RDRM12650 - Residence: The SRT: Temporary non-residence: Meaning of year of departure and period of return

An individual’s year of departure is the tax year consisting of or including the last residence period in which they were solely resident in the UK or, if split year treatment applies, the date following that on which the last residence period for which they had sole UK residence ends.

The new temporary non-residence rules only apply if an individual’s year of departure (as defined here), is 2013-2014 or later. It should be noted that the year of departure may fall earlier than the year in which an individual physically leaves the UK.

An individual’s period of return is the first residence period after period A (see RDRM12640), for which they have sole UK residence.

Example 1

Max has had sole residence in the UK for the previous 10 years. On 22 February 2015 Max moves to Poland and is considered resident there from this point, as well as retaining his UK residence up to the end of the tax year. From 22 February to 5 April 2015 he is Treaty non-resident.

For the purposes of this example, Max does not satisfy the conditions for split year treatment in tax year 2014-2015.

Max is not solely UK resident from 22 February 2015, but he will remain UK resident for the tax year. As this is not a split year, Period A will end at the end of the tax year 2013-2014. This is because that is the end of the last tax year in which Max was solely UK resident. His year of departure for the purpose of applying the temporary non-resident provisions is therefore 2013-2014; even though he physically left the UK on 22 February 2015. The next residence period begins on 6 April 2014, and Max will begin to be regarded as temporary non-resident from this point.

Max returns to the UK on 26 May 2018, and split year treatment applies.

Max has sole UK residence from 26 May 2018. He is Treaty resident for the UK part of the year. His temporary non-residence ends on 25 May 2018. The period of temporary non-residence is 6 April 2014 to 25 May 2018 inclusive; which is less than 5 years, and so Max is within the scope of the temporary non-residence provisions.

Example 2

Louis moves to the UK on 9 January 2014, becoming resident here for 2013-2014. He satisfies the conditions for split year treatment for 2013-2014, and is Treaty resident in the UK from arrival.

On 4 January 2018, Louis moves to the USA. He becomes a US tax resident and is not treaty resident in the UK from that point onwards. He satisfies the conditions for split year treatment and his overseas part of the split year starts on 4 January 2018.

Louis returns to the UK on 9 March 2023, and split year treatment applies. He is treaty resident in the UK from the date of his return.

Louis meets the ‘4 out of 7’ test for tax years immediately preceding the year of his departure.

• 2013-2014 was a split year which included a residence period for which Louis had sole UK residence
• 2014-2015, 2015-2016 and 2016-2017 were full tax years for which he had sole UK residence
• 2017-2018 was the year of departure. It was a tax year that included a residence period for which he had sole UK residence (6 April 2017 to 3 January 2018). This last period is period A.

Louis has more than 1 residence period immediately following period A in which he does not have sole UK residence. The first such period is 4 January 2018 to 5 April 2018, (the overseas part of the split year in the year of his departure).

By the time Louis returns he has been non-resident for more than 5 years, (4 January 2018 to 8 March 2023), therefore he is not temporary non-resident for the purposes of the statutory residence test. He does not need to be non-resident for 5 complete tax years in order to be outside the scope of the temporary non-residence provisions.