Does TOP QUALITY RESIDENCES Sometimes Make You Feel Stupid?

The government is proposing new rules that come to effect from 6 April 2013 that will put UK residence for tax purposes on a statutory footing, instead of counting on HMRC guidelines and case law. In principle this is a sensible move and can provide certainty for anyone unsure at present whether 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.

Under the current rules you’re resident in the UK if you spend 183 days or more in the UK and you 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 when you spend more than 90 days in the UK in any tax year you will always be considered to be resident. As before, you should be away from the united kingdom for a whole tax year so as to qualify as non-resident and a day counts to be a day on the UK if you are here at midnight on that day.

Ki Residences Singapore However, the new law is normally designed to leave most people in exactly the same position as previously which means you are unlikely to find your situation 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 the majority of our clients should be still included in the provision in Part A you are non-resident when you have left the UK to carry out 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 elements 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 present in the UK for under 46 days in today’s tax year; or You’re resident in the UK in a single or more of the prior 3 tax years but within the UK for less than 16 days in the current tax year; or You have left the UK to handle full-time work abroad and provided you were present in the united kingdom for fewer than 91 days in the tax year no a lot more than 20 days are spent employed in the UK in the tax year. Training covered by your employer and taken in the UK will be considered work and this will be extracted from your 20 day working allowance.

Part B: You’re definitely resident if:

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

Part C: If your situation isn’t described in Parts A and B then you need to compare the number of days spent in the UK against a small number 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 their website) or minor children are resident in the UK. Accommodation – you have accessible accommodation in the UK and employs it during the tax year (subject to 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 do not work full-time in the UK. UK presence in previous years – you spent more than 90 days in the UK in either of the prior two tax years and you also spend more days in the united kingdom in the tax year than in any other single country.

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

If you weren’t resident in any of the previous three tax years – ‘Arrivers’:

Fewer than 46 days in UK: Always non-resident. 46 – 90 days: Resident if 4 or more connection factors. 91 – 120 days: Resident if 3 or even 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 more of the three tax years immediately prior to 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 even more connection factors. 91 – 120 days: Resident if 2 or even more connection factors. 121 – 182 days: Resident if you can find 1 or even 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 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 new legislation.