Finance Bill

House of Commons

Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
518

      (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)
the taxpayer works sufficient hours overseas, as assessed over that
5
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
than 3 hours’ work in the UK does not exceed the permitted limit,
10
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)
it is a day spent by the taxpayer in the UK, but
15
(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
modifications—
20
(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)
in paragraph 28(9)(b), as it applies for the purposes of step 3, for “30”
25
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)
for sub-paragraph (5)(d), the number found by reducing 90 by the
30
appropriate number.
      (9)
The appropriate number is the result of—

where—
  “A” is—
(a)
30, for sub-paragraphs (5)(c) and (7)(d), or
35
(b)
90, for sub-paragraph (5)(d), and
“B” is the number of whole months in the part of the relevant year
before the day mentioned in sub-paragraph (3)(a).
Case 2: the partner of someone starting full-time work overseas
45    (1)
The circumstances of a case fall within Case 2 if they are as described in sub-
40
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).

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
519

      (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
and the partner can continue to live together while the partner is working
5
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
the overseas home, and
10
(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)
the day mentioned in sub-paragraph (4), and
15
(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)
The permitted limit is the number found by reducing 90 by the appropriate
20
number.
     (10)
The appropriate number is the result of—

where—
  “A” is 90, and
“B” is the number of whole months in the part of the relevant year
25
before the deemed departure day.
Case 3: ceasing to have a home in the UK
46    (1)
The circumstances of a case fall within Case 3 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
30
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)
there comes a day in the relevant year when P ceases to have any
home in the UK, and
35
(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)
The taxpayer is not resident in the UK for the next tax year.

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
520

      (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)
the taxpayer is considered for tax purposes to be a resident of that
5
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)
the taxpayer’s only home is in that country or, if the taxpayer has
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more than one home, they are all in that country.
Case 4: starting to have a home in the UK only
47    (1)
The circumstances of a case fall within Case 4 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.
15
      (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)
For the part of the relevant year before that day, the taxpayer does not have
20
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)
Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those
25
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-
paragraph (4), and
30
(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—

where “A” is the number of whole months in the part of the relevant year
35
beginning with the day mentioned in sub-paragraph (3).
      (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
status of family members) so those references must continue to be read as
references to year X.
40

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
521

Case 5: starting full-time work in the UK
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)
There is at least one period of 365 days in respect of which the following
5
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
in the UK,
10
(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)
during the period, there are no significant breaks from UK work, and
15
(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
assessed over a given period, apply paragraph 9(2) but for “P” read “the
20
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)
references in those paragraphs and that Part to year X are to be read
25
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)
The appropriate number is found by multiplying the number of days, in
30
each case, by—

where “A” is the number of whole months in the part of the relevant year
beginning with the day on which the 365-day period in question begins.
      (7)
Sub-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
35
status of family members) so those references must continue to be read as
references to year X.
Case 6: ceasing full-time work overseas
49    (1)
The circumstances of a case fall within Case 6 if they are as described in sub-
paragraphs (2) to (4).
40
      (2)
The taxpayer—

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
522

(a)
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), but
(b)
was resident in the UK for one or more of the 4 tax years immediately
preceding that year.
5
      (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)
is a day on which the taxpayer does more than 3 hours’ work
10
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)
A period “satisfies the overseas work criteria” if—
15
(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)
the number of days in that period on which the taxpayer does more
20
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)
A day falls within this sub-paragraph if—
25
(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
assessed over a given period, apply paragraph 14(3) but with the following
30
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
days in the period under consideration”, and
35
(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
30 by the appropriate number, and
40
(b)
for sub-paragraph (5)(d), the number found by reducing 90 by the
appropriate number.
      (9)
The appropriate number is the result of—

where—
  “A” is—
45

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
523

(a)
30, for sub-paragraphs (5)(c) and (7)(d), or
(b)
90, for sub-paragraph (5)(d), and
“B” is the number of whole months in the part of the relevant year after
the 365-day period in question ends.
Case 7: the partner of someone ceasing full-time work overseas
5
50    (1)
The circumstances of a case fall within Case 7 if they are as described in sub-
paragraphs (2) to (6).
      (2)
The taxpayer was not resident in the UK for the previous tax year.
      (3)
The taxpayer has a partner whose circumstances fall within Case 6 for—
(a)
the relevant year, or
10
(b)
the previous tax year.
      (4)
On a day in the relevant year, the taxpayer moves to the UK so the taxpayer
and the partner can continue to live together on the partner’s return or
relocation to the UK.
      (5)
In the part of the relevant year before the deemed arrival day—
15
(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
the overseas home, and
(b)
the number of days that the taxpayer spends in the UK does not
exceed the permitted limit.
20
      (6)
The taxpayer is resident in the UK for the next tax year (whether or not it is
a split year).
      (7)
If sub-paragraph (3)(a) applies, the “deemed arrival day” is the later of—
(a)
the day mentioned in sub-paragraph (4), and
(b)
the first day of what is, for the partner, the UK part of the relevant
25
year as defined for Case 6 (see paragraph 54).
      (8)
If sub-paragraph (3)(b) applies, the “deemed arrival day” is the day
mentioned in sub-paragraph (4).
      (9)
The permitted limit is the number found by reducing 90 by the appropriate
number.
30
     (10)
The appropriate number is the result of—

where—
  “A” is 90, and
“B” is the number of whole months in the part of the relevant year
beginning with the deemed arrival day.
35
Case 8: starting to have a home in the UK
51    (1)
The circumstances of a case fall within Case 8 if they are as described in sub-
paragraphs (2) to (5).
      (2)
The taxpayer was not resident in the UK for the previous tax year.

Finance Bill
Schedule 43 — Statutory residence test
Part 3 — Split year treatment
524

      (3)
At the start of the relevant year, the taxpayer had no home in the UK but—
(a)
there comes a day when, for the first time in that year, the taxpayer
does have a home in the UK, and
(b)
from then on, the taxpayer continues to have a home in the UK for
the rest of that year and for the whole of the next tax year.
5
      (4)
For the part of the relevant year before the day mentioned in sub-paragraph
(3)(a), the taxpayer does not have sufficient UK ties.
      (5)
The taxpayer is resident in the UK for the next tax year and that tax year is
not a split year as respects the taxpayer.
      (6)
Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those
10
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-
paragraph (4), and
15
(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—

where “A” is the number of whole months in the part of the relevant year
20
beginning with the day mentioned in sub-paragraph (3)(a).
      (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
status of family members) so those references must continue to be read as
references to year X.
25
General rules for construing Cases 1 to 8
52    (1)
This paragraph applies for the purposes of paragraphs 44 to 51.
      (2)
A reference to “the previous tax year” is to the tax year preceding the
relevant year.
      (3)
A reference to “the next tax year” is to the tax year following the relevant
30
year.
      (4)
“Partner”, in relation to the taxpayer, means—
(a)
a husband or wife or civil partner,
(b)
if the taxpayer and another person are living together as husband
and wife, that other person, or
35
(c)
if the taxpayer and another person of the same sex are living together
as if they were civil partners, that other person.
      (5)
If calculation of the appropriate number results in a number of days that is
not a whole number, the appropriate number is to be rounded up or down
as follows—
40
(a)
if the first figure after the decimal point is 5 or more, round the
appropriate number up to the nearest whole number,
(b)
otherwise, round it down to the nearest whole number.