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Statutory Residence Test

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A new Statutory Residence Test (SRT) that determines whether or not someone is considered UK resident for tax purposes will come into force on April 6th 2013.

Expats have until that time to ensure that they will not be affected by the Statutory Residence Test. Currently, anyone that spends over 183 days or more in any one tax year, or more than 90 days on average per tax year over four years, will be considered UK resident by for tax purposes.

The SRT is divided into three parts.

First is a test to determine whether or not someone is ‘automatically non-resident’, then a test to decide If they are ‘automatically resident’, and If they do not fall into either of these categories, a sufficient ties test will be carried out.

The sufficient ties test determines residency based on a combination of the time spent in the UK with the number of ties a person has. Ties to the UK would include family, property, employment and social connections.

More details are below:

PART A - Automatically Non-Resident

You would be considered non-resident if any of the following conditions are met:

  • Resident in one or more of the previous three years and visit the UK for fewer than 16 days, or
  • Non-resident in all of the previous three years and visit the UK for fewer than 46 days, or
  • Left to carry out full-time work abroad and visit the UK for fewer than 91 days, with fewer than 31 days spent working in the UK

PART B - Automatically Resident

You are considered resident if Part A does not apply and any of the following conditions are met:

  • Present in the UK for more than 183 days,
  • Have a home in the UK for more than 90 days and more than 30 days are spent there in the year. Whilst having that home, there is a period of 91 consecutive days during which time they have no home overseas or they have a home overseas but spend less than 30 days there in the tax year.
  • Carry out full-time work in the UK

PART C - Sufficient Ties Test

If you are not automatically considered resident or non-resident as per Parts A and B, then first it is determined whether you are:

  • an Arriver - If neither Part A nor Part B applies, then you first determine if you are:
  • a Leaver - someone who has been resident in one or more the previous three years

The number of ties you have with the UK would then be examined to determine residency:

Family Ties - spouse/partner/common law equivalent or minor children are UK resident

Accommodation Ties - has accessible accommodation that is available for at least 91 days and the individual spends one night there in the tax year

Work Ties - you do not work full time in the UK, but perform more than 40 days’ work in the UK

90 day ties - you have spent more than 90 days in the UK in either of the previous two tax years

Country Ties (applies to leavers only) - you spent more days in the UK than any other single country in the tax year

The numbers of ties relevant are then combined with the days spent in the UK for that year and status is determined as follows:

Arriver

Impact of connection factors on residence                                  Days spent in the UK

Always non-resident Fewer than 45 days

Resident if individual has 4 Factors                                              46 - 90 days

Resident if individual has 3 Factors or more                               91-120 days

Resident if individual has 2 Factors or more                              121- 182 days

Always Resident 183 days or more

Leaver

Impact of connection factors on residence                                  Days spent in the UK

Always non-resident Fewer than 16 days

Resident if individual has 4 Factors or more                               16 - 45 days

Resident if individual has 3 Factors or more                               46 - 90 days

Resident if individual has 2 Factors or more                               91 -120 days

Resident if individual has 1 factor or more                                  121 - 182 days

Always Resident 183 days or more

 

In addition to the criteria laid out above, there are various exemptions and other, more minute criteria that are too numerous to list here. Whether or not any of this applies to you also depends on specific defitnions of what constitutes, full-time work abroad, a workday, and accessible accommodation. Specific rules also apply to International Transportation Workers, aircrew and lorry drivers.

Who needs to take action?

  • Anyone living outside of the UK who intends to visit here after 6 April 2013.
  • Aircrew need to make themselves aware of the specific rules for their industry.
  • If you are currently non-resident and complete a UK Tax Return.
  • Those considering leaving the UK and subsequently being considered non-resident should be aware of the new legislation relating to splitting the tax year of departure and new temporary non-residence rules. Likewise if you are planning on returning to the UK after 6 April 2013, it is no longer a clear-cut case of being treated as resident only from the point of your arrival.

Further changes may be made to the test, so check this page regularly for the latest updates. If you want more personalised advice on how this may affect you, please do not hesitate to contact one of our advisors today.


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