Get ready for April’s new tax residency status test

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Get ready for April’s new tax residency status test

Expats who spend part of the year in the United Kingdom need to be aware of the implementation of new tests to determine their tax residency status.

April will see the HM Revenue and Customs change their current test of judging whether you are a UK resident if you’ve been in the UK for 183 days or more in a single tax year, or more than 90 days on average in a single tax year over the previous four tax years.

The new test will take three different aspects into account to determine whether you should be classed a resident or not.

Kevin White, head of UK Financial Planning at deVere UK, part of the world’s largest independent financial advisory firm, said: “The statutory residence test (SRT) aims to remove any grey areas when determining someone’s residence status for tax purposes in the UK. Existing rules, to a large extent, depend on cases decided by the courts.

‘Currently, anyone in the UK for 183 days or more in any one tax year, or more than 90 days on average per tax year over four years, will be classified as a UK resident, and someone who spends no time in the UK is unlikely to be resident. However, the new SRT, which will be divided into three parts (including tests to decide if an individual is ‘automatically non-resident’ or ‘automatically resident’), will also analyse an individual’s connections with and ties to the UK. These include family, property, work and social connections.”

Expats that have been overseas for a long period of time, or these in the UK that own property abroad need to think about whether they are liable to pay taxes once the new test comes into force.

All British expats who spend at least part of the tax year in the UK must make sure that they are familiar with the new rules. It is strongly advised that they seek advice from their financial residency as soon as possible, otherwise they may be hit by tax demands or if they fail to pay what they owe could face fines or worse.

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