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Are You Certain You are Non-UK Resident for Tax?

hmrcMaybe not after 6 April 2013!
With effect from 6 April 2013, HMRC’s Statutory Residence Test applies. This means that it is now more difficult for a person to remain non-UK resident (for example while residing in the UAE), to establish non-UK residency.

Residence status for UK tax purposes has been historically difficult to determine. On December 11th 2012 the HM Treasury published the draft Finance Bill 2013 which included the legislation to establish a new statutory residence test (SRT) as of 6th of April 2013 SRT now applies to individuals for Income tax, Capital Gains tax, Inheritance tax and Corporation tax. This legislation supersedes any previous residence legislation.

The legislation was designed to solidify HMRC guidance on UK residency. Previously it was possible to break residency in the UK by maintaining an average of less than 91 days in the UK and having little or no UK work, even if family and home remain in the UK. As of the 6 April 2013 it is now necessary to take the Statutory Residence Test. This is a multi-stage test used to find out if someone is UK resident for tax purposes. The test does not apply to companies, neither does it apply to tax years before 6 April 2013. Special rules do however apply for those who work on-board a ship or an aeroplane which travels internationally. The legislation calls these workers ‘international transport workers’

The new rules from 6 April 2013 now mean that an individual will be resident in the UK for a tax year if, either/or:

The Automatic Residence Test  is met for the tax year, i.e. if the person spends at least 183 days in the UK, the person’s only home is in the UK (or has all his/her homes in the UK), the person works in the UK for 276 days

The Sufficient Ties Test  is a way of measuring how many UK ties a person has and then using those ties to determine effectively how reliant on the UK that person remains when the number of days that person spends in the UK is taken into account. For example, where a person has been non-resident for the previous 3 tax years, if they are in the UK for between 46 and 90 days they need 4 ties to make them resident, if they are in they are in the UK for between 91 and 120 days – 3 ties, 121 or more days – 2 ties.

An example of a tie is: ‘A Family Tie, whereby the person’s spouse or civil partner is in the UK, or a child under 16 who is seen for more than 60 days. Or a ‘Work Tie – if the person works in the UK for at least 40 days, work being at least 3 hours per day’
Although the SRT potentially provides greater certainty on residence status it is as important as ever to take appropriate professional advice to ensure a full understanding of the rules.

If you are interested in learning more about each of the remaining ties applicable and your exact residency status I will be holding an informal breakfast meeting on the 5th of June at Emirates Golf Club. It may be that you are planning to return to the UK after residing in Dubai or you may simply be unsure of yours or your spouse’s status, the way you have been taxed or if there is a risk you may be taxed in the future.

If you would like to attend please rsvp to Jessica.cook@gwm-intl.com. Spaces are limited and will be provided on a first come first serve basis.
Please note that guidance here is for general information only and you should take specific advice in your particular circumstances.

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Article Courtesy of:
Jessica Cook (Profile)
Direct Line: 00971 (0) 44 36 2713
Mob: 00971 (0) 50 46 99236
Senior International Financial Planner
United Arab Emirates
Guardian Life Management

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