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I returned to england from spain in august 2013 and intend

Resolved Question:

I returned to england from spain in august 2013 and intend to remain here permanantly.
I am british and was uk tax resident before I moved to spain 10 years ago where I was spanish tax resident. I am a uk state pensioner.
I sold my house in spain in july 2013 and understand I am liable for spanish taxation for year ending december 2013. however I do not know what my position is here in england and I have done nothing so far tax wise towards this. I find it very confusing.
many thanks
sheila north
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello,
You are not liable to capital gains tax on any disposal of assets you make during the tax years for which you are wholly not resident and not ordinarily resident in the UK, providing they are not assets held for the purpose of a trade, profession or vocation carried on through a branch or agency in the UK. If you return to the UK you will be liable on gains from any disposals during the tax year of return.
You are most likely worried because you returned in the same year that you sold the property. You became resident in the UK during a tax year, you were neither resident or ordinarily resident in the UK at any time during the 5 tax years immediately preceding the 2013 year, you are, by concession , liable to capital gains tax only on gains arising from disposals made after the date of your arrival.
Since you sold the property in July and returned to the UK in August you would not be taxed in the UK on the sell.
Customer: replied 3 years ago.

thank you, XXXXX XXXXX the income tax aspect I am concerned with as I have not paid any here since my return as from August 2013 to April 2014 I am under the allowance but wonder if I am liable for the entire year?

Expert:  TaxRobin replied 3 years ago.
I will need to release your questions.
I think another expert will be able to assist you better with your remaining questions.
If you have not advised HMRC yet about your return another expert will be able to advise you on the best steps to take now.
Customer: replied 3 years ago.

OK, thank you

Expert:  TonyTax replied 3 years ago.
Hi.

Can you confirm whether or not you had a home in the UK whilst you were living in Spain.
Customer: replied 3 years ago.

no, did not have any property in uk whilst living in spain.


 

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.

Hi again.

The UK tax residency rules changed with effect from 6 April 2013. You can read them here and here. My answer is based on the assumption that you have not returned to the UK to work or have just ceased full time work in Spain or you are the spouse or partner of someone who has been living and working overseas who has returned to the UK.

Since you will be living in the UK for 183 days or more in 2013/14, you will be tax resident in the UK. However, you will be entitled to split the tax year of your return to the UK into UK resident and non-UK resident periods if you meet the following criteria:

CASE 4 (PAGE 59 OF RDR3)

1 You must be UK resident for the 2013/14 tax year. You will be as you will have spent 183 days or more in the UK by 5 April 2014.

2 You must be non-UK resident for 2012/13. I assume you were.

3 You must not meet the only home test at 6 April 2014, ie you had no UK home at 6 April 2014 or if you did you also had a home overseas but at some point in 2013/14, you only have a UK home and continue to do so for the rest of the 2013/14 tax year. You should satisfy this test.

4 You must not meet the sufficient ties test for that part of the 2013/14 tax year before the day which you met the only home test (6 April 2013 to the day before your UK home became your only home). The sufficient ties are as follows:

a You had a UK resident spouse or civil partner, unless you were separated.

b You had a place to live in the UK.

c You worked more than 3 hours a day in the UK.

d You spent more than 90 days in the UK in one or both of the 2011/12 and 2012/13 tax years and

e the UK is the country in which you spent the most number of days during the 2013/14 tax year unless you were not resident for all of the 2010/11, 2011/12 and 2012/13 tax years in which case you can discount this tie.

As you arrived in the UK between 1 August and 31 August 2013, you will fail the ties test and not be eligible for the split year treatment under Case 4 if, between 6 April 2013 and the day before your UK home became your only home if you were in the UK for:

a between 19 and 37 days and had 4 UK ties in the period or

b between 38 and 50 days and had 3 or more UK ties in the period or

c over 50 days and had 2 or more UK ties.

 

If your UK home became your only home or it was acquired in July 2013, then the number of days can be changed to 15 to 30 for a, 31 to 40 for b and over 40 for c. See Table F on page 60 of RDR3 here.

If you don't fall foul of the UK ties test, then you will qualify for split year treatment for the tax year of your return to the UK and will not have to pay UK tax on your income for the period 6 April 2013 to the day before your UK home became your only home. If you pay Spanish tax on any of your income received after your UK home became your only home then you will get credit for the Spanish tax paid against your UK liability on the same income. However, if your income from the day you returned to the UK is less than the UK personal allowance you won;t have any UK tax to pay for 2013/14. You will be entitled to the full UK personal allowance for 2013/14.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 3 years ago.
I've just noticed some typos. The amendments are as follows:

3 You must not meet the only home test at 6 April 2013, ie you had no UK home at 6 April 2013 or if you did you also had a home overseas but at some point in 2013/14, you only have a UK home and continue to do so for the rest of the 2013/14 tax year. You should satisfy this test.
Customer: replied 3 years ago.
That is so comprehensive that I have only just managed to read and digest it, and it does appear that I will be eligible for spilt year taxation, is this a form I can print off from gov site or could someone act for me. Thank you for your help which I will rate as excellent.
Expert:  TonyTax replied 3 years ago.
Thanks.

There isn't a form for split year taxation for 2013/14. Such a claim is be part of the residence, remittance pages SA109 of a tax return. You can find the 2012/13 pages here. The 2013/14 pages won't be available until after 5 April 2014. You can register for self-assessment by completing a form SA1.

You may not need to complete a tax return if your only income in the UK part of 2013/14 is a state pension and it is covered by the personal allowance. If, however, you receive other pensions, then you need to contact the tax office on the number here to make sure your tax codes are correct.
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