UK News

Final draft legislation on statutory residence test published

The Government has published a final draft of the proposed legislation on the statutory test of UK tax residence.


Previous articles set out the details relating to the statutory definition of residence (and non residence) for UK tax purposes (see Resources below). A major consultation process was carried out over the course of 18 months and it is likely that the final draft will be enacted without further changes. The legislation is due to take effect from 6 April, 2013. In our article on this subject in July 2012, we asked "What may yet change?" as some aspects of the proposal were still under debate.

The Government's view then was that an individual would be automatically not resident for a tax year if they work full time abroad for a period which includes a UK tax year and they spend no more than 90 days in the UK in the tax year in question. Additionally, the number of UK days in the tax year that they work 3 hours or more must not exceed 20. Many felt that this 20-day limit was too low. The Government's response has been to increase the limit for 20 days to 30 days. However, the "3 hours" condition remains.

At that time also, the Government was proposing that an individual should be regarded as working full-time in the UK if they were employed or self-employed over a continuous period of 9 months with no more than 25% of their work being performed overseas in that period. The continuous period has been extended from 9 months to 12 months.


The vast majority of, foreign nationals working in the UK and UK nationals working overseas whose residence status is clear cut under the current rules, are very unlikely to be affected.

The aim of the legislation is to bring clarity to those situations where residence status has been difficult to determine with any certainty. Whether this aim will be fully achieved remains to be seen.


Proposed new residency test - Complexity replaces uncertainty?

UK statutory residence test

For further information or to discuss the issues raised, please contact John Mooney or Bina Gayadien on +44 (0)20 3051 5711.


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