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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello,
I will need this query answered by someone who is familiar with non-resident taxation.
I am a UK citizen but have been non-resident since 1992, working variously in the Middle East, Asia and Africa over many years. I have been officially non-resident for tax purposes with HMRC since that time. I file an annual UK tax return each year with the non-resident tax office (the one in Newcastle) for a few UK income lines such as rent on a property that I own etc. So my UK tax affairs are all in good order and very clean.
My question relates to relocating back to the UK. I will relocate in July 2016, to work for the UK office of my employer. I will therefore immediately become resident again for tax purposes and will notify the tax office of this in advance.
I do however have 2 questions, one hopefully fairly simple, and 1 perhaps more complex:
Q1) I assume I will be eligible for split tax year treatment and therefore not be eligible for UK income tax for the salary that I earn during the tax year from April up until July before I return to live in the UK. Please can you confirm or give your thoughts on this.
Q2) I expect to receive a performance bonus for the annual period up to the end of June 2016 in respect of the company's annual performance system,. The company's financial year ends on June 30th (this is why I do not relocate until July). However the bonus will not are not physically paid until the end of September, (therefore, I will only receive it a few months after I have once again become UK tax resident). The bonus will be paid by the company's Singapore entity, not by the UK entity as it in respect of work done for the Singapore entity in the previous year. So I will receive the bonus after I relocate to the UK, but it will be only in respect of a period before I relocated back to the UK. ie: the question probably revolves around the concept of accrual basis versus cash basis for the purpose of my UK income tax liability. Will the HMRC demand to tax me on that bonus payment even though it was fully related to a period when I was non-resident for tax purposes?
I am happy to pay for this advice from a suitably knowledgeable expert in this field.
Best regards, TM
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Leave this with me while I take a look at and prepare an answer. It will take a while so please bear with me.
Expert:  TonyTax replied 1 year ago.

Hi again.

1 You should qualify for split year treatment under Case 5 of the rules which you can read in Section 5 of RDR3 here. There are some brief notes here.

2 The bonus should not be taxed in the UK. Take a look here, here, here and here for the authority and reference to the relevant legislation. Example 2 in EIM4007 seems most appropriate to your circumstances.

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

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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