What does being UK resident really mean?

Business news from the Lincs Free Press and Spalding Guardian, spaldingtoday.co.uk, @LincsFreePress on Twitter
Business news from the Lincs Free Press and Spalding Guardian, spaldingtoday.co.uk, @LincsFreePress on Twitter

It is important to understand what is meant by “resident in the UK” as this will determine what UK tax may be payable.

It is not just about having a house or flat in the UK or about how much time is spent there, but the greater the connections someone has with the UK the more likely they are to be UK resident.

Generally however, the more time spent in the UK the more likely you are to be UK resident.

Spending more than half the tax year (183 days) in the UK will mean you are UK resident for that tax year.

However, it is not as easy as simply staying away from the UK for a certain number of days.

Factors that may affect residence status include previous UK residence status; location of family, property, business, work and social connections and the pattern and purpose of UK visits.

If UK visits become part of the regular pattern of life then it is likely that UK residence will apply.

However, UK residence should not apply if visits are for a short-term, temporary purpose only, for example returning to the UK for a holiday or for a short business project for an overseas employer.

From April 6, this year ordinary resident was abolished at the same time as the introductionof a statutory residence test.

Ordinary residence with regards to UK tax implies a greater degree of permanence than mere residence.

Individuals, who are UK resident year after year, will also generally be treated as ordinarily resident.

For an individual to not be treated as ordinarily resident they must show either that they are moving away with the intention of permanently establishing a residence outside the UK or they should have a contract to work abroad for the tax year in question.

If you live, or are thinking of living abroad and want to see how this may affect your tax situation re: your investments, pensions or savings, then please get in touch.