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ARTICLE · 18 SEPTEMBER 2012

The Proposed Statutory Residence Test

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The new rules will also give a statutory basis to the previous practice of allowing taxpayers to split years between periods when they are UK resident and periods when they are not.

United KingdomTax
Justine Markovitz
Justine Markovitz
Judith Ingham
Judith Ingham
Lindsay Brown
Lindsay Brown
Louisa Douglas Home
Louisa Douglas Home
Miguel Good
Miguel Good
Ian Perrett
Ian Perrett
Jessica Dabbs
Jessica Dabbs
Melissa Ellis
Melissa Ellis
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It has been apparent for some years that the existing UK residence test, based not on statutory rules but on outdated case law and HMRC guidance which cannot be relied on, is not fit for purpose in the 21st century. HMRC was finally persuaded of this last year and began the consultation process which it is now envisaged will lead to a new statutory test coming into force in April 2013. There are still some details on which HMRC is consulting further but the shape of the new test now seems fairly clear.

An individual's residence status is to be determined by considering three sets of tests. The first two set out factors which, if satisfied, lead to an individual being conclusively UK resident or non-UK resident. If neither of these sets apply, consideration has to be given to how many ties the individual has to the UK, and this determines the number of days which the individual has to spend in the UK to be UK tax resident.

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