Split year treatment and foreign income

Hi HMRC Admin, I raise up the enquiry here because I cannot find the answer clearly after reviewed the Gov.UK guidance and the forums. Hope you can help to provide the answer to my case. Below is the time frame of my situation: - 15 June 2022 sold out Hong Kong home - 01 July 2022 rented a house in UK and stay till now - 17 Aug 2022 landed in UK - 31 Aug 2022 Hong Kong permeant job ended (all HK incomes were taxed before I landed in UK) - 1 Sept 2022 started a permeant job in UK and work till now - 10 Sept 2022 received Aug salary from Hong Kong Questions: 1) I become the UK tax resident in tax year 2022-2023 and am going to apply split year treatment. Should the UK part be started on 17 Aug 2022 or 01 July 2022 under case 4? 2) I had permeant job in UK (started on 1 Sept 2022) which later than I had the only home in the UK, so the UK part should not be started on 01 Sept 2022, is it correct? 3) From above, seems I meet case 4 and case 5 of split year treatment. In SA109, I should tick box 3.1, is it correct? 4) Do I still need to report Aug salary from Hong Kong? - If yes, should I declare partial amount (from Aug 17 to 31 Aug 2022 which assuming UK part stared on 17 Aug 2022) or full amount (due to when I received the salary on 10 Sept 2022 which I am already the UK tax resident?)? - If the UK part started on 01 July 2022, then I should declare both July and Aug Hong Kong salary, is it correct? 5) Since I already paid the taxed for all my Hong Kong incomes (included Aug salary) before I arrived UK. - Will Aug salary still be taxed in UK? - I have the invoice proving I already paid the tax in Hong Kong. How can I enclose it together with the tax return? Thank you for your help!

Hi ACTS,
1. 17/08/22.
2. UK income from 01/09/22.
3. Yes.
4. No as the work was actually carried out in Hong Kong.    
5. No and no need to enclose with the return.
Thank you. 

Hi HMRC Admin, Thank you so much for your help! Sorry for I have questions on the answer of question 4. The answer of question 4 is “No as the work was actually carried out in Hong Kong.”. However, my situation is: In August 2022: 1st – 16th : Worked the Hong Kong job in Hong Kong. Paid the income tax of all incomes (included full month of August salary) to the Hong Kong government. 17th : Landed in UK and started UK part of split year treatment (per the answer of question 1). 17th-31st : Continue worked Hong Kong's job in UK. Hong Kong employment ended on 31 Aug. I want to double confirm that the income from 17 Aug to 31 Aug 2022 will be considered carried out in Hong Kong even though I arrived in UK and started UK part of split year treatment since 17 Aug 2022? If the income from 17 Aug to 31 Aug is considered carried out in UK finally, but I already paid related income taxes to Hong Kong government. In this case, will UK government tax me again? Thank you for your help in advance! ACTS

Hi ACTS,
The period 17-31 August will be considered UK income as it was carried out here.
You will therefore need to apportion your August salary to reflect this and then claim Foreign Tax Credit Relief for the tax paid - this will also need to be apportioned.
Thank you. 
 

Hi HMRC Admin, Thank you so much for your help! Noted that I need to apportion my August salary to reflect the UK income in the period of 17-31 August. Sorry for I have one more question: Hong Kong company also paid the 13th month salary in proportion to me (monthly salary divided by 12 months times 8 months (for the period from 1st Jan to 31st Aug) £3000 / 12 x 8 = £2000). In this case, do I need to declare the 13th month salary (£2000) in tax return? If yes, should I declare the whole £2000? Or apportion it (£121) to reflect the UK income for the period of 17-31 August (£2000 divided 8months divided 31days times 15days = £121)? Thank you for your help in advance! ACTS

Hi,

If that payment was for work actually done in the UK, then yes. If the work was done in Hong Kong, then no.

Thank you.

Hi HMRC, I have a few questions, 1. Where can I find the automatic tests and the split year tax test to complete the ties test. 2. I worked six months in the UK and I the moved out Saudi Arabia for the last six months of the tax year. I worked continuously in Saudi Arabia for those six months being paid in local currency. Does this apply to the split year tax. 3. Ties to the UK, I have a wife and son who are based in UK, but I spent less than 10 days with then in the six months I was away does the tie test apply 4. I then will work this tax for the full year in Saudi Arabia, spending less than 30 days in the UK, with above does the tire test still apply?

Hi,

Please refer to:

RDR3 Statutory Residence Test

RDRM12000 - Residence: The SRT: Split year treatment

This will apply to all questions.

Thank you.

Hi HMRC Admin, Thank you for your advice. Noted I have to declare the proportion of the 13th month salary for the period of 17-31 August as UK income. Could you please help to advise which form(s) should I use and where should I fill the amount in order to declare the UK part of both August salary and 13th month salary from Hong Kong (I will apply split year treatment)? I cannot find any suitable areas to fill it on SA100, SA102 and SA106. Thank you for your help! ACTS

Hi,

The employment income earned after you became resident in the UK should be declared in the employment pages, SA102, of your Self Assessment tax return. You can claim Foreign Tax Credit Relief for any Hong Kong tax deducted in the foreign pages, SA106, under the sub-heading  'Foreign tax paid on employment, self-employment and other income'. You can see information here:                       

Check if you need to send a Self Assessment tax return

Thank you.

Hello HMRC admin, My situation is similar to ACTS. However, I am not quite sure how to apportion "Foreign Tax Credit Relief for the tax paid", if I apply split year treatment and claim FTCR for my employment income in tax year 2022-2023. Let's take an example in tax year 2022-2023. Oversea income (no need to declare, as it is before split year treatment start date): £20,000 UK income: £30,000 Tax paid in Hong kong for tax year 2022-2023: £5,000 For the above example, can I assume I can claim £5,000 / (£20,000 + £30,000) x £30,000 = £3,000 Thank you~!

Hi,

From your example, no foreign tax credit relief is due as you are not declaring any foreign income.

If the tax paid in Hong Kong is for the UK income received you will need to claim a refund from them.

Thank you.

Hi there.. I have a similar but slightly different case. I have UK sourced Income, Tax resident in Portugal under a DTA and eligible for a split year. I have a UK NT tax code from when the split year started so have not been paying PAYE Tax in the UK since that date. My P60 has all my income for the year when I was resident in UK and Portugal and I need to add that into self assessment. However, this means that for the time I was not a UK tax resident - The self assessment calculation wants to charge me for Tax for that income. How do I adjust for this? Many Thanks

Hello HMRC Admin, I have similar issue. For split year treatment and foreign tax, in SA106 Foreign tax paid on employment section, there are two values I should input the foreign tax paid and the taxable amount. I don't know should I input the total foreign tax paid and total taxable amount in Hong Kong (which the foreign income come from) of the whole year or have to calculate in proportion. There is the case details: For the tax year 2022-2023 1. Landed UK on 29/09/2022 2. Foreign employment income before landed UK is GBP 20000 3. Foreign employment income before landed UK is GBP 30000 4. Foreign tax paid is GBP 1000 (which is calculated based on whole year income GBP 20000+GBP30000 = GBP50000 foreign income) The question is For SA106 Foreign tax paid on employment section, should I input the information for 1. whole year Foreign tax paid = GBP 1000 and the taxable amount GBP 50000 or 2. in proportion Foreign tax paid = GBP 600 (proportion of the whole year foreign tax paid related to the income after landing UK) and the taxable amount GBP 30000 (taxable amount related to the income after landing UK) or what values I should input? Thank you very much. Kind Regards, Joe

Hi nortonlp,

You will need to complete the residence section of the tax return or SA109 if submitting a paper tax return to declare your split year treatment. In the additional information section (SA101) page Ai2 box 12, enter the amount of income that is not taxable in the UK. This will give a credit in the calucation, reducing the amount of taxable employment income.  

On the online tax return, when tailoring your return, click yes to "Other tax reliefs" on page 3 of 3, tailoring your return. This will bring up the "Other tax relief and deductions" section, so you can enter the amount in "Foreign earnings not taxable in the UK".

Thank you.

Hi JoeN2024,
Under the terms of the double taxation treaty with Hong Kong, income eerned for work carried out on Hong Kong soil is only taxable there and should not be declared in the UK.
Thank you. 

 

Hello HMRC Admin, I would like to ask how to apportion "Foreign Tax Credit Relief for the tax paid". Here is my case: 1. I will apply for split year treatment for tax year 23-24. (foreign part: 06/04/23 - 21/08/23 / UK part: 22/08/23 - 05/04/24) 2. I received monthly salary from a Hong Kong employer from 06/04/23 to 17/10/23. The salary from 22/08/23 to 17/10/23 is taxable in UK. 3. If I pay tax GBP 1000 to the Hong Kong government for the whole tax year 23-24, how to apportion the UK part for "Foreign Tax Credit Relief for the tax paid". Thank you.

Hi ,
 

You would need to base it on the number of days worked in uk divided by the total period worked for the company then multiply by the 1000. So it would be UK/HK x 1000  . Thank you .

Hello HMRC agent, I would like to ask about split year treatment and how to define the employment income earned before and after I became resident. Below is the time frame of my case: 1) 25 July 2024 is the last working day in UAE 2) 26 July 2024 I started a permanent job in the UK with my new employer and have been working till now (I was still in UAE) 3) 29 July 2024 I received and signed the Final Settlement letter about the End of Service Benefit (EOSB) from my UAE employer. EOSB agreement includes my final salary till July 25, leave salary, gratitude pay, relocation bonus 4) 31 July 2024 I received transfer of money from the first part of EOSB (the final salary till July 25) 5) 1 August 2024 I requested refunding of the security deposit from Water and Electricity supplier in UAE 6) 5 August 2024 I sold my car in UAE 7) 6 August 2024 I landed in the UK 8) 6 August 2024 I received refunding of the security deposit from Water and Electricity supplier in UAE 9) 7 August 2024 I received transfer of money from the sale my car on 6 August 2024 10) 9 August 2024 I received transfer of money from the second part of EOSB (leave salary, gratitude pay, relocation bonus) 11) 13 August 2024 I requested refunding of the security deposit from Chiller service supplier in UAE (it’s one of the type of public utilities in UAE, like Electricity or Water). I’m still waiting for this refund. Questions: 1. Am I correct in understanding that everything I earned before moving to the UK (6 August 2024) is a clear capital? 2. Clear capital isn't subject to UK taxation, and I can transfer this money to the UK without paying taxes? 3. Is the income from the sale of the car clear capital? The car was sold before I became a tax resident of the UK. 4. Is the income from the EOSB agreement (final salary, gratitude pay, bonuses from UAE employer) clear capital? In fact, this money was earned before moving to the UK, but the transfers came when I was already in the UK 5. Are the money from refunding the security deposits for my UAE apartment also clear capital? In fact, they were left as collateral when I was a resident of UAE and I do not receive additional income here Tahnk you a lot for your help!

Hi,
We cannot comment on scenarios, real or imagined in this forum.  
The guidance on how to apply split year treatment can be found at RDR3 Statutory Residence Test.  
If you still have issues on this matter, you will need to contact our self assesment helpline on 0300 200 3310, or contact our webchat facility at Contact HMRC or seek professional advice.
Thank you.