Statutory definition of tax residence
Government to introduce a statutory definition of tax residence with the aim to create clear rules providing greater certainty for taxpayers.
The Government would like to thank all respondents to the recent consultation on the statutory residence test and reforms to ordinary residence and to those who attended meetings with HMRC and HM Treasury. The Government has considered the views expressed during this consultation, which ended on 13 September 2012, and has made various changes to the draft legislation which has been published today. A further summary of responses document outlining the Government response to this recent consultation is published today. The Government would like to invite all interested parties to provide any views they may have on the technical detail of the draft legislation by 6 February before publication in Finance Bill 2013. The latest document can be found at the bottom of this page alongside previous response documents
June 2012The Government has carefully considered the views expressed in response to the Statutory Definition of Tax Residence consultation of June 2011. It has published the Summary of Responses to the Statutory Definition of Tax Residence consultation along with draft legislation and invites all interested parties to respond fully and work with the Government to ensure that the draft legislation meets its objectives. The Government intends to introduce the statutory definition of tax residence and reforms to ordinary residence in Finance Bill 2013. The document can be found below in the ‘summary of responses’ section.
December 2011Due to the detailed issues raised in responses to the consultation, the Government has announced that it will legislate the statutory residence test in Finance Bill 2013 to take effect from April 2013, rather than April 2012. It will introduce any reforms to ordinary residence at the same time. This will give time to consult thoroughly on the detail of these changes well in advance of implementation and ensure they achieve the objective of providing certainty.
A further announcement will be made around Budget 2012 when the Government will publish its response to the 2011 consultation together with a further consultation on policy detail and draft legislation.
BackgroundThe current rules that determine tax residence for individuals are complicated and unclear. At Budget 2011 the Government announced that it would introduce a statutory definition of tax residence. Its aim is to create clear rules that provide greater certainty for taxpayers and are simple to use.
ConsultationThis consultation proposes new statutory rules to define tax residence and seeks views on their design and implementation. The tax residence of the vast majority of individuals will not be affected by the introduction of the new statutory definition. As part of this consultation, the Government is also seeking views on options to reform the concept of ordinary residence, which currently lacks a statutory definition.
This consultation will only cover the issue of tax residence in the UK for individuals and will not cover the residence of companies.
HM Revenue & Customs is considering the possibility of providing an interactive online tool to enable individuals to self assess their residence status when the new statutory definition is introduced. A prototype of this tool is available below and interested parties are invited to make use of this to assess how a statutory test could operate in practice.
The Government would welcome views from individuals, advisors, businesses and representative groups who are affected by, or have an interest in, the rules on tax residence.
December 2012 summary of responses and revised draft legislationIn June 2012, the Government published a summary of responses to the consultation on the statutory residence test and reforms to ordinary residence. In the document, the Government outlined its response to the issues raised during consultation. It also asked further questions for consultation on the detail of the policy. The Government received around 57 responses from interested parties and is grateful to all who contributed. This document covers the Government response to the issues raised in the latest consultation which ended on 13 September 2012. The revised draft legislation is available in the Finance Bill 2013 section.
HMRC has published draft guidance to assist individuals on the application of the statutory residence test and on eligibility for overseas workday relief. Comments are invited on all parts of the guidance, in particular on its scope and coverage, by 6 February 2013 to offshorepersonal.taxteam@hmrc.gsi.gov.uk
June 2012 summary of responses and draft legislationResponses were invited from individuals, advisors, businesses and representative bodies who are affected by, or have an interest in a statutory definition of tax residence and reforms to ordinary residence. The Government received around 120 responses from a mix of individuals and organisations. The Government also held meetings with representatives from a range of external organisations.