House of Commons portcullis
House of Commons
Session 2013 - 14
Internet Publications
Other Bills before Parliament

Finance Bill


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

539

 

99    (1)  

Section 16ZC (individual who has made election under section 16ZA and to

whom remittance basis applies) is amended as follows.

      (2)  

In subsection (3)—

(a)   

in paragraph (a), after “that year” insert “or, if that year is a split year

as respects the individual, in the UK part of that year”, and

5

(b)   

in paragraph (b), after “that year” insert “or they are so remitted in

that year but it is a split year as respects the individual and they are

so remitted in the overseas part of the year”.

      (3)  

In subsection (7), in the definition of “relevant allowable losses”, after “tax

year” insert “or a part of the tax year”.

10

100        

In section 86 (attribution of gains to settlors with interest in non-resident or

dual resident settlements), in subsection (4)(a), after “the year” insert “or if,

as respects the settlor, the year is a split year, in the UK part of that year”.

101        

In section 87 (non-UK resident settlements: attribution of gains to

beneficiaries), after subsection (6) insert—

15

“(7)   

If the relevant tax year is a split year as respects a beneficiary of the

settlement—

(a)   

the amount on which the beneficiary is chargeable to capital

gains tax by virtue of this section for that year (in respect of

the settlement) is a portion of the amount on which the

20

beneficiary would have been so chargeable if the relevant tax

year had not been a split year, and

(b)   

the portion is the portion attributable to the UK part of the

relevant tax year calculated on a time apportionment basis.”

Trustees of a settlement

25

102        

In section 69 of TCGA 1992 (trustees of settlements), after subsection (2D)

insert—

“(2DA)   

A trustee who is resident in the United Kingdom for a tax year is to

be treated for the purposes of subsections (2A) and (2B) as if he or she

were not resident in the United Kingdom for that year if—

30

(a)   

the trustee is an individual,

(b)   

the individual becomes or ceases to be a trustee of the

settlement during the tax year,

(c)   

that year is a split year as respects the individual, and

(d)   

in that year, the only period when the individual is a trustee

35

of the settlement falls wholly within the overseas part of the

year.

(2DB)   

Subsection (2DA) is subject to subsection (2D) and, accordingly, an

individual who is treated under subsection (2DA) as not resident is,

in spite of that, to be regarded as resident whenever the individual

40

acts as mentioned in subsection (2D).”

103        

In section 475 of ITA 2007 (residence of trustees), after subsection (6) insert—

“(7)   

Subsection (8) applies if—

(a)   

an individual becomes or ceases to be a trustee of the

settlement during a tax year,

45

 
 

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

540

 

(b)   

that year is a split year as respects the individual, and

(c)   

the only period in that year when the individual is a trustee

of the settlement falls wholly within the overseas part of the

year.

(8)   

The individual is to be treated for the purposes of subsections (4) and

5

(5) as if he or she had been non-UK resident for the year (and hence

for the period in that year when he or she was a trustee of the

settlement).

(9)   

But subsection (8) is subject to subsection (6) and, accordingly, an

individual who is treated under subsection (8) as having been non-

10

UK resident is, in spite of that, to be treated as UK resident whenever

the individual acts as mentioned in subsection (6).”

Definitions in enactments relating to income tax and CGT

104   (1)  

Section 288 of TCGA 1992 (interpretation) is amended as follows.

      (2)  

In subsection (1), insert the following definition in the appropriate place—

15

““split year”, as respects an individual, means a tax year that, as

respects that individual, is a split year within the meaning of

Part 3 of Schedule 43 to the Finance Act 2013 (statutory

residence test: split year treatment);”.

      (3)  

After subsection (1ZA) insert—

20

“(1ZB)   

A reference in this Act to “the overseas part” or “the UK part” of a

split year is to be read in accordance with Part 3 of Schedule 43 to the

Finance Act 2013 (statutory residence test: split year treatment).”

105        

In Part 2 of Schedule 1 to ITEPA 2003 (index of defined expressions), insert

the following entries in the appropriate places—

25

 

“the overseas part

section 989 of ITA 2007”,

 
 

“split year

section 989 of ITA 2007”,

 
  

and

 
 

“the UK part

section 989 of ITA 2007”.

 

106        

In Part 2 of Schedule 4 to ITTOIA 2005 (index of defined expressions), insert

30

the following entries in the appropriate places—

 

“the overseas part

section 989 of ITA 2007”,

 
 

“split year

section 989 of ITA 2007”,

 
  

and

 
 

“the UK part

section 989 of ITA 2007”.

 

35

107        

In section 989 of ITA 2007 (definitions for purposes of Income Tax Acts),

 
 

Finance Bill
Schedule 43 — Statutory residence test
Part 4 — Anti-avoidance

541

 

insert the following definitions in the appropriate places—

““the overseas part”, in relation to a split year, has the meaning

given in Part 3 of Schedule 43 to FA 2013 (statutory residence

test: split year treatment);”,

““split year”, in relation to an individual, means a tax year that,

5

as respects that individual, is a split year within the meaning

of Part 3 of Schedule 43 to FA 2013 (statutory residence test:

split year treatment);”, and

““the UK part”, in relation to a split year, has the meaning given

in Part 3 of Schedule 43 to FA 2013 (statutory residence test:

10

split year treatment);”.

108        

In Schedule 4 to that Act (index of defined expressions), insert the following

entries in the appropriate places—

 

“the overseas part

section 989”,

 
 

“split year

section 989”, and

 

15

 

“the UK part

section 989”.

 

Part 4

Anti-avoidance

Introduction

109        

This Part of this Schedule—

20

(a)   

explains when an individual is to be regarded for the purposes of

certain enactments as temporarily non-resident,

(b)   

defines the year of departure and the period of return for the

purposes of those enactments,

(c)   

makes consequential amendments to certain enactments containing

25

special rules for temporary non-residents, and

(d)   

inserts some more special rules for temporary non-residents in

certain cases.

Meaning of temporarily non-resident

110   (1)  

An individual is to be regarded as “temporarily non-resident” if—

30

(a)   

the individual has sole UK residence for a residence period,

(b)   

immediately following that period (referred to as “period A”), one or

more residence periods occur for which the individual does not have

sole UK residence,

(c)   

at least 4 out of the 7 tax years immediately preceding the year of

35

departure were either—

(i)   

a tax year for which the individual had sole UK residence, or

(ii)   

a split year that included a residence period for which the

individual had sole UK residence, and

(d)   

the temporary period of non-residence is 5 years or less.

40

      (2)  

Terms used in sub-paragraph (1) are defined below.

 
 

Finance Bill
Schedule 43 — Statutory residence test
Part 4 — Anti-avoidance

542

 

Residence periods

111        

In relation to an individual, a “residence period” is—

(a)   

a tax year that, as respects the individual, is not a split year, or

(b)   

the overseas part or the UK part of a tax year that, as respects the

individual, is a split year.

5

Sole UK residence

112   (1)  

An individual has “sole UK residence” for a residence period consisting of

an entire tax year if—

(a)   

the individual is resident in the UK for that year, and

(b)   

there is no time in that year when the individual is Treaty non-

10

resident.

      (2)  

An individual has “sole UK residence” for a residence period consisting of

part of a split year if—

(a)   

the residence period is the UK part of that year, and

(b)   

there is no time in that part of the year when the individual is Treaty

15

non-resident.

      (3)  

An individual is “Treaty non-resident” at any time if at the time the

individual falls to be regarded as resident in a country outside the UK for the

purposes of double taxation arrangements having effect at the time.

Temporary period of non-residence

20

113        

In relation to an individual, “the temporary period of non-residence” is the

period between—

(a)   

the end of period A, and

(b)   

the start of the next residence period after period A for which the

individual has sole UK residence.

25

Year of departure

114        

“The year of departure” is the tax year consisting of or including period A.

Period of return

115        

“The period of return” is the first residence period after period A for which

the individual has sole UK residence.

30

Consequential amendments: income tax

116        

In ITEPA 2003, for section 576A substitute—

“576A   

Temporary non-residents

(1)   

This section applies if a person is temporarily non-resident.

(2)   

Any relevant withdrawals within subsection (3) are to be treated for

35

the purposes of section 575 as if they arose in the period of return.

(3)   

A relevant withdrawal is within this subsection if—

(a)   

it is paid to the person in the temporary period of non-

residence, and

 
 

Finance Bill
Schedule 43 — Statutory residence test
Part 4 — Anti-avoidance

543

 

(b)   

ignoring this section, it is not chargeable to tax under this Part

(or would not be if a DTR claim were made in respect of it).

(4)   

A “relevant withdrawal” is an amount paid under a relevant non-UK

scheme that—

(a)   

is paid to the person in respect of a flexible drawdown

5

arrangement relating to the person under the scheme, and

(b)   

would, if the scheme were a registered pension scheme, be

“income withdrawal” or “dependants’ income withdrawal”

within the meaning of paragraphs 7 and 21 of Schedule 28 to

FA 2004.

10

(5)   

If section 809B, 809D or 809E of ITA 2007 (remittance basis) applies

to the person for the year of return, any relevant withdrawal within

subsection (3) that was remitted to the United Kingdom in the

temporary period of non-residence is to be treated as remitted to the

United Kingdom in the period of return.

15

(6)   

This section does not apply to a relevant withdrawal if—

(a)   

it is paid to or in respect of a relieved member of the scheme

and is not referable to the member’s UK tax-relieved fund

under the scheme, or

(b)   

it is paid to or in respect of a transfer member of the scheme

20

and is not referable to the member’s relevant transfer fund

under the scheme.

(7)   

Nothing in any double taxation relief arrangements is to be read as

preventing the person from being chargeable to income tax in respect

of any relevant withdrawal treated by virtue of this section as arising

25

in the period of return (or as preventing a charge to that tax from

arising as a result).

(8)   

Part 4 of Schedule 43 to FA 2013 (statutory residence test: anti-

avoidance) explains—

(a)   

when a person is to be regarded as “temporarily non-

30

resident”, and

(b)   

what “the temporary period of non-residence” and “the

period of return” mean.

(9)   

In this section—

“double taxation relief arrangements” means arrangements that

35

have effect under section 2(1) of TIOPA 2010;

“DTR claim” means a claim for relief under section 6 of that Act;

“flexible drawdown arrangement” means an arrangement to

which section 165(3A) or 167(2A) of FA 2004 applies;

“remitted to the United Kingdom” has the same meaning as in

40

Chapter A1 of Part 14 of ITA 2007;

“the year of return” means the tax year that consists of or

includes the period of return.

(10)   

The following expressions have the meaning given in Schedule 34 to

FA 2004—

45

“relevant non-UK scheme” (see paragraph 1(5));

“relieved member” (see paragraph 1(7));

“transfer member” (see paragraph 1(8));

 
 

Finance Bill
Schedule 43 — Statutory residence test
Part 4 — Anti-avoidance

544

 

“member’s UK tax-relieved fund” (see paragraph 3(2));

“member’s relevant transfer fund” (see paragraph 4(2)).”

117        

In ITEPA 2003, for section 579CA substitute—

“579CA  

Temporary non-residents

(1)   

This section applies if a person is temporarily non-resident.

5

(2)   

Any relevant withdrawals within subsection (3) are to be treated for

the purposes of section 579B as if they accrued in the period of

return.

(3)   

A relevant withdrawal is within this subsection if—

(a)   

it is paid to the person in the temporary period of non-

10

residence, and

(b)   

ignoring this section, it is not chargeable to tax under this Part

(or would not be if a DTR claim were made in respect of it).

(4)   

A “relevant withdrawal” is any income withdrawal or dependants’

income withdrawal paid to the person under a registered pension

15

scheme in respect of a flexible drawdown arrangement relating to

the person under the scheme.

(5)   

Nothing in any double taxation relief arrangements is to be read as

preventing the person from being chargeable to income tax in respect

of any relevant withdrawal treated by virtue of this section as

20

accruing in the period of return (or as preventing a charge to that tax

from arising as a result).

(6)   

Part 4 of Schedule 43 to FA 2013 (statutory residence test: anti-

avoidance) explains—

(a)   

when a person is to be regarded as “temporarily non-

25

resident”, and

(b)   

what “the temporary period of non-residence” and “the

period of return” mean.

(7)   

In this section—

“double taxation relief arrangements” means arrangements that

30

have effect under section 2(1) of TIOPA 2010;

“DTR claim” means a claim for relief under section 6 of that Act;

“flexible drawdown arrangement” means an arrangement to

which section 165(3A) or 167(2A) of FA 2004 applies.”

118        

In ITTOIA 2005, for section 832A substitute—

35

“832A   

Section 832: temporary non-residents

(1)   

This section applies if an individual is temporarily non-resident.

(2)   

Treat any of the individual’s relevant foreign income within

subsection (3) that is remitted to the United Kingdom in the

temporary period of non-residence as remitted to the United

40

Kingdom in the period of return.

(3)   

Relevant foreign income is within this subsection if—

(a)   

it is relevant foreign income for the UK part of the year of

departure or an earlier tax year, and

 
 

Finance Bill
Schedule 43 — Statutory residence test
Part 4 — Anti-avoidance

545

 

(b)   

section 832 applies to it.

(4)   

Any apportionment required for the purposes of subsection (3)(a) is

to be done on a just and reasonable basis.

(5)   

Nothing in any double taxation relief arrangements is to be read as

preventing the individual from being chargeable to income tax in

5

respect of any relevant foreign income treated by virtue of this

section as remitted to the United Kingdom in the period of return (or

as preventing a charge to that tax from arising as a result).

(6)   

Part 4 of Schedule 43 to FA 2013 (statutory residence test: anti-

avoidance) explains—

10

(a)   

when an individual is to be regarded as “temporarily non-

resident”, and

(b)   

what “the temporary period of non-residence” and “the

period of return” mean.

(7)   

In this section, “double taxation relief arrangements” means

15

arrangements that have effect under section 2(1) of TIOPA 2010.”

Consequential amendments: capital gains tax

119        

In TCGA 1992, for section 10A substitute—

“10A    

Temporary non-residents

(1)   

This section applies if an individual (“the taxpayer”) is temporarily

20

non-resident.

(2)   

The taxpayer is chargeable to capital gains tax as if gains and losses

within subsection (3) were chargeable gains or, as the case may be,

losses accruing to the taxpayer in the period of return.

(3)   

The gains and losses within this subsection are—

25

(a)   

chargeable gains and losses that accrued to the taxpayer in

the temporary period of non-residence,

(b)   

chargeable gains that would be treated under section 13 as

having accrued to the taxpayer in that period if the residence

assumption were made,

30

(c)   

losses that would be allowable in the taxpayer’s case under

section 13(8) in that period if that assumption were made,

and

(d)   

chargeable gains that would be treated under section 86 as

having accrued to the taxpayer in a tax year falling wholly in

35

that period if the taxpayer had been resident in the United

Kingdom for that year.

(4)   

The residence assumption is—

(a)   

that the taxpayer had been resident in the United Kingdom

for the tax year in which the gain or loss accrued to the

40

company, or

(b)   

if that tax year was a split year as respects the taxpayer, that

the gain or loss had accrued to the company in the UK part of

it.

(5)   

But—

45

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2013
Revised 25 June 2013