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Deloitte comments on today’s Finance Bill - revisions to the statutory residence test

28 March 2013

Philip Paur, Deloitte tax director, said: “The Finance Bill published today makes significant further adjustments to the statutory residence test due to take effect from 6 April. It affects employees going abroad to work and individuals entering or returning to the UK.  

“These technical clarifications of the statutory test will make it even more complex to operate. They underline the need for employees, in particular, to keep a daily record of the amount of time they spend working abroad and in the UK respectively during their assignment. It will not be sufficient just to record time and working time spent in the UK. This will require a big cultural shift, which HMRC should acknowledge in its published guidance and make allowance for as the new rules bed in.

“UK employees working full-time abroad who take a break or holiday abroad before returning to the UK should note that they may be treated as resuming UK residence when their work assignment ends, before they actually return to the UK.  
“The revised legislation makes it easier for aircrew and mariners who keep a home in the UK but work almost exclusively abroad to be treated as working full-time abroad, and hence as non-resident, provided their working time travel into and out of the UK does not exceed a minimum limit.”


Notes to editors
Employees who go abroad to work are non-resident from the day they leave until the day before their return if they work a minimum 35 hours per week abroad for at least a complete tax year and their work or presence in the UK does not exceed certain limits. The Finance Bill revises and clarifies how the hours per week calculation is done, including the conditions under which business travel counts as working time and the non-working days that are disregarded (weekends, public holidays and days on which an employee works both in the UK and abroad if he works more than three hours in the UK). Individuals who barely manage 35 hours work per week abroad will benefit from the slightly greater flexibility to have certain weekends and public holidays disregarded from the denominator in calculating the 35 hours weekly average. But they may also be disadvantaged by HMRC’s insistence on treating certain home leave journeys as business travel. This may result in them not achieving the 35 hours average because they are deemed to have worked in the UK on the homeward or outward leg of their journey (when they have not), while actual work undertaken abroad on the same day is disregarded.

The Bill also extends the circumstances in which an individual may split the tax year when he leaves or returns to the UK. Individuals arriving from abroad who would otherwise be resident for the full tax year become resident when they cease full-time employment abroad. This supplements the existing proposal under which individuals become resident when they start a period of full-time employment in the UK lasting at least 12 months. The Bill expands the scope for accompanying spouses or partners of full-time employees to split the tax year on going abroad or returning to the UK, including where they leave or return in the tax year after the employee moves. It also clarifies what counts as full-time employment in a year of departure or return, and from when the employee ceases or regains residence when he makes a series of working visits to or from the UK and the actual date of leaving or returning would otherwise be in doubt.

Finally, the Bill extends the circumstances in which an employee is treated as non-resident if he dies while working full-time abroad.  

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.

Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.





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Laura Parsons
Deloitte LLP
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