AnnaC-Whittaker&Co
Full Registered User
Please find below information and please read through this thoroughly, should you require the actual documentation that HMRC have sent us along with the residency test, then please go to our website and download these documents, - Whittaker & Co or email info@whittakerandco.com and Rhi will send these out to you.
Kind regards - Anna Cooperwhite
Changes to Non-Residency Rules
Most of the changes to the rules of non-residency have been finalised, some are due to be finalised by the end of the year when the Government issue the draft of the Finance Bill for 2013.
I have not been able to get an answer as to whether all contractors working abroad will start with a clean sheet of 90 days in the UK from 06/04/2013 but as soon as I know this I will inform all clients.
Please find below the finalised rule changes so far, these will not change and will be in force from 06/04/2013.
There are many rumours surrounding the changes to the rules and the number of days that you are entitled to spend in the UK. If you have a home in the UK but you work full time abroad the rules are not changing very much.
If you live abroad the rules are changing and your days allowance in the UK will not be 90 days. Further details are below.
STATUTORY RESIDENCE TEST
CONTRACTORS WORKING ABROAD
• No more 4 year average! If you spend more than 90 days in the UK during a full tax year you WILL pay tax on all of your overseas income for that tax year.
• An individual will be deemed as automatically non-resident if they have full time work abroad and spend no more than 90 days in the UK during a full tax year.
• No more than 20 days per tax year can be spent working in the UK.
• Full time workers abroad will be entitled to claim a maximum of 60 days each tax year for “exceptional circumstances†(details of what can be classed as an exceptional circumstance are below).
• If an individual changes employment while working abroad a gap of more than 15 days between two employments will mean that you fail to qualify for working full time abroad and will be liable to pay tax on your income.
• An individual will be treated as being in the UK on any day when he/she is in the UK at midnight at the end of the day.
• Full time work abroad will only depend on where your duties are carried out and not the company that you work for.
• Training paid for by your employer and taken in the UK will be classed as work, this will be taken from your 20 day working allowance.
• To be eligible for Split Year Treatment an individual must have been a UK resident in the previous tax year.
• An individual can have split year treatment in two consecutive tax years but not twice in the same tax year.
• Mariners CANNOT be classed as non-resident. Mariners must follow the rules to claim SED.
FULL TIME WORK ABROAD - To be classed as a non-resident you MUST adhere to the following 5 stipulations.
1. You MUST be employed or carry on a trade or profession abroad.
2. You MUST work at least 35 hours per week.
3. You MUST carry out the employment, trade or profession for at least one full April to April tax year.
4. You must NOT spend more than 20 days working in the UK in a full April to April tax year.
5. You MUST be present in the UK for FEWER than 90 days in a full April to April tax year.
EXCEPTIONAL CIRCUMSTANCES
The Government has accepted that it is right to make provision for exceptional circumstances. It will therefore allow days of presence to be disregarded where an individual spends a day in the UK for reasons beyond their control such as:
• National or local emergencies, such as war, civil unrest or natural disasters: or
• Sudden or life-threatening illness or injury.
ADDITIONAL DAYS SPENT IN THE UK DUE TO VISA ISSUES WILL NOT BE COUNTED AS EXCEPTIONAL CIRCUMSTANCES AND MUST BE TAKEN FROM YOU 90 DAY ALLOWANCE.
To minimise the risk of being too widely used the number of days that can be disregarded due to exceptional circumstances will be restricted to 60 days in any tax year.
VOLUNTARY WORK ABROAD
Full time work abroad rules will not generally be available for unpaid voluntary work. They may be considered as non-resident under Part C of the new rules and will be dependant on days in the UK and connections to the UK. The number of days allowed in the UK will be restricted to fewer than 90 days.
LEAVING THE UK TO LIVE ABROAD AFTER 06 APRIL 2013
The Government accepts that the concept of tax residence does not exist in all jurisdictions and recognises than an individual may not settle in a country immediately after departure from the UK. It agrees that this should not be an impediment to an individual receiving split year treatment. Therefore the requirement will be that within six months of departure the individual’s normal home is overseas.
During the year of departure an individual will be able to spend fewer than 16 days in the UK.
To qualify as non-resident when you are moving overseas the following conditions must be met:
• The individual must have been resident in the previous tax year (this includes where the previous year was a split year);
• From the point of departure, the individual must have no home in the UK; and
• Must be non-resident in the following year.
If a person is a “leaver†(having been UK resident in one or more of the previous three tax years) the relevant connecting factors are:
• having a UK resident family
• having accessible accommodation in the UK
• having substantive UK employment (including self-employment) for at least 40 days in the tax year
• spending 90 days or more in the UK in either of the two previous tax years
• spending more time in the UK than in any other single country
Some of these terms are explained in more detail in the “Background†section below
For “leavers†the connecting factors are combined with days spent in the UK to determine residence status as follows.
Days spent in the UK Impact of connecting factors on UK residence status
Fewer than 10 days Always non-resident
10-44 days Resident if individual has 4 factors (non-resident with 3 or fewer factors)
45-89 days Resident if individual has 3 factors or more (non-resident with 2 or fewer factors)
90-119 days Resident if individual has 2 factors or more (non-resident with 1 or no factors)
120-182 days Resident if individual has 1 factor or more (non-resident only with no factors)
183 days or more Always resident
Kind regards - Anna Cooperwhite
Changes to Non-Residency Rules
Most of the changes to the rules of non-residency have been finalised, some are due to be finalised by the end of the year when the Government issue the draft of the Finance Bill for 2013.
I have not been able to get an answer as to whether all contractors working abroad will start with a clean sheet of 90 days in the UK from 06/04/2013 but as soon as I know this I will inform all clients.
Please find below the finalised rule changes so far, these will not change and will be in force from 06/04/2013.
There are many rumours surrounding the changes to the rules and the number of days that you are entitled to spend in the UK. If you have a home in the UK but you work full time abroad the rules are not changing very much.
If you live abroad the rules are changing and your days allowance in the UK will not be 90 days. Further details are below.
STATUTORY RESIDENCE TEST
CONTRACTORS WORKING ABROAD
• No more 4 year average! If you spend more than 90 days in the UK during a full tax year you WILL pay tax on all of your overseas income for that tax year.
• An individual will be deemed as automatically non-resident if they have full time work abroad and spend no more than 90 days in the UK during a full tax year.
• No more than 20 days per tax year can be spent working in the UK.
• Full time workers abroad will be entitled to claim a maximum of 60 days each tax year for “exceptional circumstances†(details of what can be classed as an exceptional circumstance are below).
• If an individual changes employment while working abroad a gap of more than 15 days between two employments will mean that you fail to qualify for working full time abroad and will be liable to pay tax on your income.
• An individual will be treated as being in the UK on any day when he/she is in the UK at midnight at the end of the day.
• Full time work abroad will only depend on where your duties are carried out and not the company that you work for.
• Training paid for by your employer and taken in the UK will be classed as work, this will be taken from your 20 day working allowance.
• To be eligible for Split Year Treatment an individual must have been a UK resident in the previous tax year.
• An individual can have split year treatment in two consecutive tax years but not twice in the same tax year.
• Mariners CANNOT be classed as non-resident. Mariners must follow the rules to claim SED.
FULL TIME WORK ABROAD - To be classed as a non-resident you MUST adhere to the following 5 stipulations.
1. You MUST be employed or carry on a trade or profession abroad.
2. You MUST work at least 35 hours per week.
3. You MUST carry out the employment, trade or profession for at least one full April to April tax year.
4. You must NOT spend more than 20 days working in the UK in a full April to April tax year.
5. You MUST be present in the UK for FEWER than 90 days in a full April to April tax year.
EXCEPTIONAL CIRCUMSTANCES
The Government has accepted that it is right to make provision for exceptional circumstances. It will therefore allow days of presence to be disregarded where an individual spends a day in the UK for reasons beyond their control such as:
• National or local emergencies, such as war, civil unrest or natural disasters: or
• Sudden or life-threatening illness or injury.
ADDITIONAL DAYS SPENT IN THE UK DUE TO VISA ISSUES WILL NOT BE COUNTED AS EXCEPTIONAL CIRCUMSTANCES AND MUST BE TAKEN FROM YOU 90 DAY ALLOWANCE.
To minimise the risk of being too widely used the number of days that can be disregarded due to exceptional circumstances will be restricted to 60 days in any tax year.
VOLUNTARY WORK ABROAD
Full time work abroad rules will not generally be available for unpaid voluntary work. They may be considered as non-resident under Part C of the new rules and will be dependant on days in the UK and connections to the UK. The number of days allowed in the UK will be restricted to fewer than 90 days.
LEAVING THE UK TO LIVE ABROAD AFTER 06 APRIL 2013
The Government accepts that the concept of tax residence does not exist in all jurisdictions and recognises than an individual may not settle in a country immediately after departure from the UK. It agrees that this should not be an impediment to an individual receiving split year treatment. Therefore the requirement will be that within six months of departure the individual’s normal home is overseas.
During the year of departure an individual will be able to spend fewer than 16 days in the UK.
To qualify as non-resident when you are moving overseas the following conditions must be met:
• The individual must have been resident in the previous tax year (this includes where the previous year was a split year);
• From the point of departure, the individual must have no home in the UK; and
• Must be non-resident in the following year.
If a person is a “leaver†(having been UK resident in one or more of the previous three tax years) the relevant connecting factors are:
• having a UK resident family
• having accessible accommodation in the UK
• having substantive UK employment (including self-employment) for at least 40 days in the tax year
• spending 90 days or more in the UK in either of the two previous tax years
• spending more time in the UK than in any other single country
Some of these terms are explained in more detail in the “Background†section below
For “leavers†the connecting factors are combined with days spent in the UK to determine residence status as follows.
Days spent in the UK Impact of connecting factors on UK residence status
Fewer than 10 days Always non-resident
10-44 days Resident if individual has 4 factors (non-resident with 3 or fewer factors)
45-89 days Resident if individual has 3 factors or more (non-resident with 2 or fewer factors)
90-119 days Resident if individual has 2 factors or more (non-resident with 1 or no factors)
120-182 days Resident if individual has 1 factor or more (non-resident only with no factors)
183 days or more Always resident