The first thing you need to do is determine your client’s residency status for the tax year. This is determined using the Statutory Residence Test. Assuming the 4 months was your client’s only absence. Your client was present in the UK for more than 183 days and is thus deemed to be a UK resident for tax purposes. They then need to pay tax in the UK on their worldwide income within the tax year.
To declare the foreign employment income, they will need to complete the ‘Employment’ pages of the SATR, which is SA102. You’ll need to fill in a separate ‘Employment’ page for each job, directorship, or office held in the year.
If the foreign employment income was taxed abroad, you do not include the tax paid on the SA102. You need to complete the ‘Foreign’ pages of the SATR (SA106). On page F6 (or your software equivalent), there is a section titled: Foreign tax paid on employment, self-employment and other income. As well, as this section, you need to include details in the ‘Any other information’ box (on page TR 7) of where on their tax return this income is included (in this case, the ‘employment’ pages). This will then create a Foreign Tax Credit, which can be used to reduce any UK tax payable on the same employment income.
- If no foreign tax was suffered, you do not need to complete the ‘Foreign’ pages.
- If your client was non-resident, then you do not need to include any foreign employment income in their UK SATR.
- If your client qualified for a split-year treatment. They only need to include the foreign income earned in the UK part of the year.
- More information on residency can be found in HMRC’s guidance: RDR3: Statutory Residence Test
- A useful, client-friendly guide is available here: https://www.gov.uk/tax-foreign-income