A new statutory residence test that comes into effect on 6 April 2013 will have significant implications for people considering moving to or from the UK.
From the start of the 2013-14 tax year, under the automatic overseas test, an individual will now automatically achieve non-resident status if they have been non-resident in the UK for the last three tax years and spend 45 days or less in the UK in the current tax year. The limit drops to 15 days if they have been resident in the UK for one or more of the last three tax years.
People who work overseas full-time, do not spend more than 90 days in the UK and work here for 30 days or less will also be considered non-resident.
If these criteria do not apply, under the automatic residence test an individual will automatically be considered resident if they spend at least 183 days in the UK, have a home here or work full-time in the UK.
Should neither the automatic overseas or automatic residence test decide the person’s status, the sufficient ties test compares the number of connecting factors with the number of days spent in the UK to establish residential status.
Different numbers of ties are required for arrivers (someone not resident in the UK in each of the three previous tax years) than for leavers (resident in the UK in one or more of the previous three years).
The specified ties are UK resident family, accommodation, substantive UK employment, presence for 90 days or more in previous two tax years, and (for leavers only) more (or the same) days in the UK than any other single country.
Internationally mobile individuals will need to consider their residence position in light of the new statutory residence test and may need to make changes to ensure they are operating within the new rules. Relevant factors include the amount of time spent in the UK in the current tax year.
It will also be important to keep detailed records of time spent in the UK, even for just part of a day. If they are in the UK at midnight, they will be deemed to have been in the UK for that day.
Alongside the new residence tests, an annual residential property charge will apply to residential properties worth more than £2 million that are owned by non-natural persons from April, with a liability for capital gains tax also arising when such property is disposed of.
The annual tax charge is set to be between £15,000 and £140,000, dependent on the value of the property on 1st April 2012 or the acquisition cost if purchased after that date.