Split Year Resident - TAX 20/21

[Island]

Hi,

I'm finding it hard to work this out given that the Australian and UK tax years are different.

In 2018, 2019, 2020. We lived in Australia.

In September 2020 we moved to the UK.

So for the Australian tax year I was only an Australian resident between 1st July - 16th September = only 2.5 months so presume I'd just be a UK resident for tax purposes in Australia??

But as the tax year in the UK is April - April = in the UK I think they would class me as split year resident as I have spent 197 days this tax year in the UK!

PLEASE HELP!!! Surely I can't be split year if Australia would just classify me as UK resident?

 

Thanks, Jess

[Marisawright]

17 hours ago, Island said:

So for the Australian tax year I was only an Australian resident between 1st July - 16th September = only 2.5 months so presume I'd just be a UK resident for tax purposes in Australia??

 

As I understand it,  you were an Australian resident for tax purposes in Australia up until the day you left.  So you'll fill out your Australian tax return to include all income up till 16th September and no further.  What you earned after that date is none of Australia's business because you became  a UK resident.  There's a place to declare it's your final tax return on the form.

[Ken]

On 23/06/2021 at 22:14, Island said:

Hi,

I'm finding it hard to work this out given that the Australian and UK tax years are different.

In 2018, 2019, 2020. We lived in Australia.

In September 2020 we moved to the UK.

So for the Australian tax year I was only an Australian resident between 1st July - 16th September = only 2.5 months so presume I'd just be a UK resident for tax purposes in Australia??

But as the tax year in the UK is April - April = in the UK I think they would class me as split year resident as I have spent 197 days this tax year in the UK!

PLEASE HELP!!! Surely I can't be split year if Australia would just classify me as UK resident?

 

Thanks, Jess

If you hadn't lived in Australia in the previous year then yes, only being in Australia for 2.5months might allow you to claim to be a non-resident (although you wouldn't want to do that if you have Australian income as the tax rules are less favourable to non-residents than they are to residents), but you did become a resident back in 2018. Once you do that you remain a resident until you leave, it's not something that needs to be acquired each and every year.

Similarly you become a UK resident again on the date you returned. I'm confused as why do you even want to be treated as a UK resident for the part of the year when you weren't living them since that would mean paying taxes in the UK on your worldwide income for that part of the year. Surely you would prefer to only pay taxes in the UK on your worldwide income for the part of the year you were living there (a process called split year)?

Based on what you've said you were an Australian Resident 1st July - 16th September paying taxes in Australia on your worldwide income* for that split year (and liable for tax as a foreign resident on Australian income only for the remainder of the year) and a UK Resident for 17th September to 5th April paying taxes in the UK on your worldwide income for that split year (and liable for tax as a foreign resident on UK income only for the beginning of the year).

 

*Assumes you were a permanent resident. If you were only a temporary resident you would only be taxed on Australian income.

Edited June 25, 2021 by Ken

[Island]

Hi Ken

Wow - this is very helpful, thank you so much.

The only reason I'd want to be classified as uk citizen for whole year is because it sounded a bit simpler!!

I've looked at the HMRC website questions about split year - and I seem to qualify for 3 cases.

4. starting to have a home in the UK & 6.partner of someone ceasing work overseas & 8. starting to have a home in the UK (again!)

IT IS SO CONFUSING!!!

Do I need to tell HMRC I think I qualify because of those three cases?

I do not understand the tables at all... what on earth is this on about??

Date	For 15 substitute	For 45 substitute	For 90 substitute	For 120 substitue
6 - 30 Apr	1	4	7	10
1 - 31 May	2	7	15	20
1 - 30 Jun	4	11	22	30

[Ken]

On 26/06/2021 at 04:40, Island said:

Hi Ken

Wow - this is very helpful, thank you so much.

The only reason I'd want to be classified as uk citizen for whole year is because it sounded a bit simpler!!

I've looked at the HMRC website questions about split year - and I seem to qualify for 3 cases.

4. starting to have a home in the UK & 6.partner of someone ceasing work overseas & 8. starting to have a home in the UK (again!)

IT IS SO CONFUSING!!!

Do I need to tell HMRC I think I qualify because of those three cases?

I do not understand the tables at all... what on earth is this on about??

Date	For 15 substitute	For 45 substitute	For 90 substitute	For 120 substitue
6 - 30 Apr	1	4	7	10
1 - 31 May	2	7	15	20
1 - 30 Jun	4	11	22	30

Where you become UK resident under more than one case the one with the earliest date applies. If they are same date it's irrelevant which case applies.

As to the table, I am sure that you are aware that to be classified as non-resident in the UK you can't be in the UK for more than a certain number of days? It depends on the which regulation applies as to how many days you can be in the UK. Under some circumstances it's as little as 15 days, in others 120 days. But that's in a full year. When it's a split year it's only the first part of the year (the part of the year when you don't want to be UK resident) that counts and you don't get the full year allowance of days. It's reduced to the number of days in the table. If you spent no time in the UK in the year until the date you arrived then you don't need to worry about this table at all because 0 days is below the threshold of every one of these tests.

[Island]

Hi Ken, 

Thank you so much this is really very helpful.  Really appreciate it.

Can you also explain if freelance/ part time works qualifies as full time work if you have worked enough hours?

Does the HRMC need to know all the cases that apply to us, or can we just choose one - ie case 4 starting to have a home in the UK ONLY... and stick with that.

I'm having trouble working out if the other one's apply as I was a casual teacher and husband freelance too so not easy to work out days worked etc.

 

Thanks, Jess

 

[Marisawright]

57 minutes ago, Island said:

Hi Ken, 

Thank you so much this is really very helpful.  Really appreciate it.

Can you also explain....

Ken is too polite to say so, but please bear in mind he is a professional in this field.  He is very generous in answering a question or two, but there comes a point where you really should bite the bullet and pay him for his time...