Residence for UK tax purposes — the comprehensive statutory residence test from 2013–14
The introduction in the present tax year 2013–14 of a new comprehensive statutory test for residence (SRT) is likely to be of little direct application to many if not most of our readers, who will have been and continue to be very firmly resident (and indeed domiciled — of which more below) in the UK. However, for professional advisers, it is an enormously significant step for Her Majesty’s Revenue & Customs (HMRC) to take. And indeed those who read the financial pages of the press at all regularly will be aware of this initiative.
It would not be appropriate in a Bulletin of this kind to go into very much detail of the new regime, though there will (necessarily) be some of that. What we think will be most useful is to put it into some form of context, to enable our readers to understand why it was needed and what impact it might have. There may always be a member of the family or a friend who is directly affected.
The concepts of residence and, separately domicile, are used to police the UK’s territorial tax boundaries. After all, it would make no sense — and indeed it would lead to significant inter-jurisdiction dispute — for the UK (or indeed other countries) to seek to tax income, gains and assets on a worldwide basis in the hands of those who have no or even a very limited connection with the UK…
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This decision represents a welcome return to the ‘pay for what you use’ principle and strikes a fairer balance between different creditor and expense groups.
Winckworth Sherwood has provided a summary of the Trusts (Capital and Income) Act 2013.