Posted by admin - July 19, 2013 11:19 am
Statutory Residence Test
Statutory Residence Test
A new test for UK residency, the Statutory Residence Test (STR), came into force on 6th April this year to provide clarity to residence status of ‘arrivers’ and ‘leavers’ to and from the United Kingdom and how this affects their UK tax liabilities.
‘Arrivers’ are described as individuals who have been non UK resident in the last tax three years and ‘leavers’ are those who have been resident in the UK.
Automatic non residence
For ‘arrivers’ there are automatic non residence tests, if the individual is present in the UK for fewer than 46 days they will be automatically deemed as non-resident whereas ‘leavers’ spending 16+ days in the UK are classed as residents. There is however a full time ‘working abroad’ exception which can extend the stay in the UK for leavers from 16 up to 91 days (of which up to 30 days can be spent working in the UK).
Automatic residence
Anyone who spends 183 days or more in the UK will automatically be classed as a resident. However, ‘leavers’ who own only one home which is located in the UK may be treated as resident, albeit those who only reside 30 days or less in their UK property will be treated as non-resident. People working full time in the UK (with up to 25% of the time spent working overseas) will also result in automatic residency.
The five ties
If an individual is neither automatically resident nor automatically non-resident there are a further five ‘ties’ that need to be considered together with the amount of time spent in the UK:
- Family (spouses, partners and minor children)
- Accommodation owned or rented (available for 91+ days, and used for one night or more)
- Substantive work in the UK (40+ working days)
- UK presence in previous 2 tax years (>90 days in either)
For ‘leavers’ only: Whether more time spent in UK than any other country.
The following table of time spent in the UK together with the 5 ties then determines residency:
| Days in UK | Arrivers* | Leavers* | |
|---|---|---|---|
| 183+ | Resident | Resident | |
| 121-182 | Resident is at least 2 ties apply | Resident if at least 1 tie applies | |
| 91-120 | Resident if at least 3 ties apply | Resident is at least 2 ties apply | |
| 16-45 | Non-resident | Resident if at least 4 ties apply | |
| <16 | Non-resident | Non-resident |
*Arrivers: persons not resident in the UK in the previous 3 tax years
*Leavers: persons resident in the UK in at least 1 of the previous 3 tax years
These rules are for general guidance only. If you believe you may be affected by this then we would recommend you seek specific advice about your own residency status.
For further information and advice on your personal and/or business tax liabilities call your local MFW office who will be pleased to help.
