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Statutory Residence Test Update

How HMRC decide whether or not Expats are UK resident for tax will now change in 2013

London, UK (Pryce Warner International) December 13th, 2011 – Over the past 8 months HMRC has undergone a consultation period to determine the best way to change the method in which individual's residency status is determined.

After several speculative changes were announced several months ago, it was expected that the full details would be published in 2012 Finance Bill published last week. This would have meant that any new laws would have come into force from April 6th 2012.

Instead, the Bill contained a statement stating that the consultation period is to be extended, that draft legislation will be published in the 2012 budget and that any new laws will not come into effect until April 6th 2013.


The new method for testing individuals residency status was to be a new statutory residence test. The initial proposals indicated that this new test would reduce the amount of days individuals could visit Britain and remain technically resident overseas. The new test is also likely to now be decided on a yearly basis with any changes in a person’s circumstances to be taken into account.

With the new legislation delayed this means that individuals will continue to have their residency determined on personal circumstances and the precedent case law set by HMRC. This often means that individuals need to demonstrate convincingly that their “centre of life” is based outside of the UK.

As this is decided on a case-by-case basis and is inherently ambiguous, there have been numerous cases where HMRC decisions have been appealed. The aim of the new legislation is to correct this.

By Aneil Fatania
Financial Editor
Pryce Warner International Group

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