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TOP QUALITY RESIDENCES And The Chuck Norris Effect

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

Under the current rules you’re resident in the UK if you spend 183 days or more in the UK and you also could be resident if you spend more than 90 days on average. Under the new rules there will be no more four-year average and when you spend more than 90 days in the UK in any tax year you will always be regarded as resident. Ki Residences Singapore As before, you should be away from the UK for a whole tax year so that you can qualify as non-resident and each day counts to be a day on the UK in case you are here at midnight on that day.

However, the new law is generally designed to leave most people in exactly the same position as previously which means you are unlikely to find your position suddenly altered. It is crucial though that you understand the new test of residence and non-residence. You can find three parts of the test which have to be considered in order. In other words, for anyone who is definitely non-resident based on Part A, then you need not consider parts B and C.

So, we think the majority of our clients should be still covered by the provision in Part A that you will be non-resident assuming you have left the UK to handle full-time work abroad and 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 united kingdom in the tax year. Here though will be the three elements of the test.

Part A: You’re definitely non-resident if:

You were not resident in the UK for the prior 3 tax years and present in the UK for less than 46 days in the current tax year; or You were resident in the UK in a single or more of the prior 3 tax years but present in the UK for less than 16 days in the current tax year; or You have left the UK to handle full-time work abroad and provided you’re present in the united kingdom for fewer than 91 days in the tax year and no more than 20 days are spent employed in the UK in the tax year. Training paid for by your employer and taken in the UK will undoubtedly be considered work and this will undoubtedly be taken from your 20 day working allowance.

Part B: You’re definitely resident if:

You are present in the UK 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 significantly 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 then you need to compare the quantity of days spent in the UK against a small number of clearly defined connection factors. These connection factors are as follows:

Family- your partner or civil partner or common law equivalent (provided you aren’t separated from them) or minor children are resident in the united kingdom. Accommodation – you have accessible accommodation in the united kingdom and makes use of it through the tax year (at the mercy of exclusions for some types of accommodation). Substantive work in the united kingdom – you do substantive work in the UK i.e. a lot more than forty days in the tax year but do not work full-time in the UK. UK presence in previous years – you spent more than 90 days in the UK in either of the previous two tax years and you also spend more days in the united kingdom in the tax year than in virtually any other single country.

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

If you weren’t resident in any of the prior three tax years – ‘Arrivers’:

Fewer than 46 days in UK: Always non-resident. 46 – 3 months: Resident if 4 or even more connection factors. 91 – 120 days: Resident if 3 or more connection factors. 121 – 182 days: Resident if 2 or even more connection factors. 183 days or more: Always resident.

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

Less than 16 days in UK: Always non-resident. 16 – 45 days: Resident if 4 or more connection factors. 46 – 90 days: Resident if 3 or even more connection factors. 91 – 120 days: Resident if 2 or more connection factors. 121 – 182 days: Resident if you can find 1 or even more connection factors. 183 days or more: Always resident

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