Finance Bill

House of Lords

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
510

SSCB(NI)A 1992 (general provisions as to disqualification
and suspension).
Disability living allowance
3
A person is to be treated as a disabled person under paragraph 1(c)
if he or she satisfies HMRC that he or she would be entitled to
5
receive a disability living allowance by virtue of entitlement to the
care component at the highest or middle rate but for—
(a)
the conditions as to residence and presence prescribed
under section 71(6) of SSCBA 1992 or section 71(6) of
SSCB(NI)A 1992,
10
(b)
provision made by regulations under section 72(8) of
SSCBA 1992 or section 72(8) of SSCB(NI)A 1992 (no
payment of disability allowance for persons for whom
certain accommodation is provided), or
(c)
section 113(1) of SSCBA 1992 or section 113(1) of
15
SSCB(NI)A 1992 or provision made by regulations under
section 113(2) of SSCBA 1992 or section 113(2) of
SSCB(NI)A 1992 (general provisions as to disqualification
and suspension).
Personal independence payment
20
4
A person is to be treated as a disabled person under paragraph
1(d) if he or she satisfies HMRC that he or she would be entitled to
receive personal independence payment by virtue of entitlement
to the daily living component but for—
(a)
the conditions as to residence and presence prescribed
25
under section 77(3) of WRA 2012 or the corresponding
provision having effect in Northern Ireland,
(b)
provision made by regulations under section 85 of WRA
2012 (exclusion of certain care home residents) or the
corresponding provision having effect in Northern
30
Ireland,
(c)
provision made by regulations under section 86 of WRA
2012 (exclusion of certain hospital in-patients) or the
corresponding provision having effect in Northern
Ireland, or
35
(d)
section 87 of WRA 2012 (exclusion of prisoners and
detainees) or the corresponding provision having effect in
Northern Ireland.
Increased disablement pension
5
A person is to be treated as a disabled person under paragraph
40
1(e) if he or she satisfies HMRC that he or she would be entitled to
receive an increased disablement pension but for—
(a)
conditions as to residence and presence that have effect in
relation to increased disablement pension by virtue of
regulations under section 104(3) of SSCBA 1992 or section
45
104(3) of SSCB(NI)A 1992 (application of attendance
allowance provisions),

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Schedule 44 — Trusts with vulnerable beneficiary
511

(b)
provision made under section 67(1) or (2) of SSCBA 1992 or
section 67(1) or (2) of SSCB(NI)A 1992 (non-satisfaction of
conditions for attendance allowance where person is
undergoing treatment for renal failure in hospital or is
provided with certain accommodation) that has effect in
5
relation to increased disablement pension by virtue of such
regulations, or
(c)
section 113(1) of SSCBA 1992 or section 113(1) of
SSCB(NI)A 1992 or provision made by regulations under
section 113(2) of SSCBA 1992 or section 113(2) of
10
SSCB(NI)A 1992 (general provisions as to disqualification
and suspension).
Constant attendance allowance
6
A person is to be treated as a disabled person under paragraph 1(f)
if he or she satisfies HMRC that he or she would be entitled to
15
receive constant attendance allowance but for—
(a)
article 61 (residence outside United Kingdom) or article 64
(maintenance in hospital or institution) of the Personal
Injuries (Civilians) Scheme 1983 (S.I. 1983/686), or
(b)
article 53 (maintenance in hospital or institution) of the
20
Naval, Military and Air Forces etc. (Disablement and
Death) Service Pensions Order 2006 (S.I. 2006/606).
Armed forces independence payment
7
A person is to be treated as a disabled person under paragraph
1(g) if he or she satisfies HMRC that he or she would be entitled to
25
receive armed forces independence payment but for article 42 of
the Armed Forces and Reserve Forces (Compensation Scheme)
Order 2011 (S.I. 2011/517) (cessation of payment on admission to
Royal Hospital, Chelsea).
Interpretation
30
8
In this Schedule—
“armed forces independence payment” means armed forces
independence payment under a scheme established under
section 1 of the Armed Forces (Pensions and
Compensation) Act 2004,
35
“attendance allowance” means an allowance under section 64
of SSCBA 1992 or section 64 of SSCB(NI)A 1992,
“constant attendance allowance” means an allowance
under—
(a)
article 14 of the Personal Injuries (Civilians) Scheme
40
1983 (S.I. 1983/686), or
(b)
article 8 of the Naval, Military and Air Forces etc.
(Disablement and Death) Service Pensions Order
2006 (S.I. 2006/606),
“disability living allowance” means a disability living
45
allowance under section 71 of SSCBA 1992 or section 71 of
SSCB(NI)A 1992,

Finance Bill
Schedule 45 — Statutory residence test
Part 1 — The rules
512

“HMRC” means Her Majesty’s Revenue and Customs,
“increased disablement pension” means an increase of
disablement pension under—
(a)
section 104 of SSCBA 1992, or
(b)
section 104 of SSCB(NI)A 1992,
5
“personal independence payment” means personal
independence payment under—
(a)
WRA 2012, or
(b)
the corresponding provision having effect in
Northern Ireland,
10
“SSCBA 1992” means the Social Security Contributions and
Benefits Act 1992,
“SSCB(NI)A 1992” means the Social Security Contributions
and Benefits (Northern Ireland) Act 1992,
“WRA 2012” means the Welfare Reform Act 2012.”
15
Interpretation: relevant settlement
20    (1)
In this Schedule, “relevant settlement” means—
(a)
a settlement created before 8 April 2013 the trusts of which have not
been altered on or after that date, or
(b)
a settlement arising on or after 8 April 2013 under the will of a
20
testator, if—
(i)
the will was executed before 8 April 2013 and its provisions,
so far as relating to the settlement, have not been altered on
or after that date, or
(ii)
the will was executed or confirmed on or after 8 April 2013
25
and its provisions, so far as relating to the settlement, are in
the same terms as those contained in a will executed by the
same testator before that date.
      (2)
In this Schedule a reference to a will includes a reference to a codicil.
Schedule 45
30
Section 218

Statutory residence test
Part 1
The rules
Introduction
1     (1)
This Part of this Schedule sets out the rules for determining for the purposes
35
of relevant tax whether individuals are resident or not resident in the UK.
      (2)
The rules are referred to collectively as “the statutory residence test”.
      (3)
The rules do not apply in determining for the purposes of relevant tax
whether individuals are resident or not resident in England, Wales, Scotland
or Northern Ireland specifically (rather than in the UK as a whole).
40

Finance Bill
Schedule 45 — Statutory residence test
Part 1 — The rules
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      (4)
“Relevant tax” means—
(a)
income tax,
(b)
capital gains tax, and
(c)
(so far as the residence status of individuals is relevant to them)
inheritance tax and corporation tax.
5
      (5)
Key concepts used in the rules are defined in Part 2 of this Schedule.
Interpretation of enactments
2     (1)
In enactments relating to relevant tax, a reference to being resident (or not
resident) in the UK is, in the case of individuals, a reference to being resident
(or not resident) in the UK in accordance with the statutory residence test.
10
      (2)
Sub-paragraph (1) applies even if the reference relates to the tax liability of
an actual or deemed person that is not an individual (for example, where the
liability of another person depends on the residence status of an individual).
      (3)
An individual who, in accordance with the statutory residence test, is
resident (or not resident) in the UK “for” a tax year is taken for the purposes
15
of any enactment relating to relevant tax to be resident (or not resident) there
at all times in that tax year.
      (4)
But see Part 3 of this Schedule (split year treatment) for cases where the effect
of sub-paragraph (3) is relaxed in certain circumstances.
      (5)
This Schedule has effect subject to any express provision to the contrary in
20
(or falling to be recognised and acknowledged in law by virtue of) any
enactment.
The basic rule
3
An individual (“P”) is resident in the UK for a tax year (“year X”) if—
(a)
the automatic residence test is met for that year, or
25
(b)
the sufficient ties test is met for that year.
4
If neither of those tests is met for that year, P is not resident in the UK for that
year.
The automatic residence test
5
The automatic residence test is met for year X if P meets—
30
(a)
at least one of the automatic UK tests, and
(b)
none of the automatic overseas tests.
The automatic UK tests
6
There are 4 automatic UK tests.
7
The first automatic UK test is that P spends at least 183 days in the UK in year
35
X.
8     (1)
The second automatic UK test is that—
(a)
P has a home in the UK during all or part of year X,
(b)
that home is one where P spends a sufficient amount of time in year
X, and
40

Finance Bill
Schedule 45 — Statutory residence test
Part 1 — The rules
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(c)
there is at least one period of 91 (consecutive) days in respect of
which the following conditions are met—
(i)
the 91-day period in question occurs while P has that home,
(ii)
at least 30 days of that 91-day period fall within year X, and
(iii)
throughout that 91-day period, condition A or condition B is
5
met or a combination of those conditions is met.
      (2)
Condition A is that P has no home overseas.
      (3)
Condition B is that—
(a)
P has one or more homes overseas, but
(b)
each of those homes is a home where P spends no more than a
10
permitted amount of time in year X.
      (4)
In relation to a home of P’s in the UK, P “spends a sufficient amount of time”
there in year X if there are at least 30 days in year X when P is present there
on that day for at least some of the time (no matter how short a time).
      (5)
In relation to a home of P’s overseas, P “spends no more than a permitted
15
amount of time” there in year X if there are fewer than 30 days in year X
when P is present there on that day for at least some of the time (no matter
how short a time).
      (6)
In sub-paragraphs (4) and (5)—
(a)
a reference to 30 days is to 30 days in aggregate, whether the days are
20
consecutive or intermittent, and
(b)
a reference to P being present at the home is to P being present there
at a time when it is a home of P’s (so presence there on any other
occasion, for example to look round the property with a view to
buying it, is to be disregarded).
25
      (7)
Sub-paragraph (1)(c) is satisfied so long as there is a period of 91 days in
respect of which the conditions described there are met, even if those
conditions are in fact met for longer than that.
      (8)
If P has more than one home in the UK—
(a)
each of those homes must be looked at separately to see if the second
30
automatic UK test is met, and
(b)
the second automatic UK test is then met so long as it is met in
relation to at least one of those homes.
9     (1)
The third automatic UK test is that—
(a)
P works sufficient hours in the UK, as assessed over a period of 365
35
days,
(b)
during that period, there are no significant breaks from UK work,
(c)
all or part of that period falls within year X,
(d)
more than 75% of the total number of days in the 365-day period on
which P does more than 3 hours’ work are days on which P does
40
more than 3 hours’ work in the UK, and
(e)
at least one day which falls in both that period and year X is a day on
which P does more than 3 hours’ work in the UK.
      (2)
Take the following steps to work out, for any given period of 365 days,
whether P works “sufficient hours in the UK” as assessed over that period—
45

Step 1

Finance Bill
Schedule 45 — Statutory residence test
Part 1 — The rules
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Identify any days in the period on which P does more than 3 hours’ work
overseas, including ones on which P also does work in the UK on the same
day.

The days so identified are referred to as “disregarded days”.

Step 2
5

Add up (for all employments held and trades carried on by P) the total
number of hours that P works in the UK during the period, but ignoring any
hours that P works in the UK on disregarded days.

The result is referred to as P’s “net UK hours”.

Step 3
10

Subtract from 365—
(a)
the total number of disregarded days, and
(b)
any days that are allowed to be subtracted, in accordance with the
rules in paragraph 28 of this Schedule, to take account of periods of
leave and gaps between employments.
15

The result is referred to as the “reference period”.

Step 4

Divide the reference period by 7. If the answer is more than 1 and is not a
whole number, round down to the nearest whole number. If the answer is
less than 1, round up to 1.
20

Step 5

Divide P’s net UK hours by the number resulting from step 4.


If the answer is 35 or more, P is considered to work “sufficient hours in the
UK” as assessed over the 365-day period in question.
25
      (3)
This paragraph does not apply to P if—
(a)
P has a relevant job on board a vehicle, aircraft or ship at any time in
year X, and
(b)
at least 6 of the trips that P makes in year X as part of that job are
cross-border trips that either begin in the UK, end in the UK or begin
30
and end in the UK.
10    (1)
The fourth automatic UK test is that—
(a)
P dies in year X,
(b)
for each of the previous 3 tax years, P was resident in the UK by
virtue of meeting the automatic residence test,
35
(c)
even assuming P were not resident in the UK for year X, the tax year
preceding year X would not be a split year as respects P (see Part 3 of
this Schedule),
(d)
when P died, either—
(i)
P’s home was in the UK, or
40
(ii)
P had more than one home and at least one of them was in the
UK, and
(e)
if P had a home overseas during all or part of year X, P did not spend
a sufficient amount of time there in year X.
      (2)
In relation to a home of P’s overseas, P “spent a sufficient amount of time”
45
there in year X if—
(a)
there were at least 30 days in year X when P was present there on that
day for at least some of the time (no matter how short a time), or

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Schedule 45 — Statutory residence test
Part 1 — The rules
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(b)
P was present there for at least some of the time (no matter how short
a time) on each day of year X up to and including the day on which
P died.
      (3)
In sub-paragraph (2)—
(a)
the reference to 30 days is to 30 days in aggregate, whether the days
5
were consecutive or intermittent, and
(b)
the reference to P being present at the home is to P being present
there at a time when it was a home of P’s.
      (4)
If P had more than one home overseas—
(a)
each of those homes must be looked at separately to see if the
10
requirement of sub-paragraph (1)(e) is met, and
(b)
that requirement is then met so long as it is met in relation to each of
them.
The automatic overseas tests
11
There are 5 automatic overseas tests.
15
12
The first automatic overseas test is that—
(a)
P was resident in the UK for one or more of the 3 tax years preceding
year X,
(b)
the number of days in year X that P spends in the UK is less than 16,
and
20
(c)
P does not die in year X.
13
The second automatic overseas test is that—
(a)
P was resident in the UK for none of the 3 tax years preceding year
X, and
(b)
the number of days that P spends in the UK in year X is less than 46.
25
14    (1)
The third automatic overseas test is that—
(a)
P works sufficient hours overseas, as assessed over year X,
(b)
during year X, there are no significant breaks from overseas work,
(c)
the number of days in year X on which P does more than 3 hours’
work in the UK is less than 31, and
30
(d)
the number of days in year X falling within sub-paragraph (2) is less
than 91.
      (2)
A day falls within this sub-paragraph if—
(a)
it is a day spent by P in the UK, but
(b)
it is not a day that is treated under paragraph 23(4) as a day spent by
35
P in the UK.
      (3)
Take the following steps to work out whether P works “sufficient hours
overseas” as assessed over year X—

Step 1

Identify any days in year X on which P does more than 3 hours’ work in the
40
UK, including ones on which P also does work overseas on the same day.

The days so identified are referred to as “disregarded days”.

Step 2