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The way in which an individual's residence is determined changed from 6 April when the UK's first formal residence test for individuals, known as the statutory residence test SRT , took effect. The residence of individuals for earlier years remains determined by reference to case law, limited statutory rules and HMRC practice. Under the SRT, the residence status in a particular tax year can be affected by the residence status in an earlier year. The test of whether an individual is resident in the UK for tax purposes is determined by statute from 6 April Under the basic rule, an individual is treated as UK tax resident for a tax year if he or she meets for that year:.
However, if an individual satisfies at least one of the automatic overseas tests, the individual is not UK tax resident for that tax year, ie the automatic overseas residence test takes priority over the automatic UK residence and sufficient ties tests. Determining if an individual is UK tax resident is therefore a process that can have up to three stages, as follows:.
Residence after 5 April The structure of the statutory residence test. The statutory residence test—key concepts and definitions. Statutory residence test—working full-time or sufficient hours.
Statutory residence test—split year treatment. Application of split year treatment to component income and gains after 5 April The statutory residence test—overseas workday relief.
Given the significance of UK residence to an individual's liability to UK tax, temporary non-residence has long been recognised as an avoidance opportunity. As a result, anti-avoidance measures have over the years been introduced into various specific charging provisions. FA , Sch 45, Pt 4 provides a central definition of 'temporarily non-resident' which applies to revised versions of certain charging provisions and extends it to others. The definition contained in the SRT can apply to:.
Temporary non-residence—post 5 April departures. For information on temporary non-residence prior to 6 April , see Practice Note: If you were resident in one or more of the three tax years immediately preceding the tax year under consideration, you will be treated as a 'leaver' for the purposes of the SRT.
This can result in seemingly paradoxical situations; for example someone who has arrived in the UK and completed their first tax year of residence here is treated as a leaver in the following year for the purposes of the sufficient ties tests even if they remain UK resident and do not intend to leave the UK at that time. The following ties may be relevant to your residence status if they occur at any point in the tax year, namely:. These connection factors are combined with days spent in the UK to determine residence status as follows:. You will be treated as being in the UK on any day when you are in the UK at midnight at the end of that day.
However, this is subject to a 'deeming' provision which applies in particular circumstances. This deeming provision counts days where individuals have been present in the UK as days of residence, even when they are not present in the UK at the end of the day.
If plans that form the basis of advice are disrupted, further The statutory residence test has been in place since 6 April and now seems. Expats need to use the statutory residence test to determine how much tax to pay. , your UK tax residence status is determined using a statutory residence to ensure you plan your tax residence status in the most tax efficient manner.
The deeming rule applies to individuals who have at least 3 UK ties in the tax year in question, have been present in the UK on more than 30 days without being here at the end of the day, and would be treated as a 'leaver' for the purposes of the tests, ie resident in the UK for at least one of the previous 3 tax years. If these conditions are met, all days when that individual is present in the UK above the 30 day threshold will be treated as a day of residence regardless of whether the individual is present in the UK at the end of the day.
This deeming provision does not apply to those who are working 'sufficient hours' overseas. Days spent in the UK due to exceptional circumstances may not count but the definition of what counts as exceptional circumstances is very limited. Exceptional circumstances are not taken into account for all tests. The number of days which may be spent in the UK due to exceptional circumstances without being counted as days of presence will be limited to The current rules for individuals travelling through the UK as a passenger where they are in the UK at the end of any day will also be retained.
This will mean that a day will not count as a day of UK presence if you arrive in the UK as a passenger, depart from the UK on the next day and during your time in the UK you do not engage in any activity substantially unrelated to your passage through the UK. Prior to the introduction of the SRT, by Extra Statutory Concession the tax year could be split into periods of residence and non-residence in certain circumstances, when someone came to, or left, the UK part way through a tax year. This prevented some individuals being taxed as if they were resident for the parts of the year before they came to the UK or after they left.
The new rules will, in eight statutorily defined cases, treat a tax year as being split into periods of residence and non-residence if individuals:. If an individual is not resident for a tax year under the SRT, then split year treatment will not apply. Part B — Conclusive Residence If Part A of the test does not apply, an individual will be conclusively resident for the tax year under Part B if they meet any of the following conditions, namely they: Are present in the UK for days or more in a tax year; or Have only one home and that home is in the UK or have two or more homes and all of these are in the UK or have UK and overseas homes and spend no more than a certain amount of time in the overseas homes ; or Carry out full-time work in the UK.
The UK ties referred to in Part C of the test are: Accommodation — the individual has available accommodation in the UK and makes use of it during the tax year; Substantive work in the UK — the individual has substantive employment or self-employment in the UK defined as 40 work days of more than 3 hours in the tax year.
UK presence in previous years — the individual spent more than 90 days in the UK in either of the previous two tax years. More time in the UK than other countries — the individual spends more days in the UK in the tax year than in any other single country. How to Determine your Tax Status. Tax Issues on Divorce.