Split-year treatment: the eight cases, explained

Split-year treatment is the UK’s answer to a problem its own architecture creates. Residence under the Statutory Residence Test is decided for a whole tax year — 6 April to 5 April — and a year is either resident or not. Someone who moves to Singapore in July would otherwise be taxed as a UK resident on worldwide income for the eight months they spent there.

The relief divides the year in two. Income and gains arising in the overseas part fall outside the UK charge on foreign income and gains; those arising in the UK part remain within it. It is a narrow, mechanical provision, and almost every misconception about it comes from treating it as a general apportionment rule rather than as eight specific cases with conditions.

The condition people miss first

Split-year treatment applies only if you are UK resident for the year under the SRT.

This sounds circular and is not. If the automatic overseas tests make you non-resident for the whole year — a leaver with no more than 15 UK midnight days, an arriver with no more than 45, or someone working full-time overseas within the 90-day limit — then you are outside the UK charge on foreign income and gains for the entire year. There is nothing to split, and no case to consider.

Split-year treatment is therefore the fallback for the year in which you were resident despite moving, not the mechanism by which a move is recognised. Run the residence question first. The SRT calculator does it in the statutory order.

A second point follows from this. Because you are UK resident for the year, a split year still counts as a year of UK residence everywhere else that residence years are counted: in the leaver and arriver distinction, in the temporary non-residence rules discussed in leaving the UK, and in the residence clocks behind the four-year foreign income and gains regime.

The eight cases

Three cases cover leaving. Five cover arriving.

Case 1 — starting full-time work overseas. You begin full-time work abroad during the year, meet the third automatic overseas test in the following tax year, and observe caps on UK days and UK workdays across the overseas part. Those caps are pro-rated by the number of whole months in that part, which is the detail most often overlooked: a departure in January leaves a very small allowance indeed.

Case 2 — partner of someone starting full-time work overseas. You join a spouse, civil partner or cohabiting partner who qualifies under Case 1, cease to have a UK home or spend limited time here, and meet equivalent pro-rated day caps.

Case 3 — ceasing to have a home in the UK. You had a UK home at the start of the year and cease to have any UK home during it, spend very little time in the UK thereafter, and within a short period either acquire a home overseas, are present in a single overseas country at the end of each day, or become tax resident there.

Case 4 — starting to have a home in the UK only. At some point in the year your only home or homes are in the UK, that remains true for the rest of the year, and you did not meet the sufficient ties test for the UK part before that date.

Case 5 — starting full-time work in the UK. You begin a period of full-time UK work satisfying the third automatic UK test, and again did not meet the sufficient ties test for the earlier part of the year.

Case 6 — ceasing full-time work overseas. You were non-resident in the previous year by virtue of full-time overseas work, return during the year, and were UK resident in one of the preceding four years. Pro-rated UK day caps apply to the overseas part.

Case 7 — partner of someone ceasing full-time work overseas. The mirror of Case 2, on the way back.

Case 8 — starting to have a home in the UK. You had no UK home at the start of the year, acquire one during it, and keep it for the remainder of that year and throughout the following one, without having met the sufficient ties test earlier in the year.

The priority order

More than one case can be satisfied in a single year, and they do not produce the same split date. The legislation therefore imposes an order rather than letting you choose.

Among the leaving cases, Case 1 takes priority over Cases 2 and 3, and Case 2 over Case 3. Among the arriving cases, the tie-breaks are set out in RDR3 and turn on which case applies and which split date each would produce; where a year contains both a departure and an arrival, the guidance addresses that combination too.

The consequence is practical rather than academic. Because each case fixes its own split date — the day full-time overseas work starts, the day the last UK home goes, the day the UK-only home begins — the priority rules can move the boundary by weeks. Income received either side of it is treated differently, and a bonus, a share vesting or a disposal that lands near the boundary is worth locating precisely before the year closes.

What the split actually does

In the overseas part you are treated, for most purposes, as though you were not UK resident. Foreign income and foreign gains arising in that part are outside the UK charge. In the UK part you are taxed as a resident on worldwide income and gains.

Three limits are worth stating plainly.

UK-source income is unaffected. Rental profits from UK property, UK-source pension income and earnings for duties performed in the UK are taxable here in both parts, because the charge follows the source rather than your residence.

The personal allowance is not pro-rated. A split year does not halve your allowances, which often makes the year of departure a favourable one.

It is not universal. Split-year treatment applies for income tax and capital gains tax on your own income and gains. It does not reach every provision referring to residence, and several anti-avoidance rules ignore it. National Insurance follows its own rules entirely.

Everything here is a day count

Read the eight cases together and a pattern emerges: every one of them is anchored to a date, and almost every one carries a day cap that is pro-rated from that date to the end of the tax year.

That places a demanding requirement on the record. You need the split date itself, evidenced. You need UK midnight days either side of it counted separately, because the caps apply to the overseas part alone rather than to the year. You need UK workdays distinguished from ordinary presence, because Cases 1, 2, 5 and 6 all turn on work. And you need the same figures for the adjacent tax year, because Cases 1, 6 and 8 all impose conditions on the year that follows.

Reconstructing that from memory two years later is the ordinary situation, and it is why split-year claims fail more often on evidence than on law.

What Residay tracks

Residay holds the ledger these cases are decided from. Days are recorded against countries on the UK midnight convention, so the counts either side of a split date are the counts the statute asks for rather than an approximation of them. UK workdays are labelled separately from presence, which is what Cases 1, 2, 5 and 6 require. Counts run on the UK tax year rather than the calendar year, and adjacent years are kept intact, because the conditions reach into the following year as often as the current one. The record stays on your device, exportable for the adviser who will actually complete the residence pages.

Planning notes

• Establish residence for the year before considering split-year treatment. If you are non-resident throughout, the question does not arise.
• Identify the case before the year ends, not at filing. Several cases impose conditions on the following tax year, and by filing date that year is already partly spent.
• Watch the pro-rating. A late-year departure leaves a proportionally smaller UK day allowance in the overseas part, and the full-year figure is the wrong one to plan against.
• Fix the split date deliberately, and time discretionary income around it. The boundary is where the treatment changes, and it is the one variable you often control.