A new statutory resident test came into force on the 6th April 2013 designed to give taxpayers greater certainty as to whether or not they are UK resident for tax purposes. The test distinguishes between ‘arrivers’ and ‘leavers’. Arrivers are people who have not been resident in the UK in any of the previous three tax years. Leavers are those who have been. Arrivers and leavers must use different measures to establish their residence status.
The first part of the test is an ‘automatic overseas test’. The automatic overseas test sets out factors which, if they are met, prove that a taxpayer is conclusively non-resident. If the individual is not conclusively non-resident, one then moves on to the automatic residence test, which sets out factors which prove someone is definitely UK-resident.
For arrivers in the UK, defined as those not present in the UK in any of the previous 3 tax years, one is considered conclusively as non resident is they are in the UK for less than 46 Days. Conclusive residence is deemed where one is present for more than 183 days.
If an individual is neither conclusively resident nor non-resident under these tests, the ‘sufficient ties test’ applies. This sets out five further factors which must be considered, together with the number of days spent in the UK, in order to determine an individual’s residence. The five connecting ties are:
Family – this includes spouses, civil and common law partners and minor children in the UK.
Accommodation – the individual has accommodation in the UK which is available for a continuous period of at least 91 days (ignoring breaks of less than 16 days) and s/he spends at least one night there. All forms of tenure or occupancy will fall within the definition of accommodation.
Substantive work in the UK – 40 working days or more (a working day is defined as more than 3 hours of work).
UK presence in the previous 2 tax years – an individual spends more than 90 days in the UK in either of the previous two tax years.
More days spent in the UK in a tax year than any other single country – this applies only to leavers and is designed to catch leavers who do not take up residence in any other country following a period of UK-residence.
The rules are as always significantly complex and specialist tax advice should be taken. It is interesting however in an Immigration law context when considering UK Residency.