Tax Resident in the UK?

Residence is the simplest of the three cases that we have to consider. If you are in the UK for 183 days or more in one tax year then you are resident in that year. No question about it and no exceptions.

You might think that, if you do not enter the UK at all in one year, then you could not be resident but the Inland Revenue will not give you even that assurance!

So, the range from zero to 182 days is a grey area. The only written exception arises if you make regular visits to the UK for a period of at least four years. In this case, if you spend on average more than 90 days per year in the UK, you are counted as being resident. Even if you hit this number, the actual start date of your residence will vary depending on your state of mind! If you start a four year period expecting to exceed the threshold then you are resident right away even if you subsequently change your mind before the four years are up! However, if you do not expect to exceed the threshold over four years then you are not resident until you actually do!

When might the tax man decide to exercise his discretion and push you out of the grey area and into residence? Well, the general rule is that, when counting up the days to see if you hit the threshold, the days of arrival and departure are not counted. Now, I know a number of guys working in Brussels who return to the UK every weekend. They fly home on a Friday afternoon and return on Sunday night. They do not count their Friday and Sunday in the sum so that gives them a total of 52 days through the year. Then can top this up to 90 days by making long weekends at Easter and Bank Holidays and taking their Christmas break and Summer holidays at home too. They feel that they are OK having just ducked below the 91 days but the tax man spots that, if you count all those Fridays and Sundays then the total is now 184 days! I think that, if the tax man decided to have a close look at these people, he might well exercise his option to declare them resident. Of course, the ultimate determinant is the court but suppose that you were hit by this ruling and decided to appeal, do you think that you would succeed in convincing the court that you were less resident than a person who spent one uninterrupted three month spell in the country?

Smart readers will have spotted one interesting area. Suppose that you live and work in the UK for the whole of one tax year and then leave and spend the whole of the next tax year outside the UK before returning to the UK for all of the following tax year. In the middle year, you never once set foot in the UK but, on the averaging rules, you should still be deemed to have been resident.

So what happens here? A lot depends on your status. If you leave the UK on a contract of employment, it seems that the general practice is to regard you as not Resident and also not Ordinarily Resident in that middle year. However, if you leave to go backpacking around the world or to work as a self employed person, then while you may lose your Resident status, you may keep your Ordinarily Resident status.

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