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21 Jun, 2011
UK residence
consultation
The UK's HMRC has
released its highly-awaited consultation document on a statutory
definition of tax residence in the UK. The document and
proposed legislation will affect individuals who have UK
connections, and have tax residency connections which may apply to
income tax and capital gains tax. When enacted, the new tax
residency legislation will supersede all the existing legislation
and case law.
The Tax Residence
Consultation is therefore designed to make it harder to become a
non-UK resident when leaving the UK and make it easy to get caught
up in the UK tax legislation.
However, our tax
expert has below listed the criteria to what is takes to fall in
the UK residency bracket.
PART A: You
are considered a non UK resident if:
- You were not resident in the UK in all of the previous three
tax years, and were present in the UK for less than 45 days in the
current tax year.
- You were resident in the UK in one or more of the previous
three tax years, and were present in the UK for fewer than 10 days
in the current tax year.
- Or left the UK to carry out full-time work abroad provided they
that you were present in the UK for less than 90 days in the tax
year, and no more than 20 days are spent working in the UK in the
tax year.
PART B: You
are considered a UK resident if:
- You were present in the UK for 183 days or more in a tax
year.
- You have one or more homes only in the UK.
- You carry out full-time work in the UK.
PART C:
Connection factors for UK residency
This section states
that the number of days spent in the UK, together with the
connections one has established with the UK, make an impact on
whether you qualify as a non-UK resident and thus outside the
current UK taxation bracket.
The connections
include:
- Family - spouse or civil partner, or common
law equivalent, or minor children are resident in the UK.
- Accommodation - accessible accommodation in
the UK and makes use of it during the tax year.
- Substantial work in the UK - does substantial
work in the UK (but does not work in the UK full-time).
- Present in the UK in the previous year - spent
90 + days in the UK in either of the previous two tax years.
- Spent more time in the UK than in other
countries - more days spent in the UK in the tax year than
in any other single country.
The way
these connection factors are combined with days spent in the UK to
determine UK residence status is as follows: (for
individuals who were not resident in all of the previous three
years).
| Days spent in UK |
Impact of connection factors on residence
status |
| Fewer than 45 days |
Always non-resident |
| 45 - 89 days |
Resident if individual has 4 factors or more
(otherwise not resident) |
| 90 -119 days |
Resident if individual has 3 factors or more
(otherwise not resident) |
| 120 - 182 days |
Resident if individual has 2 factors or more
(otherwise not resident) |
| 183 days or more |
Always resident |
The way
these connection factors are combined with days spent in the UK to
determine UK residence status is as follows: (for
individuals who were resident in one or more of the previous three
tax years).
| Days spent in UK |
Impact of connection factors on residence
status |
| Fewer than 10 days |
Always non-resident |
| 10 - 44 days |
Resident if individual has 4 factors or more
(otherwise not resident) |
| 45 -89 days |
Resident if individual has 3 factors or more
(otherwise not resident) |
| 90 - 119 days |
Resident if individual has 2 factors or more
(otherwise not resident) |
| 120 - 182 days |
Resident if individual has 1 factor or more
(otherwise not resident) |
| 183 days or more |
Always resident
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If you are thinking of moving abroad and would like some
more information about UK residency tax laws, please feel free to
contact one of our
qualified advisers.
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