Statutory Residence Test

[Wonkeye]

I don't know whether this would apply to any other of you expats, but this was the subject of the latest update email that I got from The Fry Group. I can't remember how I came to get on their email list, but if anyone is interested, they should email ebulletin@thefrygroup.co.uk . They now and again have useful snippets of information.

This was it:

Statutory Residence Test - the next stage

HM Treasury have finally released their response to the consultation into implementing a statutory residence test from April 2013.

The document outlines a summary of the responses received and also highlights any refinements to the original proposals that have been made. There is some much welcome clarification on certain definitions within the proposed test, although invariably some question marks will remain.

It is a three-tier test, broken down into those who are conclusively non-resident, conclusively resident or if they do not apply, the connections an individual has with the UK and the number of days that they spend here are considered in the final test:

Those who are conclusively non-resident will be
anyone present in the UK for fewer than 46 days if they have been non-resident in all of the previous three years, or
present for fewer than 16 days if they have been resident in one or more of the previous three years, or
work full-time abroad and are present in the UK for fewer than 90 days with no more than 20 days* spent working in the UK

* The consultation document outlines that the Government are requesting views on whether this should be increased to 25 days.

Those who are conclusively resident will be:
Anyone present for more than 183 days in the tax year, or
Only has one home and that home is in the UK, or
Works full-time in the UK
If Parts A & B do not apply, then the number of connecting factors with the UK and the amount of time spent in the UK determines the status.

The response also contains draft legislation which runs to a staggering 62 pages! The Government believe that the outline provided is close to a final draft, however a further consultation period into the legislation, and one or two intended alterations, is to run until mid-September 2012.

Clearly the dissection of the response and legislation will take a little time, however as soon as we have fully reviewed the document and understood its ramifications, we will be producing a number of further E-Bulletins outlining what the proposals mean for those of our clients living overseas or considering moving outside of the UK.

If you need help or advice with your tax affairs please get in touch. Please also feel free to forward this E-Bulletin to any friends or colleagues who you feel might be interested to understand more about the new statutory residence test.

For more information please call 01903 231545 or email ebulletin@thefrygroup.co.uk.