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

Ki Residences Singapore Under the current rules you’re resident in the UK in the event that you spend 183 days or more in the UK and you also could be resident in the event that you spend more than 3 months on average. Under the new rules there will be no more four-year average and when you spend more than 90 days in the UK in any tax year you will continually be considered to be resident. As before, you should be away from the united kingdom for a whole tax year to be able to qualify as non-resident and a day counts to be a day on the UK for anyone who is here at midnight on that day.

However, the new law is generally designed to leave a lot of people in exactly the same position as previously so you are unlikely to find your situation suddenly altered. It is vital though that you understand the brand new test of residence and non-residence. There are three sections of the test that have to be considered to be able. In other words, when you are definitely non-resident based on Part A, then you need not consider parts B and C.

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

Part A: You are definitely non-resident if:

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

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

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 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 UK i.e. more than forty days in the tax year but do not work full-time in the UK. UK presence in previous years – you spent a lot more than 90 days in the UK in either of the previous two tax years and you also 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 find out whether you are resident or non-resident. You can find two categories, arrivers and leavers.

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

Less 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 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 in mind – ‘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 more connection factors. 121 – 182 days: Resident if you can find 1 or even more connection factors. 183 days or even more: Always resident

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