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The Treasury has published draft legislation on the statutory definition of tax residence, along with the responses to the consultation held last summer.
Changes have been made to the original test, including an increase from ten to 15 days in the part A threshold for automatic non-residence for individuals who have been resident in one or more of the previous three tax years.
And the Treasury is to consult on two alternative options to amend the definition of full-time work abroad:
- Increasing the number of working days allowed in the UK from 20 to 25.
- Increasing the number of hours that constitute a working day from three hours to five.
The family connection factor in part C of the test will be amended so that only time spent with a child in the UK will be relevant, while the definition of accommodation will be simplified.
It will apply where an individual has accommodation available to be used for a continuous period of at least 91 days in a tax year, and the individual spends at least one night in the place during the year.
A transitional provision will allow the new rule to be applied to previous tax years only to the extent that the individual needs to know what his or her residence status was in a year prior to the introduction of the test, to determine residence in future years.
The government plans to introduce the statutory definition of tax residence in Finance Bill 2013.
Comments on the latest document should be sent no later than 13 September.
