SED Example

SED Example

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HI All,

Can somebody confirm or otherwise my thoughts on the following example:

Somebody leaves the UK in January 2009 and following several return trips back to the UK (all of which are less than 183 days, and also pass the 50% cumulative test) they return on 27/10/10 for 95 days. This return trip takes them over the 50% cumulative test, they then leave again on 30/01/11 up until 31/07/2011.

They are home for a week and then they are off again until late 2012. (during which time there are no return trips to the UK)

They have a qualifying period from Jan 09 - Jan 11, therefore all of their income from Jan 09 - 05/04/09 is effectively non taxable, likewise for the whole of the 09/10 tax year, in 10/11 on a pro rata basis their income for the period up until 30/01/11 qualifies for SED.

Jan 11 being the date they leave the UK again following the trip back to the UK (in which they failed the test)

I understand the 12 month period starts again from Jan 11 and therefore the next Qualifying period cannot be until Jan 12, but assuming they pass this from which date is the income subject to SED, surely not from Jan 11 as this would affect the 10/11 TR?

 

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By Helen Crowley
09th Sep 2014 13:00

SED Break

You said they returned to the UK on 27/10/2010 and did not leave again until January 2011 resulting in failing the cumulative test. The break therefore happens on 27/10/2010. The next qualifying period starts in January 2011 when they next leave the UK and the numbers rest to zero. As long as you then have a qualifying period of more than 365 days which you do then yes your client can qualify for SED for the two separate qualifying periods i.e. From January 2009 to October 2010 and the from January 2011 until late 2012. Yes the SED claim from January 2011 to 5/4/2011 should be made on 2011 Tax Return or it could have been amended in Janaury 2012 once it was known that there was a new qualifying period of more than 365 days.

HMRC's helpsheet HS205 will help explain if the above isn't clear.

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By Steve Kesby
09th Sep 2014 13:21

I agree with Helen

The eligible period has to end with a period of absence from the UK, so if any period of presence in the UK is more than 183 days or causes the 50% limit to be breached, the eligible period ends at the time of return to the UK.

However, any paid leave in relation to the employment current at the return before the breach is treated as earned in the eligible period, if it falls in the same tax year as that in which the eligible period ends.

Given that people don't suddenly go to sea and tend to know (broadly) how long they will be outside the UK, it was probably known before the 2010/11 filing deadline that there would be an eligible period covering the earnings from 30 January 2011 to 5 April 2011.

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