ACCA Advanced Taxation (ATX) Practice Exam

Is it possible to purchase a UK home under the accommodation condition for the split year basis?

1. Yes, purchase is allowed

2. No, only rental is allowed

3. Both purchase and rental are allowed

4. Only rental is allowed under special conditions

The correct answer is: Both purchase and rental are allowed

The correct answer highlights that both purchase and rental are permitted under the accommodation condition for the split year basis. This condition pertains to UK resident individuals who are moving in and out of the UK and have split year treatment applied to their tax residency status. When an individual qualifies for split year treatment, their tax year is split into two parts: one part when they are not a UK resident and another when they become a resident. During the period they are considered a UK resident, they need to have a suitable accommodation arrangement in place. This can be fulfilled either through purchasing a home or through renting a property, allowing the individual to establish residency in line with their life circumstances. By allowing both options, the legislation provides flexibility for individuals depending on their financial situation and personal preferences. This recognizes that some might prefer to buy a property to ensure they have a stable base while others may opt for renting based on temporary needs or financial prudence. Thus, this concept is crucial in understanding the nuances of tax residency and the implications of the split year treatment in UK tax law.