The first article in a series on the Statutory Residence Test
As we know from case law, UK residence and domicile status is important in order to determine an individual’s liability to UK taxes.
Surprisingly, residence has not been defined in the legislation but has been based on practice, supported by small pieces of statute.
However, reliance on this guidance could sometimes produce surprising results and, coupled with the application of legislation reliant on the concept of ‘ordinary residence’ which was neither defined nor understood by many persons outside the UK, the need for certainty became apparent.
This includes legislation to define residence and abolish the concept of ordinary residence.
Apart from the abolition of ordinary residence, the new statutory rules do not make much change to the previous practice, but are intended to provide some certainty.
The abolition of ordinary residence also affects the rules relating to non-UK- domiciled individuals.
This imposes a statutory residence test via Schedule 43, with provision for amendment by statutory instrument.
A person, who according to the test is resident for the year, will be deemed to be resident for the whole year, unless split-year treatment applies.
The basic rule is that a person is resident in the UK for a tax year if the automatic residence or the sufficient ties tests are met for that year.
To access other articles in this series, visit the 'Statutory Residence Test' section on this page.
You can also access further information via the 'Related links' section on this page.