A statutory residence test (SRT) is due to be introduced with effect from 6 April 2013. Draft legislation was published on 11 December 2012 and the Government has continued to consider representations on the detail of the legislation. No specific changes to the draft legislation published in December have been announced in the Budget, but it was confirmed that next week’s Finance Bill will contain amendments to the concepts of full-time work, international transportation workers and split-year status following this consultation. The broad outline of the test is not expected to change and consists of:
- automatic tests for non residence;
- automatic tests for UK residence; and
- sufficient ties tests for individuals who are not automatically considered not UK resident or UK resident.
A flowchart of the SRT is available on our website.
Another area where change is likely is that of Overseas Workday Relief (OWR). The abolition of ordinary residence has resulted in the need to redraft the rules regarding OWR (so that it is not based on being not ordinary resident). A Statement of Practice on calculating remittances when claiming OWR is also being included in legislation. As originally drafted this legislation had a number of practical difficulties which the Government is likely to address. The Budget documents state that: “amendments will be made to the transitional rules to better align with the current position.” We will need to wait and see the exact details in next week’s Finance Bill.
The Finance Bill will be published on 28 March 2013, with further guidance published after 6 April.
Any internationally mobile individuals, or employers with assignees, should carefully consider the revisions when they are published as they may greatly impact on an individual’s residence status and the resultant tax liability.