10 Best Practices For TOP QUALITY RESIDENCES

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

Under the current rules you’re resident in the UK in the event that you spend 183 days or more in the UK and you could be resident in the event that you spend more than 90 days on average. Under the new rules you will see no more four-year average and if you spend more than 90 days in the UK in virtually any tax year you will always be regarded as resident. As before, you should be away from the united kingdom for a complete tax year so as to qualify as non-resident and each day counts to be a day on the UK should you be at midnight on that day.

However, the new law is generally designed to leave a lot of people in exactly the same position as previously and that means you are unlikely to find your position suddenly altered. It is crucial though that you understand the brand new test of residence and non-residence. Ki Residences Singapore There are 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 the majority of our clients should be still covered by the provision in Part A you are non-resident assuming you have left the UK to carry out full-time work abroad and are present in the UK for less than 91 days in the tax year no a lot more than 20 days are spent working in the united kingdom in the tax year. Here though will be the three elements of the test.

Part A: You’re definitely non-resident if:

You were not resident in the united kingdom for the prior 3 tax years and within the UK for less than 46 days in the current tax year; or You’re resident in the UK in one or more of the prior 3 tax years but present in the UK for less than 16 days in the current tax year; or You have gone the UK to carry out full-time work abroad and provided you were present in the united kingdom for fewer than 91 days in the tax year no more than 20 days are spent working in the UK in the tax year. Training covered by your employer and taken in the UK will be considered work and this will be extracted from your 20 day working allowance.

Part B: You are definitely resident if:

You are present in the united kingdom 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 all of these are in the united kingdom; or You carry out full-time work in the united kingdom.

Part C: If your situation is not described in Parts A and B you then need to compare the amount of days spent in the united kingdom against a small number of clearly defined connection factors. These connection factors are as follows:

Family- your spouse or civil partner or common law equivalent (provided you aren’t separated from them) or minor children are resident in the united kingdom. Accommodation – you have accessible accommodation in the UK and employs it through the tax year (at the mercy of exclusions for some types of accommodation). Substantive work in the UK – you do substantive work in the united kingdom i.e. more than forty days in the tax year but do not work full-time in the UK. UK presence in previous years – you spent more than 90 days in the united kingdom in either of the prior two tax years and you also spend more days in the UK in the tax year than in virtually any other single country.

These connection factors are then combined with day counting to determine whether you are resident or non-resident. You can find two categories, arrivers and leavers.

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

Less than 46 days in UK: Always non-resident. 46 – 90 days: Resident if 4 or even more connection factors. 91 – 120 days: Resident if 3 or 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 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 – 3 months: Resident if 3 or even more connection factors. 91 – 120 days: Resident if 2 or more connection factors. 121 – 182 days: Resident if you can find 1 or even more connection factors. 183 days or more: Always resident

When the Finance Bill is produced there may be some changes to the legislation and more detail may emerge, but there’s been considerable consultation in fact it is sensible to prepare for the new rules now. If that is relevant to your situation you need to take professional advice to make sure you do not fall foul of the new legislation.

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