Statutory residence test legislation

The guide explains how. Statutory Residence Test Flowchart. It is designed to give taxpayers greater certainty and clarity as to whether or not they are UK-resident for tax purposes and therefore whether or not they are subject to UK income tax and capital gains tax.

Introduction: Contents. Crime, justice and the law Disabled people.

This imposes a statutory residence test via Schedule 4 with provision for amendment by statutory instrument. It supersedes all existing legislation , case law and guidance. There are two layers to the SRT: i. Under the SRT the basic rule is. For HMRC’s previously-published guidance on ‘exceptional circumstances’, click here.

HMRC recognise that the COVID-pandemic. For some individuals who have been in the UK since April, that may mean an effective ‘day zero’ for the purposes of day counting under the statutory residence test , with Friday marking ‘day one’. This guide explains many of the tests and rules but should not be considered as advice.

This legislation enables an individual to conclusively determine their residence position. You are attempting to documents. In the past, this has been decided by case law , HMRC guidance and standard practice.

So, in short, the test is intended to clarify a complex and vague process. British expatriates in Dubai, or those spending a significant period of time overseas need to be aware of the rules. Simply moving abroad to avoid UK tax is an outdated concept. Residence is a hugely important concept for the taxation of individuals, as it has a profound effect on whether, and to what extent, they are subject to tax.

In this note we introduce the very complex rules which now apply to determine residence for UK tax purposes. Here we provide an overview of the new rules, although they remain complex, and it is always advisable to seek professional guidance based on your individual circumstances. It has been apparent for some years that the existing UK residence test , based not on statutory rules but on outdated case law and HMRC guidance which cannot be relied on, is not fit for purpose in the 21st century.

Considered at a high level, the SRT is relatively straightforward. UK in the current tax year UK resident in at least one of the previous three tax years and spends less than days in the UK in the current tax. Previously, a decision as to residence was based on limited guidance in conjunction with case law , which was far from clear. Background to the Residence Test. Sufficient Ties Test.

This looks at how many days you have spent in the UK during the year, your permanent status re your work and home, the 90-day rule and your country of residence. Often the stakes are very high, and therefore the incentives to achieve residency or non-residency are great on both sides.

Its objective is to replace the current uncertain and complicated residence rules with a clear statutory residence test that is simple for taxpayers to use. HMRC has issued draft legislation and undertaken a consultation process on the proposed statutory residence test. This note provides guidance in relation to Finance Bill legislation published alongside this note. These arise when ‘exceptional circumstances’ prevent a person from leaving the UK. Who does this affect?

See HMRC’s previously published guidance on Exceptional Circumstances. Tax residence has a significant bearing on an individual’s UK tax liability, especially if they have non-UK (“overseas”) income or capital gains. These rules are especially important in cases where an expat or non-dom stays for more than a certain number of days in the UK.

For the reasons discussed above, the case law does not provide the requisite certainty. In answer to the clamour from practitioners for greater certainty, HM Treasury and HMRC have put forward (or, perhaps more accurately, have dusted off) their proposals for a statutory residence test (SRT) in a public consultation document.