UK tax rings in changes for those working overseas

UK tax rings in changes for those working overseas
28 March 2013

THE new UK HM Revenue and Customs Statutory Residence Test will determine individual UK tax residence with effect from 6 April 2013 onward.

Who needs to take action?

Any UK citizen living outside of the UK who intends to visit after 6 April 2013.

If you are currently non-resident and complete a UK Tax Return.

Aircrew need to make themselves aware of the specific rules for their industry.

Those looking at leaving the UK and subsequently being considered non-resident should be aware of the new legislation relating to splitting the tax year of departure and new temporary non-residence rules,

If you are planning on returning to the UK after 6 April 2013, it is no longer a clear-cut case of being treated as resident only from the point of your arrival.

Take the test

The new regulations require the following tests, each year! Essentially, the tests divide taxpayers into three separate possible categories, each with their own rules.

Those considered automatically non-resident,

Those considered automatically resident; and

Those who need to review connecting factors with the UK and the amount of time spent here.

The three tests are as follows:

Test 1 - Automatically Non-Resident

Non-resident if any of the following conditions are met:

Resident in one or more of the previous three years and visit the UK for fewer than 16 days, or

Non-resident in all of the previous three years and visit the UK for fewer than 46 days, or

Left to carry out full-time work abroad (FTWA) and visit the UK for fewer than 91 days, with fewer than 31 days spent working in the UK

Test 2 - Automatically Resident

Resident if Test 1 does not apply and any of the following conditions are met:

Present in the UK for more than 183 days,

Have a home in the UK for more than 90 days and more than 30 days are spent there in the year. Whilst having that home there is a period of 91 consecutive days during which time they have no home overseas or they have a home overseas but spend less than 30 days there in the tax year

Carry out full-time work in the UK

Test 3 - Sufficient Ties Test

If neither Test 1 nor 2 applies, then you first determine if you are:

An Arriver – someone who has been an expat for the last 3 years

Leaver - someone who has been resident in one or more the previous three years

 

Once you have completed these tests you then review the number of ties with the UK that apply to you:

Family Tie - spouse/partner/common law equivalent or minor children are UK resident

Accommodation Tie - has accessible accommodation which is available for at least 91 days and the individual spends one night there in the tax year

Work Tie - you do not work full time in the UK, but perform more than 40 days’ work in the UK

90 days tie - you have spent more than 90 days in the UK in either of the previous two tax years

Country Tie (applies to leavers only) - you spent more days in the UK than any other single country in the tax year

The numbers of ties relevant are then combined with the days spent in the UK for that year and status is determined as follows:

Arriver

Impact of connection factors on residence

Days spent in the UK

Always non-resident Fewer than 45 days

 

Resident if individual has 4 Factors

46 - 90 days

Resident if individual has 3 Factors or more

91-120 days

Resident if individual has 2 Factors or more

121- 182 days

Always Resident 183 days or more

 

 

Leaver

Impact of connection factors on residence

Days spent in the UK

Always non-resident Fewer than 16 days

 

Resident if individual has 4 Factors or more

16 - 45 days

Resident if individual has 3 Factors or more

46 - 90 days

Resident if individual has 2 Factors or more

91 -120 days

Resident if individual has 1 factor or more

121 - 182 days

Always Resident 183 days or more

 


The guidelines provide very specific definitions for each of the steps and what is full-time work abroad, what constitutes a workday, and what is considered accessible accommodation. Specific rules also apply to International Transportation Workers, aircrew and lorry drivers.

We have distilled the core information required here but would urge you to review the guidelines. Better still if you are an expat it would also be sensible to check with your Government embassy or consul.

Pic credit: freedigitalphotos.net

Will this new regulation impact you or do you have any advice to share on the new regulations?

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Author
Head of Behavioral Finance
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