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TonyTax
TonyTax, Tax Consultant
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I have worked overseas since 1973 and recently retired

Resolved Question:

Hi,
I have worked overseas since 1973 and recently retired in Thailand. About seven years ago I inherited a house in UK when my mother died and have since been spending about three months each year in the UK to repair and upgrade the house.
I would like to know if I was to spend a maximum of 182 days per year in the UK would it effect my non residence status and if so who much UK tax would I be liable for.
With Thanks,
George
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

You ask how much tax you would be liable for? Are you referring to a situation where you sell the UK property you own? Do you own or rent a home in Thailand? Do you stay in the UK house when you come to the UK or is it let? Have you been non-UK resident since the 1970s?

Customer: replied 2 years ago.

Hi Tony,

It is not my intention to sell my to sell my house in the UK for the foreseeable future. I use it when I come to the UK and for the time I am away it is unoccupied as I do not want to rent it out.

I own a property in Thailand and have been non-UK resident since 1973.

As far as I am aware I can stay in the UK for a maximum of 120 days per year and still retain non-residence status. My question is how would my situation change if I wanted to stay in the UK up to a maximum of 182 days in any one year?

Expert:  TonyTax replied 2 years ago.

Thanks.

Leave this with me while I draft my answer. It will take a while.

Expert:  TonyTax replied 2 years ago.
Hi again.

While you were working abroad, you were definitively non-UK resident under the automatic overseas tests(see here and from page 9 here). Now, as you spend more than 45 days in the UK in a tax year you do not meet any of the automatic overseas tests not do you meet any of the automatic UK tests so its necessary to refer to the sufficient UK ties test to determine your UK tax residence status for any one tax year.

As you were non-UK resident in the three tax years prior to your retirement, you will be treated as an "arriver" for the purposes of the statutory residence test. You should refer to the table under "Arrivers" here and to paragraphs 1.42 to 1.45 on pages 28 and 29 here.

If you spent 182 days in the UK in any one tax year, you could have no more than 2 UK ties as defined under the "Arrivers" heading here. That would reduce to 1 tie if you were UK tax resident in one or more of three preceding tax years or you spent 90 days or more in the UK in either of the previous two tax years. The tie that you have is your UK property and the one that you may acquire is that you may spend more than 90 days in the UK in a single tax year. So, spending 182 days in the UK in a tax year for the first time since 1973 may make you resident in the UK for that tax year if you spent 90 days or more in the UK in either of the previous two tax years.

You can find the tax rates and personal allowances for the UK for 2015/16 here. How much UK tax you would pay would be dependent on the type of income you have and whether any foreign tax is paid on it. Foreign pensions are given a discount of 10% so you would pay tax on 90% of one of those if you were UK tax resident. Some government service pensions might not be liable to UK tax depending on the tax treaty between the UK and the country from which the pension is derived.

From 6 April 2015, non-UK residents became liable to Capital Gains Tax in the UK on gains they make from that date on the disposal of UK residential property. Most will choose to pay only on any increase in value from 5 April 2015 but there are other options to individuals which may be more beneficial depending on their situations. You can read about this change in the law here. CGT is charged at 18% or 28% or a combination of the two rates depending on the level of the taxpayer's income in the tax year a gain is made.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Hi Tony,

Please correct me if I'm wrong but from the information you have given, I have a house in UK which counts as one tie and spending more than 90 days in the UK for the previous 2 years would count as another tie, two in total. Therefore the maximum I can spend in UK in any one year would be between 91 to 120 days?

If though I decided I wanted to spend up to 182 days per year in the UK would I then have to pay full UK tax on my pension and other sources of income or would I get some sort of tax relief because I am in the country less than 183 days in any one year and also I have financial commitments in Thailand?

Expert:  TonyTax replied 2 years ago.
Two ties to the UK limits you to no more than 120 days in the UK in any one tax year.

UK tax residency makes you liable to UK tax in your worldwide income but you would be given relief for foreign tax paid against your UK tax liability on the same income. You are either UK resident for a full tax year or you are not. There is no discount on a pro-rata basis.

Split year treatment can apply to the first tax year of arrival in the UK if certain criteria are met. Take a look at the flowchart here.
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