Split Year Treatment

All about Split Year Treatment (SYT)

According to the new Statutory Residence Test, you are either a UK or non-UK resident for the whole tax year. But how should your tax be treated if you leave the country or work overseas for a part of the tax year?

This changes your circumstances and being taxed both in the UK and the country you are working in for a time can take a toll on your finances. This is where Split Year Treatment (SYT) comes into play.

What is Split Year Treatment?

If your circumstances meet the SYT criteria, your tax liabilities will be calculated only on the basis of your actual residence in the UK, and not the whole tax year. This is similar as splitting a tax year between your resident and non-resident period.

Why do you need to apply for an SYT?

As already mentioned, your tax liabilities are only based on the period where you are a resident in the UK. This means your tax payments will be less compared to what you will be paying for an entire tax year. Just think, if the country you work in for a part of the tax year does not impose income tax or something similar, you end up saving a lot.

When are you eligible for an SYT?

There are many cases where you can qualify for SYT, with each one having a set of conditions that must be met.

Render Overseas Work

Are you about to begin full-time employment overseas? You are qualified for SYT provided that you satisfy the following requirements:

  1. You must be a UK resident during the previous tax year or for the tax year in question.
  2. You must be a non-UK resident for the following year and should meet the third condition specified in the automatic overseas test
    (AOT).

2a. Work full-time overseas (35 hours a week)

2b. Must be in the UK for less than 91 days

2c. Work in the UK for less than 31 working days

Accompany a Partner Overseas

You can split a tax year if you leave the UK to live abroad witha civil partner, partner or spouse, who is working full-time overseas. How do you qualify?

  1. You must be a UK resident during the previous tax year
  2. You must maintain a main residence outside the UK for what is left of the tax year
  3. You must spend 90 days or less in the UK for the rest of the tax year
  4. You must remain a non-UK resident during the tax year that follows after your leaving theUK.

Other circumstances that you may be qualified for SYT include:

  1. You do not have a home in the UK anymore
  2. You stopped working full-time abroad

SYT also applies to people who plan to set up permanent residence in the UK or stay for at least 2 years. This also applies to the following situations:

  1. You are just starting to settle in the UK and in your only home
  2. You are just starting to work full-time in the UK
  3. You are relocating in the UK to be with your partner

You can take a non-residence self-assessment test to check if you qualify for SYT, or you can refer to experts specialising in UK taxes. Whether you have established a domicile in the UK or not, they can help you determine your eligibility for SYT. Considering that there are several tests involved in the process, it is best to consult with a professional.

 

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