.

For individuals arriving in the UK:
4. Starting to have a home in the UK only.
5. Starting full-time work in the UK.
6. Ceasing full-time work overseas.
7. Partner of someone ceasing full-time work overseas.
8. Starting to have a home in the UK.

Each case has specific conditions that must be met, including residency status in preceding and subsequent tax years, employment status, and housing arrangements.

It’s crucial to note that if an individual doesn’t spend a complete tax year outside the UK, split year treatment cannot be claimed when leaving the country.