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Old 05.08.2011, 10:12
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(Proposed) New UK residency rules

Here is a really helpful article about the new proposed UK residency rules for people leaving the UK.

Quote:
The number of days you can spend in the UK without becoming a UK tax resident is then dependent on how many of five other factors apply to you.


A day in the UK will be any day when you are physically present at midnight.


Under the proposals, if you have left the UK you can never be UK tax resident if you spend less than 10 days in the UK in a UK tax year even though you may have a home there, or a family, or whatever.

On the other hand, if you spend more than 9 days in the UK and have your only home in the UK (and no other home outside of the UK) you will be a UK tax resident.


If you work full time in the UK (more than nine months continuously and not more than 25% of the duties performed outside of the UK) you will be classed as UK tax resident. Note that the nine months can straddle two UK tax years; it is not nine months per tax year.


Otherwise, to determine your tax residence, you need to see how many of the other “connecting factors” apply to you. These are:


1. Family – if you have a spouse/civil partner and/or children aged under 18 who are tax resident in the UK.


2. Accommodation – residential property accessible to you to be used as a place of residence and used as so by yourself or your family in the year.


3. Substantive employment – if you work in the UK for 40 or more days in a tax year.


4. UK presence in previous years – if you have been UK resident for more than 90 days in either of the previous two UK tax years.


5. More time spent in the UK in the tax year than any other single country


The above factors are all subject to their own specific criteria.


If only one factor applies, you can spend up to 119 days in the UK without becoming UK tax resident.


If no more than two factors apply, you can spend up to 89 days.


If no more than three factors apply you can spend up to 44 days.


If four or more factors apply you can spend no more than 9 days.



If you exceed any of the days above in a UK tax year you will be UK tax resident. If you spend over 182 days a year in the UK, you will be UK tax resident even if none of the connecting factors apply.

Please note that these are only proposals at this stage, but it looks like the whole question of UK residency is about to become a lot clearer. Hope this information is useful for some of you!
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Old 05.08.2011, 10:34
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Re: (Proposed) New UK residency rules

It's very good news if it happens, the thing to be aware of it't not going to be retrospectivly applied, so current 'grey areas' stay grey.

Could anybody explain how 4(or more) factors could possibly apply & spend less than 10 days? Am I missing something?


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Here is a really helpful article about the new proposed UK residency rules for people leaving the UK.




Please note that these are only proposals at this stage, but it looks like the whole question of UK residency is about to become a lot clearer. Hope this information is useful for some of you!
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Old 05.08.2011, 10:44
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Re: (Proposed) New UK residency rules

If four or more of the factors apply to you and you spend 10 or more days in the UK in a tax year, you'll have to pay tax. If you spend 9 days or less, you won't. That's how I read it.
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Old 05.08.2011, 10:49
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Re: (Proposed) New UK residency rules

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Could anybody explain how 4(or more) factors could possibly apply & spend less than 10 days? Am I missing something?
Hypothetically, at least, imagine that I live in the UK full-time until I'm 60. At 60, I decide to buy a place on The World and go cruising around the world, spending a week in each of 51 countries. I retain my house in the UK, where my wife (who gets seasick) stays year-round in my absence, and who I visit for a eight days a year at Christmas. Without judging me as a husband, I'd have fallen foul of four of the tests without spending more than 9 days in the UK:

1. Family – if you have a spouse/civil partner and/or children aged under 18 who are tax resident in the UK.

2. Accommodation – residential property accessible to you to be used as a place of residence and used as so by yourself or your family in the year.

4. UK presence in previous years – if you have been UK resident for more than 90 days in either of the previous two UK tax years.

5. More time spent in the UK in the tax year than any other single country

It's an unlikely, but not implausible, situation -- and one which today would be incredibly hard to judge with any certainty. At least the new rules make it much clearer.
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Old 05.08.2011, 11:16
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Thanks for that, it was spending more time in the uk than anywhere else & less than 10 days in the uk that got me. I can think of a few people who might leave their wife at home for a year LOL
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Old 05.08.2011, 11:37
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Re: (Proposed) New UK residency rules

i think what would also be good is a clear definition/test of "if you have left the UK". if HMRC keep this trump card that invalidates all the previous tests by claiming that you never 'left' the UK then it won't be much good to you.
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Old 05.08.2011, 18:10
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Re: (Proposed) New UK residency rules

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i think what would also be good is a clear definition/test of "if you have left the UK". if HMRC keep this trump card that invalidates all the previous tests by claiming that you never 'left' the UK then it won't be much good to you.
The whole point of the Statutary defination is to make it clear, you just have to limit your time in the UK to be less than 9 , 44 or 89 days depending on the other factors.
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Old 05.08.2011, 18:13
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Re: (Proposed) New UK residency rules

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The whole point of the Statutary defination is to make it clear, you just have to limit your time in the UK to be less than 9 , 44 or 89 days depending on the other factors.
maybe the actual law will be clearer, but just taking the above quote, you first have to cross the hurdle of having left the UK before applying the statutory definitions:

Quote:
Under the proposals, if you have left the UK you can never be UK tax resident if you spend less than 10 days in the UK in a UK tax year even though you may have a home there, or a family, or whatever.
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Old 05.08.2011, 18:46
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Re: (Proposed) New UK residency rules

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maybe the actual law will be clearer, but just taking the above quote, you first have to cross the hurdle of having left the UK before applying the statutory definitions:
I think it's fairly clear, I have quoted selected parts:-



3.7 Therefore, there are parts of the test where a distinction will be made between:
• Arrivers – defined as individuals who were not UK resident in all of the previous
three tax years; and
• Leavers – defined as individuals who were resident in one or more of the previous
three tax years.

3.11 To enable the SRT to provide both for those with straightforward affairs and those
whose tax residence position is more complicated, the Government proposes that the test will
have three parts:
• Part A contains conclusive non-residence factors that would be sufficient in
themselves to make an individual not resident.
• Part B contains conclusive residence factors that would be sufficient in themselves
to make an individual resident.
• Part C contains other connection factors and day counting rules which will only
need to be considered by those whose residence status is not determined by Part A
or Part B.

Framework
3.10 Interested parties should note the following points about the scope and application of this
test:
• it will define tax residence for individuals and it will not cover the residence of
companies;
• it will apply for the purposes of income tax, capital gains tax (CGT) and inheritance
tax (IHT);
• it will not apply for non-tax purposes or other Government services where residence
is separately defined, such as National Insurance Contributions (NICs); and
• the new statutory definition will supersede all existing legislation, case law and
guidance for tax years following its introduction.


Part A: conclusive non-residence test
Full-time work abroad
4.2 A person has full-time work abroad (FTWA) if they leave the UK to perform work abroad
and are:
• employed abroad under one or more contracts of employment (including
consecutive employments) or hold offices which have combined total hours of 35
hours per week or more; or
• carrying on one or more trades or professions wholly abroad where 35 hours of
work per week or more is undertaken on average.
4.3 In either of these cases the work must be carried out for at least one full tax year if it is to be
classed as full-time work abroad.
4.4 When a person is working full-time abroad, no more than 20 working days can be
performed in the UK in any one tax year. This limit will be reduced pro rata if the individual is
treated as being not resident for part of a year under the split year rules.
4.5 The person must be present in the UK for fewer than 90 days. This limit will be reduced pro
rata if the individual is treated as being not resident for part of a year under the split year rules.
4.6 Individuals who do not meet all the criteria for full-time work abroad, for example if they
have more than 20 working days in the UK, will not necessarily be resident; they may still be
non-resident under Part C.

Part B: conclusive residence test
Only home
4.12 If a person has only one home and that is in the UK or they have more than one home and
all of these are in the UK, this will constitute an ‘only home’.
4.13 Residential accommodation is not treated as an individual’s home if that accommodation is
being advertised for sale or let and the individual lives in another residence.
Full-time work in the UK
4.14 A person is working full-time in the UK if they are:
• employed in the UK under one or more contracts of employment (including
consecutive employments) or hold offices with total combined contracted hours of
35 hours per week or more; or
• carrying on one or more trades or professions in the UK where 35 hours of work
per week or more is undertaken on average.
4.15 The work must be carried out in the UK over a continuous period of more than 9 months
(excluding short breaks such as illness or holidays) and not more than 25% of the duties can be
undertaken outside of the UK within that period.

Last edited by fatmanfilms; 05.08.2011 at 19:03. Reason: added conclusive tests
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Old 18.08.2011, 17:39
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Re: (Proposed) New UK residency rules

THe text posted above for the Part a and Part B seems quite different to what I found elsewhere.
e.g. at http://www.bdo.uk.com/services/tax/t...osals-unveiled
I see
"Part A - Conclusive non-residence
An individual who meets any of the following three conditions will be conclusively non-resident:
  • They were not resident in the UK in all of the previous three tax years and are present in the UK for fewer than 45 days in the current year; or
  • They were resident in the UK in one or more of the previous three tax years and they are present in the UK for fewer than 10 days in the current year; or
  • They leave the UK to carry-out full time work abroad, provided they are present in the UK for fewer than 90 days in the tax year and no more than 20 days are spent working in the UK in the tax year.
"
There is an XLS with flowchart questions to determine your status. http://www.hm-treasury.gov.uk/d/cons...nline_tool.xls


To me it looks like I would be allowed 120 days per year instead of 90 so that is a plus.
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Old 18.08.2011, 19:03
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Re: (Proposed) New UK residency rules

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THe text posted above for the Part a and Part B seems quite different to what I found elsewhere.
e.g. at http://www.bdo.uk.com/services/tax/t...osals-unveiled
I see
"Part A - Conclusive non-residence
An individual who meets any of the following three conditions will be conclusively non-resident:
  • They were not resident in the UK in all of the previous three tax years and are present in the UK for fewer than 45 days in the current year; or
  • They were resident in the UK in one or more of the previous three tax years and they are present in the UK for fewer than 10 days in the current year; or
  • They leave the UK to carry-out full time work abroad, provided they are present in the UK for fewer than 90 days in the tax year and no more than 20 days are spent working in the UK in the tax year.
"
There is an XLS with flowchart questions to determine your status. http://www.hm-treasury.gov.uk/d/cons...nline_tool.xls


To me it looks like I would be allowed 120 days per year instead of 90 so that is a plus.
The question is if you have been away for the previous 3 tax years based on current rules, it's possible some people have never left the UK for tax purposes. The new rules would make things very clear but they apply to the future & are not retrospective.

I suspect your talking about upto 119 days & upto 89 days.
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Old 18.08.2011, 19:22
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Re: (Proposed) New UK residency rules

Nothing else to add, but it was covered in Tax Adviser magazine recently too:

http://www.taxadvisermagazine.com/ta...e-test-1016512
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Old 18.08.2011, 19:32
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Re: (Proposed) New UK residency rules

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Nothing else to add, but it was covered in Tax Adviser magazine recently too:

http://www.taxadvisermagazine.com/ta...e-test-1016512
Thanks, the problem areas are very useful.
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Old 19.08.2011, 10:50
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Re: (Proposed) New UK residency rules

I see the UK's attempts to make things "simpler" are as clear as mud as ever :roll:

One thing to note is that the proposed new rule that "A day in the UK will be any day when you are physically present at midnight." actually adds days present compared with the current/old rules when the days of arrival and departure didn't count. Under the old rules, I'll have been in the UK for 24 days this calendar year (as currently scheduled) - under the new it's closer to 33 days

ETA: and it seems as usual the left hand doesn't know what the right hand is doing. According to the tax advisor mag link above,

"Day count remains important and the existing guidance in HMRC6 is retained so that a day of presence in the UK is still a day in which you were present at midnight at the end of the day."

However the non-res pages of the UK tax return still tell you not to count the day of arrival and departure
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Old 19.08.2011, 11:51
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Re: (Proposed) New UK residency rules

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he right hand is doing. According to the tax advisor mag link above,

"Day count remains important and the existing guidance in HMRC6 is retained so that a day of presence in the UK is still a day in which you were present at midnight at the end of the day."

However the non-res pages of the UK tax return still tell you not to count the day of arrival and departure
Calender year does not count, it's tax year.
HRMC6 takes into account the 'Robert Gains-Cooper case. Remember it's only guidence it't not written in law.
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Old 19.08.2011, 15:38
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Re: (Proposed) New UK residency rules

Yes I know full well it's tax year that counts - I happen to have a calendar year planner in front of me which I used for illustrative purposes only to show that how the days are counted makes a big difference
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Old 29.06.2014, 15:47
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Re: (Proposed) New UK residency rules

JUst for reference the new rules are here: http://www.hmrc.gov.uk/international/rdr3.pdf
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Old 29.06.2014, 15:52
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Re: (Proposed) New UK residency rules

That is so weird, my husband has just printed off this document!
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Old 29.06.2014, 16:17
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Re: (Proposed) New UK residency rules

What! All 105 pages?
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Old 29.06.2014, 16:19
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Re: (Proposed) New UK residency rules

No, just the parts he needed.
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