5 Simple Steps To An Effective TOP QUALITY RESIDENCES Strategy

The government is proposing new rules which come to effect from 6 April 2013 which will put UK residence for tax purposes on a statutory footing, rather than relying on HMRC guidelines and case law. In principle this is a sensible move and can provide certainty for anybody unsure at present if they qualify as being non-resident in the united kingdom for tax purposes. However the rules are complex and have attracted some criticism for this reason.

Under the current rules you’re resident in the UK in the event that you spend 183 days or more in the UK and you could be resident if you spend more than 90 days on average. Under the new rules you will have no more four-year average and when you spend more than 3 months in the UK in virtually any tax year you will always be considered to be resident. As before, you need to be away from the united kingdom for a complete tax year in order to qualify as non-resident and each day counts to be a day on the UK if you are here at midnight on that day.

However, the new law is generally designed to leave a lot of people in the same position as previously and that means you are unlikely to find your situation suddenly altered. It is crucial though that you understand the new test of residence and non-residence. There are three parts of the test that have to be considered to be able. In other words, when 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 that you will be non-resident assuming you have left the UK to handle full-time work abroad and so are present in the united kingdom for fewer than 91 days in the tax year and no more than 20 days are spent working in the UK in the tax year. Here though are the three parts of the test.

Ki Residences Singapore Part A: You’re definitely non-resident if:

You were not resident in the united kingdom for the prior 3 tax years and present in the UK for less than 46 days in the current 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 today’s tax year; or You have left the UK to carry out full-time work abroad and provided you were present in the UK for less than 91 days in the tax year no more than 20 days are spent working in the UK in the tax year. Training covered by your employer and taken in the UK will undoubtedly be considered work and this will be taken 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 more homes and all of these are in the united kingdom; or You perform full-time work in the UK.

Part C: If your position is not described in Parts A and B you then need to compare the quantity of days spent in the UK against a small amount of clearly defined connection factors. These connection factors are as follows:

Family- your spouse or civil partner or common law equivalent (provided you are not separated from their website) or minor children are resident in the UK. Accommodation – you have accessible accommodation in the UK and employs it through the tax year (subject to exclusions for some types of accommodation). Substantive work in the united kingdom – you do substantive work in the UK i.e. more than forty days in the tax year but usually do not work full-time in the united kingdom. 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 UK in the tax year than in any other single country.

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

If you were not resident in any of the prior 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 more connection factors. 121 – 182 days: Resident if 2 or more connection factors. 183 days or more: Always resident.

If you were resident in one or even more of the three tax years immediately before the tax year in mind – ‘Leavers’:

Fewer 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 even more: Always resident

When the Finance Bill is produced there can be some changes to the legislation and more detail may emerge, but there has been considerable consultation in fact it is sensible to prepare for the new rules now. If this is relevant to your situation you need to take professional advice to make sure you do not fall foul of the new legislation.

Leave a Reply

Your email address will not be published. Required fields are marked *