TOP QUALITY RESIDENCES: Do You Really Need It? This Will Help You Decide!

The government is proposing new rules which come to effect from 6 April 2013 that may put UK residence for tax purposes on a statutory footing, rather than relying on HMRC guidelines and case law. In principle that is a sensible move and can provide certainty for anybody unsure at present if they qualify as being non-resident in the united kingdom for tax purposes. Nevertheless 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 could be resident in the event that you spend more than 90 days on average. Beneath the new rules there will be no more four-year average and when you spend more than 3 months in the UK in virtually any tax year you will always be considered to be resident. As before, you have to be away from the UK for a whole tax year so that you can qualify as non-resident and a day counts as being a day on the UK in case you are at midnight on that day.

However, the new law is normally designed to leave most people in the same position as previously and that means you are unlikely to find your situation suddenly altered. It is important though that you understand the brand new test of residence and non-residence. There are three parts of the test that have to be considered to be able. In other words, for anyone who is definitely non-resident based on Part A, then you need not consider parts B and C.

So, we think most of our clients ought to be still covered by the provision partly 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 fewer than 91 days in the tax year and no a lot more than 20 days are spent employed in the UK in the tax year. Here though will be the three parts of the test.

Part A: You’re definitely non-resident if:

You were not resident in the UK for the prior 3 tax years and present in the UK for less than 46 days in today’s tax year; or You were resident in the UK in one or more of the previous 3 tax years but present in the UK for fewer than 16 days in today’s tax year; or You have gone the UK to carry out full-time work abroad and provided you were present in the united kingdom for less than 91 days in the tax year and no more than 20 days are spent employed in the united kingdom in the tax year. Training paid for by your employer and used the UK will undoubtedly be considered work and this will undoubtedly be extracted from your 20 day working allowance.

Part B: You are definitely resident if:

You are present in the united kingdom for 183 days or more in a tax year; or You have only 1 home and that home is in the united kingdom 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 is not described in Parts A and B you then need to compare the amount of days spent in the united kingdom against a small amount of clearly defined connection factors. These connection factors are the following:

Family- your spouse or civil partner or common law equivalent (provided you aren’t 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 through the tax year (at the mercy of exclusions for some types of accommodation). Substantive work in the UK – you do substantive work in the UK i.e. a lot more than forty days in the tax year but usually do not work full-time in the UK. Ki Residences Sunset Way 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 UK 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 weren’t resident in any of the prior three tax years – ‘Arrivers’:

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

If you were resident in one or more of the three tax years immediately before the tax year in mind – ‘Leavers’:

Less than 16 days in UK: Always non-resident. 16 – 45 days: Resident if 4 or even more connection factors. 46 – 90 days: Resident if 3 or more connection factors. 91 – 120 days: Resident if 2 or more connection factors. 121 – 182 days: Resident if there are 1 or more connection factors. 183 days or even more: Always resident

Once the Finance Bill is produced there can be some changes to the legislation and more detail may emerge, but there has been considerable consultation and it is sensible to prepare for the brand new rules now. If that is relevant to your situation you should take professional advice to ensure you don’t fall foul of the brand new legislation.

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