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EXPATS NEED TO UNDERSTAND STATUTORY RESIDENCE TEST

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Press Release / 2013-01-23 09:30:26

Expats who flit between their overseas home and the UK need to ensure they are not caught out by the new Statutory Residence Test (SRT) which comes into effect on April 6, 2013, a specialist financial adviser has warned.

Angela South, managing director of Expat Pensions, said the SRT has important implications not only for those planning to leave the UK but also individuals planning to visit the UK for a significant period of time, particularly where they have UK connections or ties.

Ms South said: “For those who are not automatically resident, the basis of residency will now be determined by whether an individual meets the automatic overseas residence test or the ‘sufficient ties’ test.”

Individuals are automatically overseas resident if:

-         they are not resident in the UK for one or more of the three tax years preceding the tax year and spend fewer than 16 days in the tax year.

-         they are resident in the UK for none of the three tax years preceding the tax year and spend few than 46 days in the UK in the tax year.

-         they work full time overseas in the tax year without any significant breaks and spend less than 91 days excluding deemed days in the UK in the tax year, and the number of days in the tax year in which they work for less than three hours in the UK is fewer than 31.

Angela South said: “Clearly this is a complex area.

“For people who are not automatically overseas resident – and who are not automatically resident, ie 183 days in the UK or having a home in the UK or working full time in the UK – residency will be determined by the ‘sufficient ties’ test.

“So anyone who does not satisfy the automatic overseas tests and who visits the UK for more than 16 days should make himself aware as to whether he might become UK resident.

“This particularly applies if he has family in the UK, has accommodation in the UK, either their own or provided by a close relative, works in the UK, spends more than 16 days in the UK or spends more time in the UK than elsewhere.”

She said that as there could be many cases where people will have to amend or vary their travel, working or family arrangements to ensure they remain non-resident, it is recommended that if there is any doubt they should seek professional advice.

“These changes represent the most significant change to the UK’s tax residence rules for over 100 years.

“If you live abroad, are working abroad, or spend considerable times abroad, you should at the very least be recording the number of days you are actually present in the UK.

“In cases like this, it may prove difficult, if not impossible, to change your status retrospectively, so anyone moving abroad or working abroad for lengthy periods of time, needs to be aware of the rules.

“Most importantly, they also need to consider how the UK’s rules work with the rules of the overseas jurisidiction where they are based or are working.

“This is something of a Gordian knot – and very difficult to unpick in retrospect,” she said.

Expat Pension advises clients within Europe, the Middle East, Far East and Australasia.

For example in Spain, Angela South visits clients and holds regular surgeries in areas such as the Costa Calida and Costa Blanca from Mojacar up the coastline to Moraira and visits areas such as Gibraltar, the Costa del Luz, Costa del Sol, Costa Brava, and other areas of mainland Spain and the Balearics by appointment.

Ms South said: “By the very nature of the work we do, we work closely with other professionals with specialist expertise in all areas of a country’s finances and tax, so we are in a position to help expats structure their finances, savings and investments regardless of the jurisdiction they come under.”

For further information on your financial options if considering retiring or moving abroad to work, email angela@expatpensions.info or call 0044 1789 490363.