Personal Tax

Residence ― overview

Produced by Tolley
  • 27 Oct 2021 14:52

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Residence ― overview
  • Introduction
  • Tax implications of UK residence
  • Non-residents ― general
  • Personal allowances
  • Residence (2013/14 onwards)
  • Residence (pre-2013/14)
  • UK non-resident
  • UK resident
  • Reporting non-resident status to HMRC
  • More...

Residence ― overview

Introduction

Residence is an important tax concept as it determines whether an individual is liable to UK income tax, capital gains tax and inheritance tax. Residence must be decided on a year-by-year basis.

Until 2013/14, the statutory definition of residence was very brief. In order to determine someone’s residence status it was necessary to consult the extensive case law on the subject and heavy reliance was placed on guidance published by HMRC. Although the individual is entitled to rely on the HMRC guidance if they fall clearly within it, several cases (most notably the Gaines-Cooper case), highlighted the short-comings of this guidance and left some individuals in an uncertain position.

It is against this background that a consultation into a potential statutory residence test (also referred to as the SRT) was introduced with effect from 6 April 2013.

This guidance note provides an overview of:

  1. the tax implications of UK residence

  2. the statutory residence test which applies from the 2013/14 tax year onwards

  3. the rules up to and including the 2012/13 tax year

  4. dual residence

Tax implications of UK residence

Taxpayers who are resident in the UK are taxable on their worldwide income and gains.

There is an exception for UK residents who are not domiciled or deemed domiciled in the UK. They have the right to use the remittance basis for foreign income and gains. Under the remittance basis, foreign income and gains are only taxed in the UK when remitted (brought) here. For the remittance basis generally, see the Remittance basis ― overview guidance note.

Until 6 April 2013, those who were not ordinary resident could also access the remittance basis, but only for income, not for gains. Ordinary residence status was abolished from 6 April 2013, subject to transitional provisions for 2013/14 to 2015/16. See the Ordinary residence ― transitional rules (2013/14 to 2015/16) guidance note for more on the transitional provisions.

Non-residents ― general

A person who is not resident in the UK is not

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