Clear And Unbiased Facts About TOP QUALITY RESIDENCES (Without All the Hype)

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

Under the current rules you are resident in the UK in the event that you spend 183 days or more in the UK and you also could be resident if you spend more than 3 months on average. Beneath the new rules you will see no more four-year average and when you spend more than 90 days in the UK in virtually any tax year you will always be regarded as resident. As before, you have to be away from the UK for a complete tax year in order to qualify as non-resident and a day counts to be 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 and that means you are unlikely to find your situation suddenly altered. It is important though that you understand the brand new test of residence and non-residence. You can find three sections of the test that have to be considered in order. In other words, if you are definitely non-resident on the basis of Part A, then you don’t have to consider parts B and C.

So, we think most of our clients ought to be still included in the provision partly A you are non-resident when you have left the UK to carry out full-time work abroad and are present in the united kingdom for fewer than 91 days in the tax year and no a lot more than 20 days are spent working in the united kingdom in the tax year. Here though will be the three parts of the test.

Part A: You are definitely non-resident if:

You were not resident in the UK for the previous 3 tax years and present in the UK for under 46 days in today’s 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 today’s tax year; or You have gone the UK to handle full-time work abroad and provided you were 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 covered by your employer and taken in the UK will undoubtedly be considered work and this will be taken from your 20 day working allowance.

Part B: You are definitely resident if:

You are present in the UK for 183 days or even more in a tax year; or You have only 1 home and that home is in the united kingdom or have more homes and many of these are in the united kingdom; or You carry out full-time work in the UK.

Part C: If your position is not described in Parts A and B you then 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 the following:

Family- your spouse or civil partner or common law equivalent (provided you are not separated from them) or minor children are resident in the UK. Accommodation – you have accessible accommodation in the united kingdom and employs it during the tax year (subject to exclusions for some types of accommodation). Substantive work in the UK – 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 a lot more than 90 days in the united kingdom in either of the previous two tax years and you 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 are resident or non-resident. Ki Residences Sunset Way You can find two categories, arrivers and leavers.

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

Fewer than 46 days in UK: Always non-resident. 46 – 90 days: 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 even more: Always resident.

If you were resident in a single or even 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 even more connection factors. 46 – 90 days: 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 even more connection factors. 183 days or more: Always resident

Once the Finance Bill is produced there might 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 this is relevant to your situation you need to take professional advice to be sure you don’t fall foul of the new legislation.

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