ONLY INDIVIDUALS who spend fewer than ten days in the UK during a tax year will definitely be counted as non-resident under a new test proposed by the government today.
The consultation on the statutory residency test said that there will be three categories of individuals: conclusive non-resident; conclusive resident; and individuals that do not fall into either of those two categories.
The test will take into account “connection” factors such as family, accommodation, substantive work in the UK, UK presence in previous years and time spent in the UK compared with other countries.
The conclusive and non-conclusive residency test will be based on day counting. The consultation said that those people spending fewer than ten days in the UK would be counted as non-resident regardless of other factors. Those who work full time abroad will also be non-resident, as will those who have been non-resident in the UK in each of the previous three tax years – people they call “arrivers” – and spent less than 45 days in the UK in the current tax year.
Those who will definitely be counted as resident are individuals who spend more than 183 days in the UK or have only one home and that home is in the UK.
For people who do not fall into either category, the consultation defines four factors. They are: a UK resident family; has substantive UK employment; has accessible accommodation in the UK; and has spent 90 days or more in the UK in either of the previous two tax years.
The consultation states that it should be harder for “leavers” – people who have been resident for all of the previous three tax years – to relinquish their status than it should for arrivers to acquire it.
For leavers, an extra factor is included; whether the individual spends more days in the UK than in any other single country.
The number of factors that apply to an individual will depend on the amount of time they spend in the UK.
The consultation proposes that arrivers will always be counted as non-resident if they spent less than 45 days in the UK. Those who spend between 45-89 days in the UK will only be counted as resident if four factors apply to them. This will go down to three factors for people spending 90-119 days in the UK; and two factors for 120-182 days.
Leavers will find it harder to prove they are non-resident. They will be included as resident if they spend 120-182 days in the UK and only one factor applies to them. This goes up to two for 90-119 days; three for 45-89 days; and four factors for 10-44 days.
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