New UK Tax Residence Rules
By Mary Taylor, Partner, Blevins Franks
British expatriates in France need to understand the UK residence rules as well as the French ones, to establish where they are resident for tax purposes – it may not be the country you expect. The UK finally has a Statutory Residence Test, which came into effect on 6th April.
To assess your residence status, you now need to work through the following tests in the order shown. The first is absolute, so if you are non-UK resident under this test, the other two will not apply. If the second applies, the third is ignored.
Automatic overseas test
If you meet any of the following conditions, you will automatically be treated as not resident in the UK:
- You were not resident in the UK in any of the previous three years, and are present for fewer than 46 days in the current year.
- You were resident in one or more of the previous three years, and present for fewer than 16 days.
- You work overseas full time, subject to certain conditions.
Automatic residence test
You will be automatically treated as resident in the UK if you meet any of the following conditions:
- You spend at least 183 days in the UK in the current year.
- Your only or main home is in the UK.
- You work full time in the UK for at least 365 days without a significant break, subject to conditions.
Sufficient ties test
If your residence position is not determined by the above two tests, the number of days you can spend in the UK without being UK resident depends on if you are an “arrive” or “leaver”, and the number of connecting ties you have. In summary, these are:
- Family – spouse/minor children in UK
- Accessible accommodation
- Work – 40 days or more
- 90 days— or more in either of two previous tax years
- More days in UK than any other single country (‘leavers’ only).
This test operates on a sliding scale. The more ties you have, the less time you can spend in the UK without becoming UK resident.
All references to “years” are a UK tax year, and a day in the UK is counted if you are there at midnight.
The new Statutory Residence Test provides much more certainty, but is not simple. HM Revenue & Customs’ guidance notes run to 55 pages and are more complex than originally appears. You also need to take the local French residence rules into account, so for certainty on your position speak to an experienced advisory firm like Blevins Franks which is based in both countries and fully understands how the two regimes interact.
Mary Taylor TEL 05 62 30 51 40 EMAIL mary.taylor@blevinsfranks.com.
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.
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