Government proposals for a new statutory residence test have been postponed until April 2013.
In an unprecedented move, these guidelines will define tax residence for individuals, but not companies.
They will in some cases mean that current and past presence in the UK could determine whether or not a person is regarded as a UK resident.
The test will comprise of three parts, they are as follows,
Part A: Non-Residence
An individual will be considered a non-resident if they,
– Are not a resident in the UK in all of the previous three tax years and are in the UK less than 45 days in the current tax year.
– Are resident in the UK in one or more of the previous three tax years and present in the UK less than 10 days in the current tax year.
– They have left the UK to carry out full-time work abroad and are present in the UK less than 90 days in the tax year, with no more than 20 of those spent working in the UK.
Part B: Residence
An individual will be considered a UK resident if they,
– Are present in the UK for 183 days or more in a tax year.
– Have only one home which is in the UK, or have two or more homes all of which are in the UK.
– Carry out full-time work in the UK over a continuous period of more than nine months, this excludes short breaks such as illness and holidays, with no more than 25% of the relevant duties being undertaken outside the UK within that period.
Part C: Connections and Day Counting
This part of the test will take the form of a tie breaker, and it will apply to individuals whose residence status doesn’t fall in to Part A or B.
An individual must then compare the number of days they spend in the UK against factors such as whether or not an individual has family living in the UK, whether they have accommodation that they spend time in during the tax year, whether or not they carry out substantive work in the UK and whether or not they have spent 90 days or more in the UK in either of the previous two tax years.