The Statutory Residence Test
The new UK statutory residence test
On and after the 6th April 2013, a new statutory residence test comes into effect. This will determine whether an individual is resident in the UK for tax purposes or not.
The test is being introduced to make it easier for those unsure of their residency status to clarify their UK tax position.
The statutory residence test was announced by the UK Government during the 2011 Budget, however it was decided later that year to defer the introduction of the test until April 2013 so that many of the complex issues requiring careful consideration could be addressed.
UK tax residence status is currently determined largely by court decision. Many factors are considered to determine if an individual is resident in the UK. Simply, if you are living in the UK for 183 days or more during a tax year, then you are seen as a UK resident. However there can be exceptions to this where those spending less than 183 days in the UK might be considered resident depending on the purpose of their stay and connections to the UK.
The New Statutory Residence Test
The new test will follow current legislation closely and outcomes achieved under the new rules are likely to be very similar. However, the test will now include a simplified three part structure:
- 1. An automatic overseas test determines whether or not you are automatically non-resident.
- 2. An automatic UK test determines whether or not you are automatically resident.
- 3. A 'sufficient ties' test determines the position of those not meeting either of the above. Residency is decided using a combination of days spent in the UK and the number and nature of any ties you have to the UK.
For more information: The New Statutory Residence Test