UK residence rules before 6 April 2013 were based on days of residence in the UK and were quite generous (183 days, or 91 days average over a four-year rolling period) compared to the latest rules. So what are the rules and should you be worried about time spent in the UK?
Under the current rules, you will not be resident in the UK for a tax year if you fall under any of the following conditions:
1. You were not resident in the UK in all of the previous three tax years and you are present in the UK for fewer than 46 days in the current tax year; or
2. You were resident in the UK in one or more of the previous three tax years and you are present in the UK for fewer than 16 days in the current tax year; or
3. You leave the UK to carry out full-time work abroad (35 hours a week or more), provided you are present in the UK for fewer than 91 days in the tax year and no more than 30 days are spent working in the UK in the tax year.
Brits who have been living abroad for many years but flit back to the UK, are treated as ‘leavers’ (not UK resident in all three tax years preceding the year of return). Those who have been UK resident in one or more of the three tax years immediately preceding the year of return, will be classed as ‘arrivers’ and can only be in the UK for fewer than the 16 days to have any certainty of non-residence. However, if you spend more than 16 days in the UK, you must then determine how many ‘connecting factors’ apply to you.
For ‘leavers’ there are four connecting factors to consider: 1. UK resident family; 2. UK work for more than three hours per day during 40 or more days in a tax year; 3. Accessible UK accommodation; 4. Spending more than 90 days in the UK in either of the previous two tax years.
If you are a ‘leaver’, once your connecting factors are understood, you can apply them to the scale of allowable days below to find your classification of non-residence since 6 April 2013.
These rules are complex, so you really need to carefully plan UK visits. Becoming UK tax resident normally means that your worldwide income becomes taxable in the UK, which could also adversely affect your succession planning. For expert advice, please contact us.