Individuals who have left the UK permanently, temporarily moved there or even frequently visited it, have for some time been uncertain as to whether or not they were caught by the UK’s tax system. The current rules are quite frankly a nightmare for all but the most experienced tax advisers, and even they have not been adverse to getting it wrong from time to time.

Following years of criticism, Her Majesty’s Revenue and Customs has recently consulted on a new framework which aims to make it easier for individuals to determine their exposure. The new proposals distinguish between individuals who have not been resident in the UK for all of the previous three tax years (“Arrivers”) and individuals who have been resident in the UK in one or more of the previous three tax years (“Leavers”). 

The proposal introduces a three part test.

Part A of the consultation contains rules which, if met, confirm that an individual is non-resident and as a result provides certainty of their non-UK resident status. As such, the individual need not consider parts B or C of the test.

Arrivers who spend less than 45 days in the UK or Leavers who spend less than 10 days in the UK would automatically be non-UK resident.

As mentioned above, Part B only applies if Part A does not, and contains categories where individuals would definitely be considered UK resident. If both Parts A and B could apply, then Part A has precedence. In broad terms, individuals who spend in excess of 183 days in the UK; individuals whose only home(s) are in the UK; and individuals who carry out full time work (35 hours or more a week) in the UK would automatically be UK resident.

If neither Part A nor Part B applies conclusively, then Part C is used to determine residence.

Part C looks at ‘connecting factors’ linked to day counts. Overall, the more connecting factors a person has to the UK, the less time they will be able to spend there without becoming tax resident. The connecting factors are:

° Family (defined as spouse, civil partner, common law partner and minor children) who are resident in the UK

° Available accommodation in the UK

° Working in the UK for 40 or more days in the tax year (working 3 or more hours a day constitutes one working day for these purposes)

° Spending 90 days or more in the UK in either of the last two tax years

° (for Leavers only) spending more time in the UK than in any other single country.

Far be it from me to suggest that the intention here is to make it far easier to acquire UK residence for tax purposes than it is to lose it. However, this does appear to be the case.

This reflects current UK case law which supports the idea that residence should have an ‘adhesive’ quality and, at a time where governments around the world need every penny that they can get, you really can’t see it getting less ‘stickier’ any time soon.