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bigduckontax, Accountant
Category: Tax
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I have lived in the UK all my life and since September 2010

Customer Question

I have lived in the UK all my life and since September 2010 I years have been a self-employed researcher.

On 23 June, I will be going abroad to work full time as a journalist. I will be employed on service contracts (self-employed).

I am trying to clarify whether I will be non-resident for income tax purposes.

I appear to meet the first two criteria for having a "split year" regarding my residency status for THIS tax year as:
1) I am UK resident who has been resident in the UK in the previous tax year and
2) I will be working full-time abroad until the end of this tax year.

However, the third criteria states that you must be non-resident in the UK in the following tax year. I am not sure yet whether that will be the case. It is more than likely that I will be abroad for just for one calender year.

Can you advise on my tax status if I decide that it will just be one calender year (and not a full tax year) and return to work in the UK in June 2015 and this would be affected if I if I stay abroad longer.

I read on the HMRC site that even if I qualified under the definition of ‘temporary period of non-residence’ a tax liability may arise on my return to the UK for self-employed income earned abroad. Will I have to pay UK tax on the income I earned abroad from self-employment?

Also in determining residency status it mentions having a home in the UK. I currently live at my girlfriends house (she is the owner). She will be staying in the UK. Does that count as having a home? How would this be affected if I become a co-signatory on her mortgage during the period I am away.

Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I'm Keith and happy to help you with your question.


Firstly things will go much smoother if, when you leave the UK, you send a form P85 to your tax office. HMRC will then record you as non-resident for the following tax year and split the year into two portions, one resident and one non resident. When you return to the UK you advise your tax office and the situation is reversed. However, you are correct in your thoughts that if you do return as you surmise, for tax purposes, you will never become non-resident. However, if you do use the P85 process and do stay away longer than anticipated all will be in order for your tax affairs. You need to be away for a full tax, not calender, year to achieve non-resident status and the legislation takes that back to the departure date. I suspect that you will probably not achieve this and be treated for tax purposes as resident for the whole period abroad. This means that all your world wide income in the period will be subject to UK taxation, but for most countries there are Double Tax Treaties in place which allow tax deducted by overseas governments to be allowed as tax credits against UK liabilities.


Living at your girl friend's residence does not constitute you having a home in the UK for tax purposes, despite you being classed for tax purposes as resident. Paying her mortgage is merely a gift of moneys to her and gifts are outside the scope of UK tax legislation.


I do hope I have thrown some light on your tax position. Please don't forget the P85 procedure, you can file it on line; it will make life so much easier. A colleague has reminded me that the departure year split is now enshrined in legislation; it used to be an extra statutory concession. The effect is the same!

Customer: replied 3 years ago.

Thank you.


Two issues:


1) Re: my home. I am currently mid way through being added to her mortgage. I assume this will then mean that I do have a home in the UK. What are the implications for residency then?


2) Aside from the amount of time I am away does being self-employed affect the situation re residency?







Expert:  bigduckontax replied 3 years ago.
The fact that you are assisting her with the mortgage is irrelevant. Your addition to the mortgage deed merely makes you liable in law for some of the debt due. It, in itself, creates no property rights. Your residence rights stem from your living and working in the UK and it is clear from the tax authorities point of view you are resident. However the definition of residence differs between taxation and immigration/nationality legislation. This is a taxation web site and we experts are not competent to comment on the latter subject.

Self employment has no effect on residency, Lee.
Expert:  bigduckontax replied 3 years ago.

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