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Dear all,
Hope you all are doing well!!
Just a quick query in relation to the residency status test for paper TX-UK (taxation – UK).
I have just made my own note to check the UK residency status of an individual for the current tax year for tax puposes based on the OT lectures and the lecture notes. I have enlisted the steps that I am following. Can anyone kindly have a look into this below and please let me know if my understanding on this is correct.
Many thanks
Best wishes
SumanStep 1. Test for whether PREVIOUSLY RESIDENT or NOT PREVIOUSLY RESIDENT
Firstly, we need to see if a person was previously resident in the UK or not.
a. A person was PREVIOUSLY RESIDENT in the UK if he was resident in the UK in any of the preceding 3 tax years.
b. If statement a is not applicable, then a person is considered to be NOT PREVIOUSLY RESIDENT in the UK.Step 2. Test for AUTOMATICALLY NOT RESIDENT for tax purposes for the current tax year.
Having established whether a person was previously resident or not previously resident in step 1, we then need to go through the table (the one that will be given in the exam in the tax table) to see if they qualify for AUTOMATICALLY NOT RESIDENT for tax purposes for the current tax year.
In addition, there’s also another test which can qualify a person as AUTOMATICALLY NOT RESIDENT for the current tax year for tax purposes, if they:
a. Work full time overseas AND
b. Have not lived in the UK in the current tax year for more than 90 daysStep 3. Test for AUTOMATCALLY RESIDENT for tax purposes for the current tax year.
A person qualifies as AUTOMATICALLY RESIDENT for tax purposes for the current tax year if they have lived in the UK for more than 183 days.
In addition, there’s also another test which can qualify a person as AUTOMATICALLY RESIDENT for tax purposes for the current tax year, if they:
a. Work full time in the UK OR (can you please check if this is ‘OR’ or should be ‘AND’?)
b. Have their only home in the UK
The above two points a and b can only be disregard if a person qualifies through one of the test as AUTOMATICALLY NOT RESIDENT in the UK.Please do not ignore the sequence of residency test. It is written in notes as well as study texts that sequence MUST be followed.
So, you’ll have to check for residence in an exam question in this way:
1) Whether or not the individual is automatically UK resident. (Auto-residency test)
If the answer to 3 tests here is no, you move to second test.2) Whether or not the individual is automatically NOT a UK resident. (Auto non-residency test)
If the answer to these 3 tests is also no, then you go to third test.3) Whether the individual has sufficient ties with UK to be declared a UK resident. (ties test)
Only in this test the importance of previous residency comes.You don’t have to determine whether or not the individual was a UK resident in previous years, it’ll either be mentioned in question or there will be enough information available for you to determine if individual was previously a UK resident.
This is because exam questions usually focus on CURRENT YEAR residency status. You’ll have to answer if the individual is UK resident in this year or not.Hope this helps.
Hi f6ali
Thanks for the info. and providing the details. This is really helpful.
Best wishes
Suman
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