UK Expat Living in UAE Retuning Home Tax Help

Easto

Hi, 
I was hoping someone maybe able to help me clarify a tax query I have regarding tax upon returning back to the UK. I will attempt to detail all key dates and other considerations as best as possible. Any help would be greatly appreciated as I am confused on my residency status and tax implications. I have been UK citizen since birth and had a home in the UK for the whole period I have been away.
Tax Year 18/19
Last working day in UK - 2 May 2018
First working day UAE - 6 May 2018
Number of days spent in UK between overseas dates: 23
I assume I fall into the Non Resident category for tax year 2018/2019 ?
Tax Year 19/20
Potential last working day in UAE - 27 Feb 2020
First day back in UK - 28 Feb 2020
Sufficient hours test result: 49 
Number of days in UK between overseas dates: 39
Total number of days if leaving on date above: 39 + 38 = 77
Ties to UK: 2
With me due to move back to my home and cease being a resident in the UAE but not commence UK work until the new tax year 20/21 would I be liable to pay UK tax based on worldwide income? Does the 38 days back in the UK earning no foreign income and no UK income effect the significant gap stipulation? 

My concern is the definition of significant gap and ensuring I qualify for the automatic overseas test 3 for 19/20 tax year, my employer here has offered an extension on my notice therefore if I need to stay longer to satisfy the stipulations for the overseas test I will but it doesn't seem clear if I can class this as a split year. 
If anybody can offer any help it would be greatly appreciated, I will also be seeking tax advise.
Many thanks 

oldbikebloke

you have NOT been abroad for a complete tax year since May 18 - Apr 19 is part of 18/19 and Apr 19 - Feb 20 is part of 19/20  
start reading: 
https://www.gov.uk/tax-foreign-income/residence
https://www.litrg.org.uk/tax-guides/migrants/residence-and-domicile/what-split-year-treatment
https://www.rossmartin.co.uk/overseas-residence/2357-split-year-treatment-toolkit

Easto

Thanks @oldbikebloke
Looks like Case 6 Split year applies to my circumstances for returning to the UK. 

Speedbird676

“ You will not get split-year treatment if you live abroad for less than a full tax year before returning to the UK. You also need to meet other conditions.”

I recommend you do not return until on or after 6th April, 2020.

Easto

Hi @Speedbird676
Please correct me if I'm wrong on the below, this is taken directly from HRMC site with my answers besides. 

Case 6: Ceasing full-time work overseas 

5.33 In some circumstances you may receive Case 6 split year treatment if you were non-UK resident in the previous tax year because you worked full time overseas and you cease to work full-time overseas in the tax year to which split year treatment applies. You must: 

 be UK resident for the tax year in question - Yes because I would cease to have a home in a foreign country.

 have been not UK resident for the tax year before the year in question because you either: 

 satisfied the third automatic overseas test for that year or, - Yes because I meet the third automatic overseas test for year 18/19 (Non Resident)

 if the year was 2012 to 2013, worked full-time overseas for the whole of the tax year under the rules in force prior to the Statutory Residence Test), see HMRC6 

 have been UK resident for 1 or more of the 4 tax years before the year in which you are not UK resident under the previous bullet point - Yes

 be UK resident in the tax year following the year in question (whether or not it is a split year) - Yes

 satisfy the overseas work criteria for a relevant period - Yes

There is a possibility I could get split treatment case 4 but 6 precedes this in priority. I have only 2 ties to the UK and have spent less than the permitted number of days in the UK, therefore I do not think it necessary to wait until April to return. I am waiting on some professional advise I will post it once I hear back. 

Speedbird676

My interpretation of the link I posted is that you were never non-resident because you were not out of the UK for a full tax year. Therefore, the cases re: split year treatment are irrelevant.

"You stayed UK resident if you were abroad less than a full tax year (6 April to 5 April the following year). This means you usually pay UK tax on foreign income for the entire time you were away."

Easto

Yes I think that section on the site is rather misleading and a little confusing. 
"You stayed UK resident if you were abroad less than a full tax year (6 April to 5 April the following year). This means you usually pay UK tax on foreign income for the entire time you were away."
Usually being an important adverb here. If you look further down the page I believe the temporary non resident section describes this a little further. 

"

If you return to the UK within 5 years

You may have to pay tax on certain income or gains made while you were non-resident. This doesn’t include wages or other employment income.

These rules (called ‘temporary non-residence’) apply if both:

• you return to the UK within 5 years of moving abroad (or 5 full tax years if you left the UK before 6 April 2013)
• you were a UK resident in at least 4 of the 7 tax years before you moved abroad

Chapter 6 of HMRC’s guidance note to the Statutory Residence Test has more information about:

• temporary non-residence
• what income and gains you’ll need to pay tax on

"
I believe what is being outlined here is that if you earn foreign income while being in the UK as UK resident you will be taxed on that foreign income unless you are domiciled elsewhere or you earned that foreign income while being in the overseas part of the tax year in question. The temporary non residence on the RDR3 highlights these points further. 
The SRT test in the RDR3 document outlines the specifics for automatic overseas test. Therefore I would qualify for automatic overseas for year 18/19 as I meet all the criteria.
"1.4 If you meet any of the automatic overseas tests for a tax year, you are automatically non-resident for that year. You should therefore consider these tests first, as if you meet any one of them, you will not need to consider any of the other parts of the test. "
"Third automatic overseas test 

1.7 You work full-time overseas over the tax year, without any significant breaks during the tax year from overseas work, and: 

 you spend fewer than 91 days in the UK in the tax year 

 the number of days in the tax year on which you work for more than 3 hours in the UK is less than 31 "

I believe I am complying with the rules as outlined in the HMRC guidelines. But I must admit some of the brief bullet points on the site can cause some serious confusion specifically the one you have mentioned @Speedbird676

Speedbird676

I'd be interested in the professional advice you receive.

robynandian

Hi there, I know this post is from February but did you ever receive any professional advice about this matter.
We have a situation where my husband  has been paying tax in UK as non resident .. Due lived in australia for 16 years. Now have been living in UAE for nearly 5 years and may have a contract job in the UK to start before April 2021. Wondering if he will pay tax on UAE wages earned during UK tax year ending April 2021.?

robynandian

Clarification ... Tax for UK as non resident has been for rental earrings on his flat

macman

If he was non-resident, then the basic rate income tax due should have been collected at source by either the tenant or LA as a deduction from the rental income, and paid directly to HMRC. This is a requirement under the Non-Resident Landlord Scheme.