Finance (No. 2) Bill (HC Bill 154)

(b) a day on which P would have done more than 3 hours’ work in the
UK but for being on annual leave, sick leave or parenting leave.

(2) There is a “significant break from overseas work” if at least 31 days go by
and not one of those days is—

(a) 5a day on which P does more than 3 hours’ work overseas, or

(b) a day on which P would have done more than 3 hours’ work
overseas but for being on annual leave, sick leave or parenting leave.

Relevant jobs on board vehicles, aircraft or ships

30 (1) P has a “relevant” job on board a vehicle, aircraft or ship if condition A and
10condition B are met.

(2) Condition A is that P either—

(a) holds an employment, the duties of which consist of duties to be
performed on board a vehicle, aircraft or ship while it is travelling, or

(b) carries on a trade, the activities of which consist of work to be done
15or services to be provided on board a vehicle, aircraft or ship while it
is travelling.

(3) Condition B is that substantially all of the trips made in performing those
duties or carrying on those activities are ones that involve crossing an
international boundary at sea, in the air or on land (referred to as “cross-
20border trips”).

(4) Sub-paragraph (2)(b) is not satisfied unless, in order to do the work or
provide the services, P has to be present (in person) on board the vehicle,
aircraft or ship while it is travelling.

(5) Duties or activities of a purely incidental nature are to be ignored in deciding
25whether the duties of an employment or the activities of a trade consist of
duties or activities of a kind described in sub-paragraph (2)(a) or (b).

UK ties

31 (1) What counts as a “UK tie” depends on whether P was resident in the UK for
one or more of the 3 tax years preceding year X.

(2) 30If P was resident in the UK for one or more of those 3 tax years, each of the
following types of tie counts as a UK tie—

(a) a family tie,

(b) an accommodation tie,

(c) a work tie,

(d) 35a 90-day tie, and

(e) a country tie.

(3) Otherwise, each of the following types of tie counts as a UK tie—

(a) a family tie,

(b) an accommodation tie,

(c) 40a work tie, and

(d) a 90-day tie.

(4) In order to have the requisite number of UK ties for year X, each tie of P’s
must be of a different type.

Family tie

32 (1) P has a family tie for year X if—

(a) in year X, a relevant relationship exists at any time between P and
another person, and

(b) 5that other person is someone who is resident in the UK for year X.

(2) A relevant relationship exists at any time between P and another person if at
the time—

(a) P and the other person are husband and wife or civil partners and, in
either case, are not separated,

(b) 10P and the other person are living together as husband and wife or, if
they are of the same sex, as if they were civil partners, or

(c) the other person is a child of P’s and is under the age of 18.

(3) P does not have a family tie for year X by virtue of sub-paragraph (2)(c) if P
sees the child in the UK on fewer than 61 days (in total) in—

(a) 15year X, or

(b) if the child turns 18 during year X, the part of year X before the day
on which the child turns 18.

(4) A day counts as a day on which P sees the child if P sees the child in person
for all or part of the day.

(5) 20“Separated” means separated—

(a) under an order of a court of competent jurisdiction,

(b) by deed of separation, or

(c) in circumstances where the separation is likely to be permanent.

33 (1) This paragraph applies in deciding for the purposes (only) of paragraph
2532(1)(b) whether a person with whom P has a relevant relationship (a
“family member”) is someone who is resident in the UK for year X.

(2) A family tie based on the fact that a family member has, by the same token,
a relevant relationship with P is to be disregarded in deciding whether that
family member is someone who is resident in the UK for year X.

(3) 30A family member falling within sub-paragraph (4) is to be treated as being
not resident in the UK for year X if the number of days that he or she spends
in the UK in the part of year X outside term-time is less than 21.

(4) A family member falls within this sub-paragraph if he or she—

(a) is a child of P’s who is under the age of 18,

(b) 35is in full-time education in the UK at any time in year X, and

(c) is resident in the UK for year X but would not be so resident if the
time spent in full-time education in the UK in that year were
disregarded.

(5) In sub-paragraph (4)—

(a) 40references to full-time education in the UK are to full-time education
at a university, college, school or other educational establishment in
the UK, and

(b) the reference to the time spent in full-time education in the UK is to
the time spent there during term-time.

(6) For the purposes of this paragraph, half-term breaks and other breaks when
teaching is not provided during a term are considered to form part of “term-
time”.

Accommodation tie

34 (1) 5P has an accommodation tie for year X if—

(a) P has a place to live in the UK,

(b) that place is available to P during year X for a continuous period of
at least 91 days, and

(c) P spends at least one night at that place in that year.

(2) 10If there is a gap of fewer than 16 days between periods in year X when a
particular place is available to P, that place is to be treated as continuing to
be available to P during the gap.

(3) P is considered to have a “place to live” in the UK if—

(a) P’s home or at least one of P’s homes (if P has more than one) is in
15the UK, or

(b) P has a holiday home or temporary retreat (or something similar) in
the UK, or

(c) accommodation is otherwise available to P where P can live when P
is in the UK.

(4) 20Accommodation may be “available” to P even if P holds no estate or interest
in it and even has no legal right to occupy it.

(5) If the accommodation is the home of a close relative of P’s, sub-paragraph
(1)(c) has effect as if for “at least one night” there were substituted “a total of
at least 16 nights”.

(6) 25A “close relative” is—

(a) a parent or grandparent,

(b) a brother or sister,

(c) a child aged 18 or over, or

(d) a grandchild aged 18 or over,

30in each case, including by half-blood or by marriage or civil partnership.

Work tie

35 (1) P has a work tie for year X if P works in the UK for at least 40 days (whether
continuously or intermittently) in year X.

(2) For these purposes, P works in the UK for a day if P does more than 3 hours’
35work in the UK on that day.

36 (1) This paragraph applies for the purposes of paragraph 35.

(2) It applies in cases where P has a relevant job on board a vehicle, aircraft or
ship.

(3) When making a cross-border trip as part of that job—

(a) 40if the trip begins in the UK, P is assumed to do more than 3 hours’
work in the UK on the day on which it begins,

(b) if the trip ends in the UK, P is assumed to do fewer than 3 hours’
work in the UK on the day on which it ends.

(4) Those assumptions apply regardless of how late in the day the trip begins or
ends (even if it begins or ends just before midnight).

(5) For the purposes of sub-paragraph (3)(a), it does not matter whether the trip
ends on that same day.

(6) 5A day that falls within both paragraph (a) and paragraph (b) of sub-
paragraph (3) is to be treated as if it fell only within paragraph (a).

(7) In the case of a cross-border trip to or from the UK that is undertaken in
stages—

(a) the day on which the trip begins or, as the case may be, ends is the
10day on which the stage of the trip that involves crossing the UK
border begins or ends, and

(b) accordingly, any day on which a stage is undertaken by P solely
within the UK must (if it lasts for more than 3 hours) be counted
separately as a day on which P does more than 3 hours’ work in the
15UK.

90-day tie

37 P has a 90-day tie for year X if P has spent more than 90 days in the UK in—

(a) the tax year preceding year X,

(b) the tax year preceding that tax year, or

(c) 20each of those tax years separately.

Country tie

38 (1) P has a country tie for year X if the country in which P meets the midnight
test for the greatest number of days in year X is the UK.

(2) If—

(a) 25P meets the midnight test for the same number of days in year X in
two or more countries, and

(b) that number is the greatest number of days for which P meets the
midnight test in any country in year X,

P has a country tie for year X if one of those countries is the UK.

(3) 30P meets the “midnight test” in a country for a day if P is present in that
country at the end of that day.

Part 3 Split year treatment

Introduction

39 35This Part of this Schedule—

(a) explains when, as respects an individual, a tax year is a split year,

(b) defines the overseas part and the UK part of a split year, and

(c) amends certain enactments to provide for special charging rules in
cases involving split years.

40 (1) The effect of a tax year being a split year is to relax the effect of paragraph
2(3) (which treats individuals who are UK resident “for” a tax year as being
UK resident at all times in that year).

(2) When and how the effect of paragraph 2(3) is relaxed is defined in the special
5charging rules introduced by the amendments made by this Part.

(3) Subject to those special charging rules (and any other special charging rules
for split years that may be introduced in the future), nothing in this Part
alters an individual’s residence status for a tax year or affects his or her
liability to tax.

41 10This Part—

(a) does not apply in determining the residence status of personal
representatives, and

(b) applies to only a limited extent in determining the residence status of
the trustees of a settlement (see section 475 of ITA 2007 and section
1569 of TCGA 1992, as amended by this Part).

42 The existence of special charging rules for cases involving split years is not
intended to affect any question as to whether an individual would fall to be
regarded under double taxation arrangements as a resident of the UK.

Definition of a “split year”

43 (1) 20As respects an individual, a tax year is a “split year” if—

(a) the individual is resident in the UK for that year, and

(b) the circumstances of the case fall within—

(i) Case 1, Case 2 or Case 3 (cases involving actual or deemed
departure from the UK), or

(ii) 25Case 4, Case 5, Case 6, Case 7 or Case 8 (cases involving actual
or deemed arrival in the UK).

(2) The 8 Cases are described in paragraphs 44 to 51.

(3) In those paragraphs, the individual is referred to as “the taxpayer” and the
tax year as “the relevant year”.

(4) 30In applying Part 2 of this Schedule to those paragraphs, for “P” read “the
taxpayer”.

Case 1

44 (1) The circumstances of a case fall within Case 1 if they are as described in sub-
paragraphs (2) to (4).

(2) 35The taxpayer was resident in the UK for the previous tax year (whether or
not it was a split year).

(3) There is at least one period (consisting of one or more days) that—

(a) begins with a day that—

(i) falls within the relevant year, and

(ii) 40is a day on which the taxpayer does more than 3 hours’ work
overseas,

(b) ends with the last day of the relevant year, and

(c) satisfies the overseas work criteria.

(4) The taxpayer is not resident in the UK for the next tax year because the
taxpayer meets the third automatic overseas test for that year (see paragraph
14).

(5) A period “satisfies the overseas work criteria” if—

(a) 5the taxpayer works sufficient hours overseas, as assessed over that
period,

(b) during that period, there are no significant breaks from overseas
work,

(c) the number of days in that period on which the taxpayer does more
10than 3 hours’ work in the UK does not exceed the permitted limit,
and

(d) the number of days in that period falling within sub-paragraph (6)
does not exceed the permitted limit.

(6) A day falls within this sub-paragraph if—

(a) 15it is a day spent by the taxpayer in the UK, but

(b) it is not a day that is treated under paragraph 23(4) as a day spent by
the taxpayer in the UK.

(7) To work out whether the taxpayer works “sufficient hours overseas” as
assessed over a given period, apply paragraph 14(3) but with the following
20modifications—

(a) for “P” read “the taxpayer”,

(b) for “year X” read “the period under consideration”,

(c) for “365 (or 366 if year X includes 29 February)” read “the number of
days in the period under consideration”, and

(d) 25in paragraph 28(9)(b), as it applies for the purposes of step 3, for “30”
read “the permitted limit”.

(8) The permitted limit is—

(a) for sub-paragraphs (5)(c) and (7)(d), the number found by reducing
30 by the appropriate number, and

(b) 30for sub-paragraph (5)(d), the number found by reducing 90 by the
appropriate number.

(9) The appropriate number is the result of—

40Case 2

45 (1) The circumstances of a case fall within Case 2 if they are as described in sub-
paragraphs (2) to (6).

(2) The taxpayer was resident in the UK for the previous tax year (whether or
not it was a split year).

(3) The taxpayer has a partner whose circumstances fall within Case 1 for—

(a) the relevant year, or

(b) the previous tax year.

(4) On a day in the relevant year, the taxpayer moves overseas so the taxpayer
5and the partner can continue to live together while the partner is working
overseas.

(5) In the part of the relevant year beginning with the deemed departure day—

(a) the taxpayer has no home in the UK at any time, or has homes in both
the UK and overseas but spends the greater part of the time living in
10the overseas home, and

(b) the number of days that the taxpayer spends in the UK does not
exceed the permitted limit.

(6) The taxpayer is not resident in the UK for the next tax year.

(7) If sub-paragraph (3)(a) applies, the “deemed departure day” is the later of—

(a) 15the day mentioned in sub-paragraph (4), and

(b) the first day of what is, for the partner, the overseas part of the
relevant year as defined for Case 1 (see paragraph 53).

(8) If sub-paragraph (3)(b) applies, the “deemed departure day” is the day
mentioned in sub-paragraph (4).

(9) 20The permitted limit is the number found by reducing 90 by the appropriate
number.

(10) The appropriate number is the result of—

Case 3

46 (1) The circumstances of a case fall within Case 3 if they are as described in sub-
30paragraphs (2) to (6).

(2) The taxpayer was resident in the UK for the previous tax year (whether or
not it was a split year).

(3) At the start of the relevant year the taxpayer had one or more homes in the
UK but—

(a) 35there comes a day in the relevant year when P ceases to have any
home in the UK, and

(b) from then on, P has no home in the UK for the rest of that year.

(4) In the part of the relevant year beginning with the day mentioned in sub-
paragraph (3)(a), the taxpayer spends fewer than 16 days in the UK.

(5) 40The taxpayer is not resident in the UK for the next tax year.

(6) At the end of the period of 6 months beginning with the day mentioned in
sub-paragraph (3)(a), the taxpayer has a sufficient link with a country
overseas.

(7) The taxpayer has a “sufficient link” with a country overseas if and only if—

(a) 5the taxpayer is considered for tax purposes to be a resident of that
country in accordance with its domestic laws, or

(b) the taxpayer has been present in that country (in person) at the end
of each day of the 6-month period mentioned in sub-paragraph (6),
or

(c) 10the taxpayer’s only home is in that country or, if the taxpayer has
more than one home, they are all in that country.

Case 4

47 (1) The circumstances of a case fall within Case 4 if they are as described in sub-
paragraphs (2) to (4).

(2) 15The taxpayer was not resident in the UK for the previous tax year.

(3) At the start of the relevant year, the taxpayer did not meet the only home
test, but there comes a day in the relevant year when that ceases to be the
case and the taxpayer then continues to meet the only home test for the rest
of that year.

(4) 20For the part of the relevant year before that day, the taxpayer does not have
sufficient UK ties.

(5) The “only home test” is met if—

(a) the taxpayer has only one home and that home is in the UK, or

(b) the taxpayer has more than one home and all of them are in the UK.

(6) 25Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those
paragraphs) apply for the purposes of sub-paragraph (4) with the following
adjustments—

(a) references in those paragraphs and that Part to year X are to be read
as references to the part of the relevant year mentioned in sub-
30paragraph (4), and

(b) each number of days mentioned in the first column of the Table in
paragraphs 18 and 19 is to be reduced by the appropriate number.

(7) The appropriate number is found by multiplying the number of days, in
each case, by—

35

(8) Sub-paragraph (6)(a) does not apply to the references to year X in
paragraphs 32(1)(b) and 33 of this Schedule (which relate to the residence
40status of family members) so those references must continue to be read as
references to year X.

Case 5

48 (1) The circumstances of a case fall within Case 5 if they are as described in sub-
paragraphs (2) and (3).

(2) The taxpayer was not resident in the UK for the previous tax year.

(3) 5There is at least one period of 365 days in respect of which the following
conditions are met—

(a) the period begins with a day that—

(i) falls within the relevant year, and

(ii) is a day on which the taxpayer does more than 3 hours’ work
10in the UK,

(b) in the part of the relevant year before the period begins, the taxpayer
does not have sufficient UK ties,

(c) the taxpayer works sufficient hours in the UK, as assessed over the
period,

(d) 15during the period, there are no significant breaks from UK work, and

(e) at least 75% of the total number of days in the period on which the
taxpayer does more than 3 hours’ work are days on which the
taxpayer does more than 3 hours’ work in the UK.

(4) To work out whether the taxpayer works “sufficient hours in the UK” as
20assessed over a given period, apply paragraph 9(2) but for “P” read “the
taxpayer”.

(5) Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those
paragraphs) apply for the purposes of sub-paragraph (3)(b) with the
following adjustments—

(a) 25references in those paragraphs and that Part to year X are to be read
as references to the part of the relevant year mentioned in sub-
paragraph (3)(b), and

(b) each number of days mentioned in the first column of the Table in
paragraphs 18 and 19 is to be reduced by the appropriate number.

(6) 30The appropriate number is found by multiplying the number of days, in
each case, by—

(7) 35Sub-paragraph (5)(a) does not apply to the references to year X in
paragraphs 32(1)(b) and 33 of this Schedule (which relate to the residence
status of family members) so those references must continue to be read as
references to year X.

Case 6

49 (1) 40The circumstances of a case fall within Case 6 if they are as described in sub-
paragraphs (2) to (4).

(2) The taxpayer was not resident in the UK for the previous tax year because
the taxpayer met the third automatic overseas test for that year (see
paragraph 14).

(3) There is at least one period (consisting of one or more days) that—

(a) begins with the first day of the relevant year,

(b) ends with a day that—

(i) falls within the relevant year, and

(ii) 5is a day on which the taxpayer does more than 3 hours’ work
overseas, and

(c) satisfies the overseas work criteria.

(4) The taxpayer is resident in the UK for the next tax year (whether or not it is
a split year).

(5) 10A period “satisfies the overseas work criteria” if—

(a) the taxpayer works sufficient hours overseas, as assessed over that
period,

(b) during that period, there are no significant breaks from overseas
work,

(c) 15the number of days in that period on which the taxpayer does more
than 3 hours’ work in the UK does not exceed the permitted limit,
and

(d) the number of days in that period falling within sub-paragraph (6)
does not exceed the permitted limit.

(6) 20A day falls within this sub-paragraph if—

(a) it is a day spent by the taxpayer in the UK, but

(b) it is not a day that is treated under paragraph 23(4) as a day spent by
the taxpayer in the UK.

(7) To work out whether the taxpayer works “sufficient hours overseas” as
25assessed over a given period, apply paragraph 14(3) but with the following
modifications—

(a) for “P” read “the taxpayer”,

(b) for “year X” read “the period under consideration”,

(c) for “365 (or 366 if year X includes 29 February)” read “the number of
30days in the period under consideration”, and

(d) in paragraph 28(9)(b), as it applies for the purposes of step 3, for “30”
read “the permitted limit”.

(8) The permitted limit is—

(a) for sub-paragraphs (5)(c) and (7)(d), the number found by reducing
3530 by the appropriate number, and

(b) for sub-paragraph (5)(d), the number found by reducing 90 by the
appropriate number.

(9) The appropriate number is the result of—