Temporary Non-Residence Rules
If you leave the UK for a short period and then return, the 'temporary non-residence' rules can mean you still have to pay UK tax on certain income and gains you received while you were away.These rules are designed to prevent individuals from leaving the UK for a short time simply to realise a large capital gain or receive income tax-free, only to return shortly after.
When do the rules apply?
The rules apply to you if:
- You return to the UK after a period of non-residence.
- That period of non-residence was 5 years or less.
- You were a UK resident in at least 4 of the 7 tax years immediately before you left.
What is taxed?
If you meet these conditions, certain types of income and capital gains that you received during your period of non-residence are treated as if you received them in the tax year you return to the UK. This means they become subject to UK tax.
This typically applies to:
- Capital gains on assets you owned before you left the UK.
- Certain types of investment income, like dividends from closely-held companies.
This is a complex area, designed to combat tax avoidance.