Why Ignoring TOP QUALITY RESIDENCES Will Cost You Time and Sales

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

Under the current rules you’re resident in the UK in the event that you spend 183 days or even more in the UK and you could be resident in the event that you spend more than 90 days on average. Ki Residences Sunset Way Under the new rules you will see no more four-year average and if you spend more than 90 days in the UK in virtually any tax year you will continually be considered to be resident. As before, you need to be away from the UK for a whole tax year in order to qualify as non-resident and each day counts as being a day on the UK when you are here at midnight on that day.

However, the new law is normally designed to leave a lot of people in the same position as previously so you are unlikely to find your position suddenly altered. It is important though that you understand the new test of residence and non-residence. You can find three sections of the test which have to be considered to be able. In other words, in case you are 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 included in the provision in Part A you are non-resident when you have left the UK to carry out full-time work abroad and so are present in the UK for less than 91 days in the tax year no more than 20 days are spent working in the UK 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 under 46 days in today’s tax year; or You’re resident in the UK in one or more of the prior 3 tax years but within the UK for less than 16 days in today’s tax year; or You have gone the UK to carry out full-time work abroad and provided you’re present in the united kingdom for less than 91 days in the tax year no more than 20 days are spent working in the united kingdom in the tax year. Training covered by your employer and taken in the UK will 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 UK or have more homes and all of these are in the united kingdom; or You carry out full-time work in the UK.

Part C: If your position isn’t described in Parts A and B then you need to compare the number of days spent in the united kingdom against a small amount 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 their website) or minor children are resident in the united kingdom. Accommodation – you have accessible accommodation in the united kingdom and makes use of it during the tax year (at the mercy of exclusions for some forms of accommodation). Substantive work in the united kingdom – you do substantive work in the united kingdom i.e. more than forty days in the tax year but usually 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 coupled 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 previous three tax years – ‘Arrivers’:

Fewer than 46 days in UK: Always non-resident. 46 – 3 months: Resident if 4 or more connection factors. 91 – 120 days: Resident if 3 or even 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 a single or more of the three tax years immediately before the tax year under consideration – ‘Leavers’:

Fewer than 16 days in UK: Always non-resident. 16 – 45 days: Resident if 4 or more connection factors. 46 – 3 months: Resident if 3 or more connection factors. 91 – 120 days: Resident if 2 or more connection factors. 121 – 182 days: Resident if there are 1 or more connection factors. 183 days or even more: Always resident

Once the Finance Bill is produced there could be some changes to the legislation and more detail may emerge, but there has been considerable consultation and it is sensible to prepare for the new rules now. If this is relevant to your situation you should take professional advice to ensure you don’t fall foul of the brand new legislation.

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