Yes, I would be declaring all foreign income to the UK as I believe that that is what I need to do when claiming relief under the DTA. First declare all foreign income and then provide evidence (treaty residence) as to why it is not subject to UK income with the expectation that no tax is due on that foreign income. However the DTA relates to tax year 2020-2021 in which I meet the requirements to be treaty resident.
Unfortunately, I am unable to claim treaty residence in the 2021-2022 tax year as I did not spend 180 days in Dubai in this current tax year. As a result it seems that my foreign income in tax year 2021-2022 WILL be subject to UK tax as I cannot claim treaty residence or split year on this occassion.
The return of income I had had paid to me back to my employer as part of my employment bond occured this year in tax year 2021-2022 (the year I am subject to UK income tax on foreign income).
The income earnt in tax year 2021-2022 is £80,000 but £30,000 must be returned back to my employer as part of the bond. My question was therefore whether for tax year 2021-2022 for "foreign employment income" do I report £80,000 (the amount I earnt but without considering income my employer demanded be returned) or do I report £50,000 (the amount I finally ended up with earning abroad after returning income to my employer).
Many thanks for your help!
Apologies the last paragraph should read:
My question therefore is: in reporting "foreign income earnt", can I declare that it is actually a figure of £80,000 minus £30,000 and thus a final total reportable foreign income earnt of £50,000?
£50,000 is all I would have to report?
Dear HRMC team,
Whilst employed in Dubai I was subject to a "bond" of around £30,000, with a penalty for leaving my job unless a certain number of years had passed due to training costs incurred by the company. The bond is for these training costs. This penalty of £30,000 would have to be repaid immediately by me from my income that I had earnt from employment in the UAE before I would be permitted to leave the UAE.
I earnt £80,000 during the period of employment in question.
My question therefore is: in reporting "foreign income earnt", can I declare that it is actually a figure of £80,000 minus £32,000 and thus a final total earnt of £48,000?
Is this correct?
I would appreciate if HMRC can confirm the above as the question has still not been clearly answered.
thankyou for your reply.
So to confirm and in conclusion then:
The fact that I completed the remainder of the tax year (2021-2022) in the UAE and returned to the UK in the "NEXT" tax year (2022-2023) has absolutely no impact on my claim to DTA Treaty Residence in the UAE for the purpose of UK tax exemption on income earnt in the UAE from 01/08/21-05/04/22?
That salary earnt in the UAE from 01/08/21-05/04/22, whilst it needs to be declared in self assessment with the DTA quoted, is totally exempt from UK income tax in the end.
Hi “HMRC Admin 17” and other admins,
I have been through those SRT notes in great detail and still sim unable to find an answer to the following question:
If I claim treaty residence in the UAE for the second half of tax year 2021-2022 (01/08/22 - 05/06/22), does coming back to the UK half way through tax year 2022-2023 cause my claim for treaty residence in tax year 2021-2022 to be void? Essentially is it a requirement to spend a full tax year abroad after claiming “treaty residence”? To claim split year treatment a full tax year abroad would be required but there is nothing written in the legislation for what happens when treaty residence is claimed? I would appreciate if HMRC could give a clear answer on this.
Hi "HRMC ADMIN 17",
Can I further elaborate to ensure I get the correct response:
- I am SRT in both tax year: (2021-2022) and tax year (2022-2023)
- I was NOT resident under the SRT in the UK in tax year (2020-2021) or for 9 years before this.
- I cannot apply "Split Year" treament because I was not resident in the UK in tax year (2020-2021)
- A full tax year was NOT spent as non UK resident abroad in the UAE because I returned to the UK they very next tax year.
- I am relying solely on "Treaty Residence" to claim tax exemption on UAE earned income from 01/08/21 to 05/04/22
- I do not meet the tests to claim "Treaty Residence" to claim exemption on UAE earned income from 06/04/22 to 10/07/22 because of the very short period of the tax year this encompasses.
When looking at SPLIT YEAR treatment, in order to apply SPLIT YEAR treament you must have been resident for a full tax year in the UK in the year PRIOR to splitting the year, (I was NOT tax resident in the UK in year 2020-2021 so I cannot apply split year treament).
Also when looking at Split Year treament, another requirement is to spend a full tax year abroad when again I have not done as I have returned in the next tax year. Thus SPLIT YEAR cannot apply in my case.
The only posibility I have to get tax exemptions is through TREATY RESIDENCE as part of the UAE-EK Double Tax Agreement.
So basically the main question is:
When applying for TREATY RESIDENCE in the UAE to exempt my UAE earnt income in tax year 2021-2022 (01/08/21 to 05/04/22), is it a requirement to subsequently spend a full tax year abroad (i.e. I should have spent tax year 2022-2023 in the UAE) OR does it not matter that I came back to the UK in the tax year following the year in which TREATY RESIDENCE was claimed?
Essentially do TREATY RESIDENCE tax exemption claims require a full tax year be spent abroad such as is the case for SPLIT YEAR treament or are the two concepts completely different?
Last year I left the uk after being in the UK from April 6th 2021 until August 1st 2021. This makes me tax resident in the UK for 2021/2022 as per the SRT (statutory residence test).
For the remainder of the tax year, August 1 2021 until April 5 2022, I was working full time in Dubai for a Dubai based employer. I cut ties with the UK as this was intended to be a permanent move. As per the DTA (UK UAE) I was “treaty resident” in Dubai and so exempted from UK income tax on the salary earned whilst there.
However due to a change in circumstances, I permanently returned to the UK on July 10th 2022 to take up UK employment.
I have 2 questions:
Will this return to the UK in 2022 impact my ability to apply UAE treaty residence in the 2021/2022 tax year even if I meet the treaty ties tests making me a confirmed treaty resident of the UAE during that 2021/2022 tax year?
Would I be correct in assuming that ONLY my UAE income earned from April 6th 2022 until July 10th 2022 (i.e. tax year 2022/2023) is subject to UK income tax? I would again be tax resident in the UK as per the SRT rules for 2022/2023 but this time I have calculated that I do not meet the DTA “ties tests” for “treaty residence” for the UAE in this tax year unlike in the 2021/2022 tax year in which I did meet the requirements.
Please confirm my understanding is correct.