Need More Time? Read These Tips To Eliminate TOP QUALITY RESIDENCES

The government is proposing new rules that come to effect from 6 April 2013 which will put UK residence for tax purposes on a statutory footing, rather than relying on HMRC guidelines and case law. In principle it is a sensible move and will provide certainty for anybody unsure at present if they qualify as being non-resident in the UK for tax purposes. However the rules are complex and also have attracted some criticism because of this.

Under the current rules you are resident in the UK if you spend 183 days or even more in the UK and you also could be resident if you spend more than 3 months on average. Under the new rules there will be no more four-year average and if you spend more than 3 months in the UK in any tax year you will continually be considered to be resident. As before, you should be away from the UK for a whole tax year so that you can qualify as non-resident and a day counts to be a day on the UK should you be at midnight on that day.

Ki Residences Sunset Way However, the new law is normally designed to leave a lot of people in exactly the same position as previously which means you are unlikely to find your position suddenly altered. It is vital though that you understand the new test of residence and non-residence. There are three parts of the test which have to be considered to be able. In other words, in case you are definitely non-resident based on Part A, then you don’t have to consider parts B and C.

So, we think most of our clients ought to be still covered by the provision in Part A that you are non-resident when you have left the UK to handle full-time work abroad and are present in the UK for less than 91 days in the tax year and no more than 20 days are spent working in the united kingdom in the tax year. Here though are the three parts of the test.

Part A: You are definitely non-resident if:

You were not resident in the united kingdom for the prior 3 tax years and within the UK for under 46 days in the current tax year; or You’re resident in the UK in one or more of the previous 3 tax years but present in the UK for less than 16 days in the current tax year; or You have left the UK to carry out full-time work abroad and provided you were present in the UK for less than 91 days in the tax year and no a lot more than 20 days are spent working in the united kingdom in the tax year. Training covered by your employer and taken in the UK will be considered work and this will be taken from your 20 day working allowance.

Part B: You’re definitely resident if:

You are present in the UK for 183 days or even more in a tax year; or You have only 1 home and that home is in the UK or have significantly more homes and many of these are in the UK; or You perform full-time work in the united kingdom.

Part C: If your position isn’t described in Parts A and B you then need to compare the quantity of days spent in the UK against a small amount of clearly defined connection factors. These connection factors are as follows:

Family- your partner or civil partner or common law equivalent (provided you are not separated from them) or minor children are resident in the united kingdom. Accommodation – you have accessible accommodation in the UK and makes use of it during the tax year (at the mercy of exclusions for some types of accommodation). Substantive work in the UK – you do substantive work in the united kingdom i.e. more than forty days in the tax year but usually do not work full-time in the united kingdom. UK presence in previous years – you spent a lot more than 90 days in the UK in either of the prior two tax years and you spend more days in the united kingdom in the tax year than in virtually any other single country.

These connection factors are then coupled with day counting to determine whether you’re resident or non-resident. There are two categories, arrivers and leavers.

If you were not resident in any of the prior three tax years – ‘Arrivers’:

Fewer than 46 days in UK: Always non-resident. 46 – 90 days: Resident if 4 or even more connection factors. 91 – 120 days: Resident if 3 or more connection factors. 121 – 182 days: Resident if 2 or even more connection factors. 183 days or even more: Always resident.

If you were resident in a single or even more of the three tax years immediately before the tax year under consideration – ‘Leavers’:

Less than 16 days in UK: Always non-resident. 16 – 45 days: Resident if 4 or more connection factors. 46 – 3 months: Resident if 3 or more connection factors. 91 – 120 days: Resident if 2 or even more connection factors. 121 – 182 days: Resident if there are 1 or more connection factors. 183 days or more: Always resident

When the Finance Bill is produced there may be some changes to the legislation and more detail may emerge, but there’s been considerable consultation in fact it is sensible to prepare for the new rules now. If this is relevant to your situation you need to take professional advice to make sure you do not fall foul of the brand new legislation.