Newsletter 2

UK tax residence generally applicable to individuals is a tedious subject so I want to break it down and explain it in everyday language if I can. Lets look at my personal circumstances as an example.

Where am I resident?

I have been in New Zealand since mid October 2018. Before that I lived in the UK. Having said that, I had a sabbatical in Greece in 2017-18 then we went back to the UK for a few months in 2018 before leaving for New Zealand with family. There are some tricks possibly available to push my temporary non-UK residence back to 6th April, 2016 due to the overlap of the Greek and the UK tax years but I will try to explain them in a later post concerned with temporary residence for UK Capital Gains Tax purposes.

For now I want to look at the basics which are complex enough. We start by dividing time periods according to the UK tax year which runs from 6th April to the 5th of April the following year and assume that I don't die during the tax year.

In the year from 6th April 2018 to 5th April, 2019 was I automatically overseas?

The automatic overseas test has priority so its best to start with it. If I was within one automatic test, then I could not have been UK resident that year.

1. I was not present in the UK for fewer than 16 UK days and,
2. Because of having been UK resident in any of the preceding three tax years (before the 18-19 year), in the 18-19 year, I cannot say that I was present in the UK for fewer than 46 days so fail that test.

The result is that, in the 18-19 year, I don't satisfy either of the two main UK overseas tests. I happen to have satisfied them in the 19-20 and later years but for now lets stick with the prior year. As none of the overseas tests apply, it is not yet necessary to apply the?sufficient UK?ties test. I must first check whether I fall within one of the three main?automatic UK?tests.

I will be UK resident if one of the automatic UK tests is met:

1. I was not present in the UK for 183 days or more in the 18-19 UK tax year. We got back from Greece around the 10th of June and left again on the 19th of October, 2018. Because I was present in the UK 2018-19 year for only around 140 days, the first automatic residence test does not apply to me.
2. As we rented out our flat and it was not available to us, we no longer had our only or any home in the UK so the only substantive home in the UK test did not apply.
3. The Sufficient hours worked in the UK. Work is done where it is actually done so this test was not satisfied as I was not working in the 35 days (NB the sufficient days worked test is more involved than that).

It looks as though none of the automatic UK tests were satisfied so I have to look at the UK ties tests to see if I was UK resident in the 18-19 UK tax year.

To satisfy the sufficient ties I must see how many UK ties I had and when I know that, I can calculate:

whether the days I spent in the UK was enough to be UK resident.

The ties are:

• family; I had family in the UK in the tax year, so I satisfy this test
• accommodation; again as the tenants had moved out, by the time we moved back, this test was satisfied,
• work; if I had work in the UK for at least three hours a day and for at least 40 days (whether continuously or intermittently), in the year then I would satisfy this test
• 90 day; if I spent 90 days or more in the 18-19 year or the 17-18 year or in both of them then this test is satisfied and
• country; this test would be satisfied if I spent more days in the UK than any of the country, which I didn't.

The result, according to the sliding scale of days spent, as I spent over 45 days in the UK and had three or more ties, I was resident in the UK in the 18-19 UK tax year.

This is the sliding scale if I was resident in the UK for none of the last three tax years preceding the year in question which was not applicable:

?????Days spent in the UK in year Number of ties that are sufficient??

More than 45 but not more than 90 All 4??

More than 90 but not more than 120 At least 3??

More than 120 At least 2

This is the sliding scale applicable if I was resident for one year in the last three years which applies:

Days spent in the UK in year Number of ties that are sufficient??

More than 15 but not more than 45 At least 4??

More than 45 but not more than 90 At least 3??

More than 90 but not more than 120 At least 2??

More than 120 At least 1

There are more details about the UK Statutory Residence Test in my blog here: https://michaelreason.com/wp