• Search Results
  • Audit
    • Tax
    • Advisory

    Tuesday 19 March 2019

    The UK statutory residence test

    With the new UK statutory residence test set to come into effect imminently, anyone with concerns about their UK residence status should seek advice as soon as possible.

    The UK Government has published draft legislation on the new statutory residence test, which comes into effect from 6 April 2013.

    There are three residence tests:
    automatically non-UK resident
    automatically UK resident
    sufficient ties and day count

    A day is counted for UK residence purposes where an individual is present in the UK at midnight. Days are counted by reference to the UK tax year, ie 6 April to 5 April.

    Automatically non-UK resident
    An individual cannot be UK resident if they:

    • spend less than 16 days in the UK
    • were not UK resident in the previous three tax years, and spend less than 46 days in the UK
    • have left the UK for full-time (on average, more than 35 hours a week over the tax year) work abroad.

    The draft legislation confirms that an individual will be able to spend no more than 30 working days in the UK (this has increased from the 20 days previously proposed). A working day for these purposes comprises three or more hours. Considerable and detailed record keeping will therefore be required.

    There is no provision for part-time workers.Automatically UK resident
    An individual will be automatically UK resident during a tax year if they:

    • spend at least 183 days in the UK or have their only home in the UK for more than 90 days, but only if the home is actually occupied for at least 30 days
    • are in full-time work in the UK for a continuous 12-month period.

    Sufficient ties and day count
    Where an individual meets neither the automatic non-UK residence nor the automatic UK residence test, they must consider the ‘sufficient ties test’ in conjunction with the number of days spent in the UK. The number of connecting factors or ties combined with UK days to be resident is set out in the following table.

    Days spent in the UK

    ‘Arriver’ – if the individual was non-UK resident in all the previous three years

    ‘Leaver’ – if the individual was UK resident in at least one of the previous three years

    Fewer than 16

    Always non-UK resident

    Always non-UK resident

    16 to 45

    Always non-UK resident

    4 ties = UK resident

    46 to 90

    4 ties = UK resident

    3 ties = UK resident

    91 to 120

    3 ties = UK resident

    2 ties = UK resident

    121 to 182

    2 ties = UK resident

    1 tie = UK resident

    183 or more

    Always UK resident

    Always UK resident


    Ties to consider:

    Family tie: An individual’s spouse or partner (or someone else with whom they are living) or a minor child is resident in the UK. Under the current proposals, minor children who are resident in the UK only because they are in full-time education here will not be considered a connecting factor if they spend fewer than 21 days in the UK outside of term time (a half-term holiday will count as term time for these purposes).
    Accommodation tie: An individual has ‘available accommodation’ for a continuous period of at least 91 days in the tax year, ignoring any gaps of fewer than 16 days. A place to live is to be widely defined and will include a home in the UK, holiday home, temporary retreat or ‘something similar’. HM Revenue & Customs will publish guidance to outline how it will apply the accommodation tie in practice. For example, accommodation will not be treated as being available unless the individual could stay there for at least a three-month period. This could include use of a hotel, as long as the same hotel is always used.
    Work tie: An individual spends at least 40 days working in the UK, where a working day is defined as three hours.
    90-day tie: An individual spent more than 90 days in the UK in at least one of the previous two tax years.
    Country tie (leavers only): If the UK is the country where the greatest number of days has been spent.

    Take action
    It is important to keep a record of days spent in and out of the UK and to review your UK-residence position in the current year.

    While the statutory residence test is not due to come into effect until 6 April 2013, an individual who has historically been a non-UK resident and would like to maintain their non-UK residency should consider whether they would continue to be a non-resident under the new rules. Of particular concern is the definition of full-time work abroad. Anyone who is concerned about their UK residence status should seek advice.

    For more information:
    Emma Hendron
    Saffery Champness, UK
    T +44 20 7841 4000
    E emma.hendron@saffery.com

    www.saffery.com

    Back to top