RE1740 - Non-residents: year of commencement or cessation of UK residence
Strictly an individual who is resident in the United Kingdom for a year of assessment is chargeable on the basis that he is resident for the whole year. However, by concession, an individual is chargeable on income, the liability of which is affected by his residence status, only by reference to the period of his residence in the United Kingdom if
- he is resident here for part of a year, and
- he is not ordinarily resident here for the other part of the year.
It is usual to take into account the effect of the concession by stating the individual's residence status as though the year was split
Example
1993-94
An individual came to reside in the United Kingdom on 6 September 1993. He was previously not resident in the United Kingdom. His residence status is regarded as
Not resident and not ordinarily resident to 5 September 1993, resident and ordinarily resident thereafter.
His income is made up of
- £3,000 income from property in the United Kingdom
- £12,000 per annum income from sources outside the United Kingdom.
He is chargeable for 1993-94 on the £3,000 but on his other income only on the basis of the amount for the period 6 September 1993 to 5 April 1994, say £7,000.
If he lived here until 6 September 1993 and then left to live abroad and was not ordinarily resident after that date, his residence status is regarded as
Resident and ordinarily resident to 6 September 1993, not resident and not ordinarily resident thereafter.
He would be chargeable for 1993-94 on the £3,000 and on his other income for the period 6 April 1993 to 6 September 1993, say
There are detailed instructions for determining the amount of income chargeable for the period of residence or ordinary residence where a person becomes, or ceases to be, resident or ordinarily resident in the United Kingdom in respect of
- interest on exempt United Kingdom government securities (IM1535)
- dividends and other qualifying distributions by United Kingdom companies (AP3076 (a) (iv))
- income assessable under Cases IV and V of Schedule D (IM1647 and 1651)
- income assessable under Schedule E (SE5805).
Where charges on income are paid or payable, the amount for the full year is taken into account in computing the payer's liability for the period of residence (AP380, last sub-para).
An individual who becomes, or ceases to be resident in the United Kingdom is due full personal reliefs for the year. They can be set against all chargeable income even if some of the income arose in the part of the year when the claimant is treated as not resident in the United Kingdom. Where, however, the income includes items chargeable at a reduced rate of tax by reason of a Double Taxation Agreement, the personal reliefs should be allowed as far as possible against other income.
1990-1991 onwards
Coming to the United Kingdom
For 1990-91 onwards
- where an individual coming to the United Kingdom
- has had income liable to United Kingdom tax whilst being not resident and
- becomes resident in the United Kingdom,
deal with in accordance with RDRM10245 of the Residence, Domicile and Remittance Basis Manual (RDRM)
Leaving the United Kingdom
- Where an individual leaving the United Kingdom
- has continuing income liable to United Kingdom tax
and
- becomes not resident in the United Kingdom,
deal with in accordance with Residence, Domicile and Remittance Manual (RDRM).
In any case of doubt or difficulty contact CAR PTI Advisory (Residence and Domicile Technical Team), Bootle.
