Temporary Non-Residence

A person who is not UK tax resident will usually only be subject to UK tax on UK sourced income.  There should be no UK tax due on any foreign income received whilst they are non-resident. Furthermore non-residents are exempt from capital gains tax, even on assets located within the UK.

However, if you are returning to the UK after what is considered a ‘temporary period of non-residence’ a tax liability may arise for some of these previously exempt income and gains.

A person will be considered ‘temporarily non resident’ if

• Their absence from the UK was for less than 5 complete tax years, and
• They had been resident in the UK for any part of 4 out of the 7 years immediately preceding their departure. 

Further information about the meaning of temporary non-residence can be found on HMRC’s website at: http://www.hmrc.gov.uk/manuals/cgmanual/CG26110.htm

Income Tax

If you have been temporarily non resident, then you may be liable to UK tax on certain types of foreign income if you remitted it to the UK during your absence (i.e. if you brought it to or enjoyed it in the UK).

The foreign income that will be taxed includes self-employment income and savings income, but not employment income.

If income becomes taxable in the UK as a result of these rules, you will be treated as if you had received that foreign income on the day of your return, and tax will therefore be due for the tax year of your return.

However, it is worth checking the double tax treaty between the UK and the country where you were resident.  Some treaties may not allow the UK to tax income that has arisen in the other country, even under these rules.

 Capital gains tax

If you have been temporarily non resident, then you may be liable to UK capital gains tax on any assets you sold during your absence, but only if you owned the asset when you left the UK.

Again the gains will be treated as if they arose on the day of your return and you should check if the double tax treaty prevents the UK from taxing these gains. 

• For more details see HMRC self assessment help sheet 278 (www.hmrc.gov.uk/helpsheets/hs278.pdf )