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- Are You on Top of GDPR? - Published May 2018 by Raoul Ruiz Martinez
- Financial Fitness - Published Jan 2018 by Raoul Ruiz Martinez
- Six Tough Questions You Need to Ask - Published in Nov 2017 by Raoul Ruiz Martinez
- Plan for a Successful Retirement - Published Oct 2017 by Raoul Ruiz Martinez
- 5-year Plan, 10-year Plan, 30-Year Plan. Do you have yours? - Published August 2017 by Raoul Ruiz Martinez
- The Will Bank Opportunity by John L Douglas - Published in The Journal of the Law Society of Scotland 17th July 2017
- August 2017 - HMRC & Offshore Accounts for UK Residents
- A New Year, A New Start…. January 2017
- Inheritance Tax (IHT) Planning (Part 3) - Published November 2016
- Planning for a Better Future? Forget Trusts. Think Family Investment Companies! - Published Nov 16
- Inheritance Tax Planning (Part 2) - Published August 2016
- BREXIT: What do we know as investors and what are the unknowns? Published in July 2016
- Inheritance Tax Planning (Part 1) - Published in June 2016
- Why is tidy a key word in financial planning? Published May 2016
- The Future of International Financial Planning - Published in March 2016
- Volatility: Global Financial Markets and Tax - Published Feburary 2016
- Financial Information Sharing for 2016 - Published December 2015
Summary of the 2015 Pension Flexibility - Published 5th May 2015
Offshore bonds get £5k tax free savings boost - Published 29th April 2015
How your peers invest clients’ money: Finesco Financial Services Ltd - Published in Professional Advisor 25th March 2015
- TRUSTS : Good Reasons to Never Make a Change - Published March 2015
- Saving....for Ourselves - Today's children will need A £2.4m pension pot.
- Cash is King - Article Published 25th July 2013
- Saving – Don’t Put Off Till Tomorrow What You Can Do Today - Article Published 23rd May 2013
HMRC Statutory Residence Test - 6th April 2013
- QNUPS Article Published 23rd March 2013
- Old New Year - Article Published 24th January 2013
- Retirement and Savings – The Facts on Inflation published November 2012
- Finesco Prsentation on New Pension Rules - A New Generation Begins
HMRC Pension Tax Relief Changes
- Emergency Budget:
- Budget Day: 22 June 2010
- Capital Gains Tax Angles
- Long Term Care
- QROPS: Transferring UK Pensions Overseas
- The State of Pensions
- ISA Changes Affecting You



HMRC Statutory Residence Test - 6th April 2013
On 6 April 2013, HM Revenue and Customs’ (HMRC) new Statutory Residence Test (SRT) came into effect.
The SRT replaces an odd mixture of statutory provision, case law and general practice centred on the old 183 and 91 day rules which now no longer apply.
The new SRT places residence and non-residence on a statutory footing for the first time and this complex legislation will have far reaching implications for anyone leaving the UK
Background
The previous process was subject to severe criticism for many years. There was considerable uncertainty about how the guidance from HMRC would be applied in many circumstances and recent case law, particularly the Gaines-Cooper case in 2008 cast further doubt on published HMRC guidance.
After a long consultation process the long awaited statutory test of residence came into effect on 6 April 2013. This article explains the key concepts of the new rules.
SRT – The Basic Rules
The SRT is actually a series of three tests:-
1) Automatic Overseas Test.
2) Automatic UK Test.
3) Sufficient Ties Test.
Taken together the tests are necessarily complex. This is so because under any statutory basis all factors require to be taken into account, provisions need to be defined and anti-avoidance measures thought of and enacted to ensure that the legislation operates as intended. This does not mean that the rules won't change at some future point.
Automatic Overseas Test (AOT)
You will automatically be regarded as non-resident in a tax year if you meet any one of the three following tests.
You will automatically be regarded as non-resident in a tax year if you meet any one of the three following tests.
1st AOT: If you were resident in any of the three previous tax years and spent fewer than 16 days in the UK in the current year. If an individual dies in the tax year then this test does not apply.
2nd AOT: If you were not resident in any of the three previous tax years and spend fewer than 46 days in the UK in the current year.
3rd AOT: If you work full time overseas for the tax year, spend fewer than 91 days in the UK in the current year, and less than 31 days where work in the UK is for more than 3 hours, provided various conditions are met.
If any one of the above AOT tests apply you will be regarded as non-UK resident for the tax year in question and need not delve further into the complex SRT rules.
Automatic UK Test (AUKT)
If you do not meet any of the AOT tests you should consider the automatic UK tests. If you meet either of these two tests you will automatically be UK resident.
1st AUKT: You spend 183 days or more in the UK in the tax year.
2nd AUKT: Applicable to you if you have a home in the UK. You meet this test where:
- You have a home for a period of more than 90 days.
- You are present in that home for 30 or more days, and
- There is a period of 91 consecutive days of which at least one day falls into the tax year when you either have no overseas home or spend less than 30 days in the tax year in any overseas home.
Sufficient Ties Test (STT)
If you meet neither the automatic overseas nor the UK tests the next set of tests, the Sufficient Ties Tests, must be considered. This is when things begin to get really complicated.
These tests differentiate between someone who is arriving or returning to the UK. They are more stringent if you are a “leaver” seeking to lose your UK resident status. In this case, an existing UK resident leaving for overseas has to minimise the amount of time spent in the UK and/or sever more “ties” to the UK. An “arriver”, i.e. someone seeking to gain UK residence, has to spend more time in the UK and/or establish more “ties”.
This can be tabulated as follows:
As you can see from the above table, the number of ties you have to or with the UK is an important factor when determining your residence status. So, what are these ties? There are five of them as follows:
Family Tie – This tests your ‘relevant relationships’; spouse, child under 18, etc, who is/are resident in the UK.
Accommodation Tie – This applies if you have a ‘place to live’ available for a continuous period of 91 days or more and actually spend at least one night there. It includes various types of accommodation, including holiday homes and property not owned by you.
Work Ties – This tie tests whether you work in the UK for at least 40 days during the tax-year. A working day constitutes more than 3 hours of work.
90 Day Ties – This counts if you have spent more than 90 days in the UK in either or both of the two tax years preceding the current year.
Country Tie – This tie exists if the UK is the country in which you have spent the greatest number of days in the UK. A day counts if you are present in the UK at midnight.
So, once you have established how many ties to the UK, as defined, apply to you it is then possible to use the above table to determine whether you are UK resident in the relevant tax year by reference to the number of days actually spent in the UK.
Earlier Tax Years
The new SRT operates from 6 April 2013 and, therefore, will be relevant for the 2013/14 tax year.
As can be seen from the above, some of the tests depend upon your residence for the three previous tax years up to 2012/13 which is based on the “old” rules. However, if suitable, you can opt for these years to be determined under the new SRT rules if you wish.
Opting into SRT may be beneficial in some circumstances but, naturally, care should be exercised as it could produce an adverse result when compared to the old basis.
Conclusion
The certainty of approach offered by the new SRT is much to be welcomed but perhaps an opportunity has been lost to greatly simplify the determination process and there remains considerable ambiguity over definitions such as “home” and “accommodation available” which leaves scope for confusion and variable interpretations.
Overall, however, the SRT is an improvement over the old rules but its gross complexity means that it may be even harder to understand and to comply with for many individuals seeking to clarify their position and minimise their tax liability.
(The above is a brief summary of the new Statutory Residence Test. The full detail of the test is available from HMRC, with guidance notes, and should be consulted for further information. This summary is for general guidance purposes only and does not constitute professional advice. It is expressly not intended to give any individual advice and you should not act on this guidance without appropriate personal advice after due examination of your particular circumstances.)
Finesco Financial Services Limited May 2013