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Income Tax Bill


Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 2 — Residence

416

 

Chapter 2

Residence

829     

Residence of individuals temporarily abroad

(1)   

This section applies if—

(a)   

an individual has left the United Kingdom for the purpose only of

5

occasional residence abroad, and

(b)   

at the time of leaving the individual was both UK resident and

ordinarily UK resident.

(2)   

Treat the individual as UK resident for the purpose of determining the

individual’s liability for income tax for any tax year during the whole or a part

10

of which the individual remains outside the United Kingdom for the purpose

only of occasional residence abroad.

830     

Residence of individuals working abroad

(1)   

This section applies for income tax purposes if an individual works full-time in

one or both of—

15

(a)   

a foreign trade, and

(b)   

a foreign employment.

(2)   

In determining whether the individual is UK resident ignore any living

accommodation available in the United Kingdom for the individual’s use.

(3)   

A trade is foreign if no part of it is carried on in the United Kingdom.

20

(4)   

An employment is foreign if all of its duties are performed outside the United

Kingdom.

(5)   

An employment is also foreign if in the tax year in question—

(a)   

the duties of the employment are in substance performed outside the

United Kingdom, and

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(b)   

the only duties of the employment performed in the United Kingdom

are duties which are merely incidental to the duties of the employment

performed outside the United Kingdom in the year.

(6)   

In this section—

“employment” includes an office, and

30

“trade” includes profession and vocation.

831     

Foreign income of individuals in the United Kingdom for temporary purpose

(1)   

Subsection (2) applies in relation to an individual if—

(a)   

the individual is in the United Kingdom for some temporary purpose

only and with no view to establishing the individual’s residence in the

35

United Kingdom, and

(b)   

in the tax year in question the individual has not actually resided in the

United Kingdom at one or several times for a total period equal to 183

days (or more).

   

In determining whether an individual is within paragraph (a) ignore any living

40

accommodation available in the United Kingdom for the individual’s use.

 
 

Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 2 — Residence

417

 

(2)   

Apply the following rules in determining the individual’s liability for income

tax.

   

   

Rule 1

   

In relation to pension or social security income arising from a source outside

5

the United Kingdom, treat the individual as non-UK resident for the purposes

of the following—

(a)   

Chapter 4 of Part 9 of ITEPA 2003 (tax on foreign pensions),

(b)   

Chapter 5A of that Part (tax on pensions under registered pension

schemes) but only if the income is an annuity under a registered

10

pension scheme within paragraph 1(1)(f) of Schedule 36 to FA 2004,

(c)   

Chapter 10 of that Part (tax on employment-related annuities),

(d)   

Chapter 15 of that Part (tax on voluntary annual payments),

(e)   

section 647 of ITEPA 2003 (meaning of “foreign residence condition”)

but only in its application for the purposes of section 651 of that Act

15

(which provides an exemption for tax under Chapter 14 of Part 9 of that

Act), and

(f)   

Chapter 6 of Part 10 of ITEPA 2003 (taxable foreign benefits).

   

See sections 566 and 657 of ITEPA 2003 for the definitions of “pension income”

and “social security income”.

20

   

   

Rule 2

   

In relation to income arising from a source outside the United Kingdom, treat

the individual as non-UK resident for the purposes of any charge under a

provision mentioned in section 830(2) of ITTOIA 2005 (which contains a list of

25

provisions under which relevant foreign income is charged).

   

In this rule “income” does not include income chargeable as a result of section

844 of ITTOIA 2005 (unremittable income: income charged on withdrawal of

relief after source ceases).

(3)   

Paragraph (e) of Rule 1 in subsection (2) applies only if—

30

(a)   

the individual makes a claim as mentioned in section 647(3)(a) of

ITEPA 2003, and

(b)   

the Commissioners are satisfied that subsection (2) of this section

applies in relation to the individual.

(4)   

Subsection (5) applies in relation to an individual if subsection (2) would have

35

applied in relation to the individual but for subsection (1)(b).

(5)   

Apply the rules set out in subsection (2) in determining the individual’s

liability for income tax.

   

But—

(a)   

instead of treating the individual as non-UK resident in relation to the

40

income and for the purposes mentioned in those rules, treat the

individual as UK resident, and

(b)   

ignore subsection (3).

832     

Employment income of individuals in the United Kingdom for temporary

purpose

45

(1)   

Subsection (2) applies in relation to an individual if—

 
 

Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 2 — Residence

418

 

(a)   

the individual is in the United Kingdom for some temporary purpose

only and with no intention of establishing the individual’s residence in

the United Kingdom, and

(b)   

during the tax year in question the individual spends (in total) less than

183 days in the United Kingdom.

5

   

In determining whether an individual is within paragraph (a) ignore any living

accommodation available in the United Kingdom for the individual’s use.

(2)   

Treat the individual as non-UK resident for the purposes of Chapters 4 and 5

of Part 2 of ITEPA 2003 (which set out rules for determining taxable earnings

from employment).

10

(3)   

Subsection (4) applies in relation to an individual if subsection (2) would have

applied in relation to the individual but for subsection (1)(b).

(4)   

Treat the individual as UK resident for the purposes of the provisions

mentioned in subsection (2).

833     

Visiting forces and staff of designated allied headquarters

15

(1)   

This section applies to an individual who—

(a)   

is a member of a visiting force of a designated country or of a civilian

component of such a force,

(b)   

is in the United Kingdom, but only because of being a member of the

force or the civilian component, and

20

(c)   

is not a British citizen, a British overseas territories citizen, a British

National (Overseas) or a British Overseas citizen.

(2)   

For the purposes of subsection (1)—

(a)   

members of the armed forces of a designated country who are attached

to a designated allied headquarters are treated as a visiting force of that

25

country, and

(b)   

whether an individual is a member of a civilian component of such a

force is to be determined accordingly.

(3)   

This section also applies to an individual who—

(a)   

is of a category for the time being agreed between Her Majesty’s

30

Government in the United Kingdom and the other members of the

North Atlantic Council,

(b)   

is employed by a designated allied headquarters,

(c)   

is in the United Kingdom, but only because of being employed by the

designated allied headquarters, and

35

(d)   

is not a British citizen, a British overseas territories citizen, a British

National (Overseas) or a British Overseas citizen.

(4)   

If this section applies to an individual throughout a period, the period is not

treated for income tax purposes as—

(a)   

a period of residence in the United Kingdom, or

40

(b)   

creating a change of the individual’s residence or domicile.

(5)   

Subsection (4) does not affect the operation of section 56 or 460 of this Act or

section 278 of ICTA (residence etc of claimants) in relation to an individual for

any tax year.

(6)   

Subsections (1) to (3) are to be interpreted as if—

45

 
 

Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 3 — Jointly held property

419

 

(a)   

they were in Part 1 of the Visiting Forces Act 1952 (c. 67), and

(b)   

references in that Act to a country to which a provision of that Act

applies were references to a designated country.

(7)   

In this section—

“allied headquarters” means an international military headquarters

5

established under the North Atlantic Treaty, and

“designated” means designated for the purpose in question by or under

an Order in Council made for giving effect to an international

agreement.

834     

Residence of personal representatives

10

(1)   

This section applies for income tax purposes if the personal representatives of

a deceased person (“D”) include one or more persons who are UK resident and

one or more persons who are non-UK resident.

(2)   

If the following condition is met, the person or persons who are non-UK

resident are treated, in their capacity as personal representatives, as UK

15

resident.

(3)   

The condition is that when D died D was UK resident, ordinarily UK resident

or domiciled in the United Kingdom.

(4)   

If that condition is not met, the person or persons who are UK resident are

treated, in their capacity as personal representatives, as non-UK resident.

20

835     

Residence rules for trustees and companies

(1)   

See sections 475 and 476 for rules about the residence of the trustees of a

settlement.

(2)   

See the following provisions for rules about the residence of companies—

   

sections 66 and 66A of FA 1988, and

25

   

section 249 of FA 1994.

Chapter 3

Jointly held property

836     

Jointly held property

(1)   

This section applies if income arises from property held in the names of

30

individuals—

(a)   

who are married to, or are civil partners of, each other, and

(b)   

who live together.

(2)   

The individuals are treated for income tax purposes as beneficially entitled to

the income in equal shares.

35

(3)   

But this treatment does not apply in relation to any income within any of the

following exceptions.

   

   

Exception A

   

Income to which neither of the individuals is beneficially entitled.

40

 
 

Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 3 — Jointly held property

420

 

   

   

Exception B

   

Income in relation to which a declaration by the individuals under section 837

has effect (unequal beneficial interests).

   

5

   

Exception C

   

Income to which Part 9 of ITTOIA 2005 applies (partnerships).

   

   

Exception D

   

Income arising from a UK property business which consists of, or so far as it

10

includes, the commercial letting of furnished holiday accommodation (within

the meaning of Chapter 6 of Part 3 of ITTOIA 2005).

   

   

Exception E

   

Income consisting of a distribution arising from property consisting of—

15

(a)   

shares in or securities of a close company to which one of the

individuals is beneficially entitled to the exclusion of the other, or

(b)   

such shares or securities to which the individuals are beneficially

entitled in equal or unequal shares.

   

“Shares” and “securities” have the same meaning as in section 254 of ICTA.

20

   

   

Exception F

   

Income to which one of the individuals is beneficially entitled so far as it is

treated as a result of any other provision of the Income Tax Acts as—

(a)   

the income of the other individual, or

25

(b)   

the income of a third party.

837     

Jointly held property: declarations of unequal beneficial interests

(1)   

The individuals may make a joint declaration under this section if—

(a)   

one of them is beneficially entitled to the income to the exclusion of the

other, or

30

(b)   

they are beneficially entitled to the income in unequal shares,

   

and their beneficial interests in the income correspond to their beneficial

interests in the property from which it arises.

(2)   

The declaration must state the beneficial interests of the individuals in—

(a)   

the income to which the declaration relates, and

35

(b)   

the property from which that income arises.

(3)   

The declaration has effect only if notice of it is given to an officer of Revenue

and Customs—

(a)   

in such form and manner as the Commissioners for Her Majesty’s

Revenue and Customs may prescribe, and

40

(b)   

within the period of 60 days beginning with the date of the declaration.

(4)   

The declaration has effect in relation to income arising on or after the date of

the declaration.

(5)   

The declaration continues to have effect until such time (if any) as there is a

change in the beneficial interests of the individuals in either—

45

(a)   

the income to which the declaration relates, or

 
 

Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 4 — Other miscellaneous rules

421

 

(b)   

the property from which that income arises.

Chapter 4

Other miscellaneous rules

838     

Local authorities and local authority associations

(1)   

A local authority in the United Kingdom is not liable to income tax in respect

5

of its income.

(2)   

A local authority association in the United Kingdom is not liable to income tax

in respect of its income.

(3)   

Tax is repayable as a result of subsection (1) or (2) only if a claim for repayment

is made.

10

839     

Issue departments of the Reserve Bank of India and the State Bank of

Pakistan

No liability to income tax arises in respect of the income of the issue

department of—

(a)   

the Reserve Bank of India constituted under an Act of the Indian

15

legislature called the Reserve Bank of India Act 1934, or

(b)   

the State Bank of Pakistan constituted under orders made under section

9 of the Indian Independence Act 1947 (c. 30).

840     

Government securities held by non-UK resident central banks

(1)   

No liability to income tax arises in respect of income from securities which is—

20

(a)   

income payable out of the public revenue of the United Kingdom, and

(b)   

income of a bank, or the issue department of a bank, to which this

section applies for the time being.

(2)   

But subsection (1) does not prevent the income from being taken into account

in calculating profits, gains or losses of a business carried on in the United

25

Kingdom.

(3)   

Her Majesty may by Order in Council direct that this section applies to a bank

or its issue department if it appears to Her Majesty that the bank—

(a)   

is non-UK resident, and

(b)   

is entrusted by the government of a territory outside the United

30

Kingdom with the custody of the territory’s principal foreign exchange

reserves.

(4)   

No recommendation may be made to Her Majesty in Council to make an order

under this section unless a draft of the order has been laid before and approved

by a resolution of the House of Commons.

35

841     

Official agents of Commonwealth countries etc

(1)   

This section applies if an individual is employed in the United Kingdom as an

official agent for—

 
 

Income Tax Bill
Part 14 — Income tax liability: miscellaneous rules
Chapter 4 — Other miscellaneous rules

422

 

(a)   

a country mentioned in Schedule 3 to the British Nationality Act 1981

(c. 61) (which contains a list of Commonwealth countries) or the

Republic of Ireland, or

(b)   

a state or province of a country within paragraph (a).

(2)   

If conditions A and B are met, the individual is entitled to the same immunity

5

from income tax as that to which a member of the staff of a mission is entitled

under the Diplomatic Privileges Act 1964 (c. 81).

(3)   

Condition A is that the individual has been certified—

(a)   

to be ordinarily resident outside the United Kingdom, and

(b)   

to be UK resident solely for the purposes of the individual’s functions

10

as an official agent.

(4)   

The certification must have been done by (as the case may be)—

(a)   

the High Commissioner of the country for which the individual is an

official agent, or

(b)   

the Agent-General of the state or province for which the individual is

15

an official agent.

(5)   

In subsection (4)(a) “High Commissioner” includes the head of the mission of

the country in question by whatever name called.

(6)   

Condition B is that the individual’s functions as an official agent are not

performed in connection with a trade, business or other undertaking carried on

20

for the purposes of profit.

(7)   

In this section “head of the mission” and “a member of the staff of a mission”

are to be read in accordance with the Diplomatic Privileges Act 1964.

842     

European Economic Interest Groupings

(1)   

The following rules about European Economic Interest Groupings apply for

25

the purposes of charging income tax—

Rule 1

   

A grouping is treated as acting as the agent of its members.

   

   

Rule 2

30

   

The activities of a grouping are treated as those of its members acting jointly.

   

   

Rule 3

   

Each member of a grouping is treated as having a share of the grouping’s

property, rights and liabilities.

35

   

   

Rule 4

   

Any trade or profession carried on by the grouping is treated as carried on in

partnership by the members of the grouping.

(2)   

For the purposes of Rule 3, a member’s share of any property, rights or

40

liabilities of a grouping is determined according to the contract under which

the grouping is established.

 
 

 
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