The conflict in the Middle East continues to place civilian lives at risk, with many electing to leave the areas most impacted by violence.
Given its popularity for individuals looking to be more tax efficient, many of the people leaving the Middle East may be returning to the UK, bringing their assets back into the scope of UK tax law.
Once out of harm’s way, it is worth understanding how your tax position has changed upon your return.
How is UK tax residence determined?
Your tax position is mostly decided by whether you are classified as a UK tax resident.
Spending more than 183 days or more in the UK each tax year, the time between 6 April one year and 5 April the next, will lead to HMRC classifying you as a UK tax resident.
If your only home is in the UK for more than 91 days in a row or you stayed in your UK home for more than 30 days in a tax year, then this will also see you classed as a UK tax resident.
Your circumstances will be assessed through a Statutory Residence Test (SRT).
Limiting your time in the UK typically means relying on specific conditions, such as working overseas or carefully monitoring the number of days spent in the UK.
Global conflict can disrupt these plans, resulting in you coming back to the UK earlier than planned and staying for longer than expected.
What exceptional circumstances apply?
SRT rules do have some degree of leniency when your circumstances change unexpectedly.
You are given a 60-day buffer to be in the UK when subject to exceptional circumstances.
The current conflict in the Middle East would qualify for this, as would other instances of war, civil unrest or other instances that make it unsafe to remain in a country.
However, the leniency is closely monitored, so you will need to have evidence that shows you did not already plan to return to the UK and that you will leave as soon as you are able.
Documenting official advice along with how you are personally impacted may help you present your application to HMRC.
Not every aspect of the SRT has a 60-day allowance, so be mindful when seeking this consideration.
What happens when you reacquire UK tax residence?
Crossing the 183-day threshold makes you a UK tax resident and brings you back into line with UK tax laws.
This will include income and gains from overseas, even if these were previously not part of your UK tax exposure.
If your time in the Middle East was particularly short-lived, income and gains from that period may fall back into scope for UK tax.
Living abroad for fewer than five years means that temporary non-residence rules apply, potentially removing the tax exemptions you moved country to access.
Returning to the UK partway through a tax year can enable you to split your tax liability between non-resident and resident parts.
For those who were out of the country for an extended period of time, there may be further reductions to your UK tax liability if you were a non-resident for at least ten years.
Most foreign income and gains from the UK during your first four years back can be made exempt through the Foreign Income and Gains (FIG) regime, as long as a claim is made.
Where your tax residency is split between two countries, you will become subject to a double tax treaty that will determine which country’s tax rules to follow.
How can we support you during this conflict?
The conflict in the Middle East is distressing and you will be managing a whole range of things if you are fleeing it.
Your taxes may not be the greatest concern, but it is still important to stay compliant.
Our team can assist with this to ensure that your focus is on keeping you and your loved ones safe.
We can help you manage your tax liabilities and make sure you are remaining compliant with all jurisdictions.
If you need further advice on how your tax position is affected when returning to the UK, get in touch.
