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House of Lords

Session 2013 - 14 Internet Publications Other Bills before Parliament

Finance Bill

Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 531
(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
paragraphs) apply for the purposes of sub-paragraph (4) with the following
adjustments—	5
(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
(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.	10
(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
beginning with the day mentioned in sub-paragraph (3).
(8)   Sub-paragraph (6)(a) does not apply to the references to year X in	15
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 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-	20
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
conditions are met—
(a)    the period begins with a day that—	25
(i)    falls within the relevant year, and
(ii)    is a day on which the taxpayer does more than 3 hours’ work
in the UK,
(b)    in the part of the relevant year before the period begins, the taxpayer
does not have sufficient UK ties,	30
(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
(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	35
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
taxpayer”.
(5)   Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those	40
paragraphs) apply for the purposes of sub-paragraph (3)(b) with the
following adjustments—
Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 532
(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 (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.	5
(6)   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
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	10
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: ceasing full-time work overseas
49    (1)   The circumstances of a case fall within Case 6 if they are as described in sub-	15
paragraphs (2) to (4).
(2)   The taxpayer—
(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	20
(b)    was resident in the UK for one or more of the 4 tax years immediately
preceding that year.
(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—	25
(i)    falls within the relevant year, and
(ii)    is 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	30
a split year).
(5)   A 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	35
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,
and
(d)    the number of days in that period falling within sub-paragraph (6)	40
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
Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 533
(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—	5
(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”	10
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	15
appropriate number.
(9)   The appropriate number is the result of—
where—
“A” is—
(a)    30, for sub-paragraphs (5)(c) and (7)(d), or	20
(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
50    (1)   The circumstances of a case fall within Case 7 if they are as described in sub-	25
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
(b)    the previous tax year.	30
(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—
(a)    the taxpayer has no home in the UK at any time, or has homes in both	35
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.
(6)   The taxpayer is resident in the UK for the next tax year (whether or not it is	40
a split year).
(7)   If sub-paragraph (3)(a) applies, the “deemed arrival day” is the later of—
Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 534
(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
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).	5
(9)   The permitted limit is the number found by reducing 90 by the appropriate
number.
(10)   The appropriate number is the result of—
where—
“A” is 90, and	10
“B” is the number of whole months in the part of the relevant year
beginning with the deemed arrival day.
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).	15
(2)   The taxpayer was not resident in the UK for the previous tax year.
(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	20
the rest of that year and for the whole of the next tax year.
(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.	25
(6)   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 (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-	30
paragraph (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
where “A” is the number of whole months in the part of the relevant year
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
Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 535
status of family members) so those references must continue to be read as
references to year X.
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	5
relevant year.
(3)   A reference to “the next tax year” is to the tax year following the relevant
year.
(4)   “Partner”, in relation to the taxpayer, means—
(a)    a husband or wife or civil partner,	10
(b)    if the taxpayer and another person are living together as husband
and wife, that other person, or
(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	15
not a whole number, the appropriate number is to be rounded up or down
as follows—
(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.	20
The overseas part
53    (1)   “The overseas part” of a split year is the part of that year defined below—
(a)    for the Case in question, or
(b)    if the taxpayer’s circumstances fall within more than one Case, for
the Case which has priority (see paragraphs 54 and 55).	25
(2)   For Case 1, the overseas part is—
(a)    if there is only one period falling within paragraph 44(3), the part
beginning with the first day of that period, and
(b)    if there is more than one such period, the part beginning with the first
day of the longest of those periods.	30
(3)   For Case 2, the overseas part is the part beginning with the deemed
departure day as defined in paragraph 45(7) and (8).
(4)   For Case 3, the overseas part is the part beginning with the day mentioned
in paragraph 46(3)(a).
(5)   For Case 4, the overseas part is the part before the day mentioned in	35
paragraph 47(3).
(6)   For Case 5, the overseas part is—
(a)    if there is only one period falling within paragraph 48(3), the part
before that period begins, and
(b)    if there is more than one such period, the part before the first of those	40
periods begins.
(7)   For Case 6, the overseas part is—
Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 536
(a)    if there is only one period falling within paragraph 49(3), the part
ending with the last day of that period, and
(b)    if there is more than one such period, the part ending with the last
day of the longest of those periods.
(8)   For Case 7, the overseas part is the part before the deemed arrival day as	5
defined in paragraph 50(7) and (8).
(9)   For Case 8, the overseas part is the part before the day mentioned in
paragraph 51(3)(a).
Priority between Cases 1 to 3
54    (1)   This paragraph applies to determine which Case has priority where the	10
taxpayer’s circumstances for the relevant year fall within two or all of the
following—
Case 1 (starting full-time work overseas);
Case 2 (the partner of someone starting full-time work overseas);
Case 3 (ceasing to have a home in the UK).	15
(2)   Case 1 has priority over Case 2 and Case 3.
(3)   Case 2 has priority over Case 3.
Priority between Cases 4 to 8
55    (1)   This paragraph applies to determine which Case has priority where the
taxpayer’s circumstances for the relevant year fall within two or more of the	20
following—
Case 4 (starting to have a home in the UK only);
Case 5 (starting full-time work in the UK);
Case 6 (ceasing full-time work overseas);
Case 7 (the partner of someone ceasing full-time work overseas);	25
Case 8 (starting to have a home in the UK).
(2)   In this paragraph “the split year date” in relation to a Case means the final
day of the part of the relevant year defined in paragraph 53(5) to (9) for that
Case.
(3)   If Case 6 applies—	30
(a)    if Case 5 also applies and the split year date in relation to Case 5 is
earlier than the split year date in relation to Case 6, Case 5 has
priority;
(b)    otherwise, Case 6 has priority.
(4)   If Case 7 (but not Case 6) applies—	35
(a)    if Case 5 also applies and the split year date in relation to Case 5 is
earlier than the split year date in relation to Case 7, Case 5 has
priority;
(b)    otherwise, Case 7 has priority
(5)   If two or all of Cases 4, 5 and 8 apply (but neither Case 6 nor Case 7), the Case	40
which has priority is the one with the earliest split year date.
(6)   But if, in a case to which sub-paragraph (5) applies, two or all of the Cases
which apply share the same split year date and that date is the only, or
Finance Bill Schedule 45 — Statutory residence test Part 3 — Split year treatment 537
earlier, split year date of the Cases which apply, the Cases with that split
year date are to be treated as having priority.
The UK part
56          “The UK part” of a split year is the part of that year that is not the overseas
part.	5
Special charging rules for employment income
57          ITEPA 2003 is amended as follows.
58    (1)   In section 15 (earnings for year when employee UK resident), for subsection
(1) substitute—
“(1)    This section applies to general earnings for a tax year for which the	10
employee is UK resident except that, in the case of a split year, it does
not apply to any part of those earnings that is excluded.
(1A)    General earnings are “excluded” if they—
(a)    are attributable to the overseas part of the split year, and
(b)    are neither—	15
(i)    general earnings in respect of duties performed in the
United Kingdom, nor
(ii)    general earnings from overseas Crown employment
subject to United Kingdom tax.”
(2)   After subsection (3) insert—	20
“(4)    Any attribution required for the purposes of subsection (1A)(a) is to
be done on a just and reasonable basis.
(5)    The following provisions of Chapter 5 of this Part apply for the
purposes of subsection (1A)(b) as for the purposes of section 27(2)—
(a)    section 28 (which defines “general earnings from overseas	25
Crown employment subject to United Kingdom tax”), and
(b)    sections 38 to 41 (which contain rules for determining the
place of performance of duties of employment).
(6)    Subject to any provision made in an order under section 28(5) for the
purposes of subsection (1A)(b), provisions made in an order under	30
that section for the purposes of section 27(2) apply for the purposes
of subsection (1A)(b) too.”
59          In section 22 (chargeable overseas earnings for year when remittance basis
applies and employee outside section 26), for subsection (7) substitute—
“(7)    Section 15(1) does not apply to general earnings within subsection	35
(1).”
60    (1)   Section 23 (calculation of “chargeable overseas earnings”) is amended as
follows.
(2)   In subsection (3), for step 1 substitute—
“Step 1	40
Identify—