{"id":273,"date":"2014-01-18T21:00:28","date_gmt":"2014-01-18T21:00:28","guid":{"rendered":"http:\/\/www.taxpartnersuk.com\/blog\/?p=192"},"modified":"2014-01-18T21:00:28","modified_gmt":"2014-01-18T21:00:28","slug":"uk-tax-residence-the-statutory-test","status":"publish","type":"post","link":"https:\/\/www.taxpartnersuk.com\/blog\/uk-tax-residence-the-statutory-test\/","title":{"rendered":"UK Tax Residence – The Statutory Test"},"content":{"rendered":"

Tax residency in the UK has long been a highly contentious issue particularly for those with tax affairs in more than one jurisdiction. As there was no statutory definition of what makes a person a \u2018resident\u2019, often it was left to individual circumstances, general practice, judicial interpretations and at times even pure \u2018common sense\u2019! The system was so uncertain that the Gaines-Cooper case of 2008 demonstrated how unreliable HMRC\u2019s published guidance in this regard could get. Well, that is all history now. Finance Act 2013 (Schedule 45) now clearly defines under what circumstances a person could be resident or non-resident, with the concept of \u2018ordinary residence\u2019 having gone the dinosaurs’ way!<\/p>\n

Let us in this article consider the status of a person arriving in the UK.<\/p>\n

 <\/p>\n

First Test \u2013 Automatically resident in the UK<\/b><\/p>\n

If you spend 183 or more days in the UK in a tax year you\u2019re tax resident in the UK. You will be considered to have spent the day in the UK if you\u2019re here at midnight. Even if you have not been in the UK at the end of the day (midnight) for 183 days, still you could be UK resident under the \u2018deeming rule\u2019 whereby a) you have been tax resident in the UK in one or more the last three years, b) you have at least 3 UK ties, and c) you have been present in the UK for at least 30 (qualifying) days without being present at the end of the day. However, transit days are not counted where you arrive in the UK whilst travelling from one country to another outside the UK and leave the next day. Transit passengers are not expected to engage in any activity substantially unrelated to your transit.<\/p>\n

 <\/p>\n

Second Test \u2013 Automatically resident overseas, so not resident in the UK<\/b><\/p>\n

If you fail test 1 and is unsure of your residence then you need to check the following table and see if you\u2019re automatically resident overseas. If you\u2019re automatically resident overseas then obviously you\u2019re not resident in the UK.<\/p>\n\n\n\n\n\n
Days spent in the UK during the tax year<\/td>\nResident in any of the previous 3 years<\/td>\nNot resident in any of the previous 3 years<\/td>\n<\/tr>\n
Less than 16<\/td>\nAutomatically Non-resident<\/td>\nAutomatically non-resident<\/td>\n<\/tr>\n
Less than 46 days<\/td>\nTake Test 3<\/td>\nAutomatically non-resident<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There is yet another way to be automatically resident overseas; i.e. if you work full time overseas. The conditions are:<\/p>\n

a)\u00a0\u00a0\u00a0 If you work full time overseas over the tax year without any significant breaks from overseas work during the tax year, and<\/p>\n

b)\u00a0\u00a0 You spend fewer than 91 days in the UK during the tax year<\/p>\n

c)\u00a0\u00a0\u00a0 \u00a0You work in the UK for more than 3 hours a day but fewer than 31 days in the tax year.<\/p>\n

Broadly, fully time overseas work effectively means working 35 hours during a working week. Obviously days worked in the UK will be disregarded.<\/p>\n

 <\/p>\n

Third Test \u2013 Other cases of being automatically resident in the UK<\/b>\u00a0<\/b><\/p>\n

Having come this far and if you\u2019re still unsure of whether you\u2019re resident or not, follow these steps to see if you still automatically qualify to be a UK resident.<\/p>\n

1.\u00a0This is relevant if you have a home in the UK.<\/span><\/p>\n

If you had a home in the UK and<\/b> you spend at least 91 consecutive days in the UK and<\/b> at least 30 of those days fall within the tax year, then you are conclusively tax resident in the UK<\/p>\n

2. This is for those working work full time (broadly at least 35 hours a week) in the UK.<\/span><\/p>\n

If you work in the UK for any period of 365 days without any significant break from UK work and:<\/p>\n

a) all or part of the 365 days<\/b> fall within the tax year,<\/p>\n

b) 75% of the work days comprising more than 3 hours of work a day out of the 365 days are within the UK<\/b>, and<\/p>\n

d)\u00a0\u00a0 at least ONE of those of days per b) above fall within the tax year<\/b> then<\/p>\n

you\u2019re automatically UK resident.<\/p>\n

 <\/p>\n

Finally the fourth sufficient ties test<\/b><\/p>\n

Having taken the three tests above and still unsure of whether you\u2019re tax resident in the UK you could now take this test which is based on your connections with the UK.<\/p>\n\n\n\n\n\n\n\n\n\n
Days spent in the UK during the tax year<\/td>\nUK resident in one or more of the last 3 years<\/td>\nNon-resident in the last 3 years<\/td>\n<\/tr>\n
< 16 days<\/td>\nAlways non-resident<\/td>\nAlways non-resident<\/td>\n<\/tr>\n
16-45 days<\/td>\n4 ties<\/td>\nNon-resident<\/td>\n<\/tr>\n
46-90 days<\/td>\n3 ties<\/td>\n4 ties<\/td>\n<\/tr>\n
91-120 days<\/td>\n2 ties<\/td>\n3 ties<\/td>\n<\/tr>\n
120-182<\/td>\n1 tie<\/td>\n2 ties<\/td>\n<\/tr>\n
> 182 days<\/td>\nAlways resident<\/td>\nAlways resident<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

And the four relevant ties are:<\/p>\n

Tie 1 – Family tie<\/b>: This tie is basically about the relationship of an individual with a family member who is tax resident in the UK. If your spouse, civil partner (not yet separated) or minor children (not those in full time education) are resident in the UK you satisfy the family tie test. Children under the age of 18 are considered for this tie and you should have spent at least 61 days with the child during the tax year to have had this tie.<\/p>\n

Tie 2 – Accommodation tie<\/b>: If you have a place available to you to live in the UK and a) that is available to you for 91 days or more during the tax year and, b) if you spend one or more nights there during the tax year, c) or if it the home of a close relative (parent, grandparent, brother, sister, children or grandchildren of 18 and above) you spend 16 or more nights there during the tax year you have had this tie.<\/p>\n

Tie 3 \u2013 Work tie<\/b>: If you work for 40 or more days in a tax year with each work day comprising 3 hours of work, you will have had this tie.<\/p>\n

Tie 4 \u2013 90 day tie<\/b>: If you spend more than 90 days in either or both of the last two tax years in the UK you will have met this tie test.<\/p>\n

Tie 5 \u2013 Country tie<\/b>: You will have met this tie test if UK is the country where you spent more nights than any other country in the tax year.<\/p>\n

Whilst this is a simplified version of a very elaborate rule-based statutory residence test, it nevertheless should give the reader a broad idea of how the whole test system works.<\/p>\n

Tax Partners<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Tax residency in the UK has long been a highly contentious issue particularly for those with tax affairs in more than one jurisdiction. As there was no statutory definition of what makes a person a \u2018resident\u2019, often it was left to individual circumstances, general practice, judicial interpretations and at times even pure \u2018common sense\u2019! The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,17,18,36],"tags":[],"class_list":["post-273","post","type-post","status-publish","format-standard","hentry","category-statutory-residence-test","category-tax-advice-2","category-uk-tax-advice","category-uk-tax-residence"],"yoast_head":"\nUK Tax Residence - The Statutory Test - Beyond Compliance: Technical & Advisory Insights<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.taxpartnersuk.com\/blog\/uk-tax-residence-the-statutory-test\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UK Tax Residence - The Statutory Test - Beyond Compliance: Technical & Advisory Insights\" \/>\n<meta property=\"og:description\" content=\"Tax residency in the UK has long been a highly contentious issue particularly for those with tax affairs in more than one jurisdiction. 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