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Taxation: Domicile

Volume 488: debated on Friday 27 February 2009

To ask the Chancellor of the Exchequer how many days in each tax year individuals with taxable income from UK interests are required to spend outside the UK to qualify for non-resident status; when this figure was last reviewed; what plans he has to review it; and if he will make a statement. (259309)

An individual’s residence status for tax purposes is not a matter of simply counting days in the UK. Individuals who can demonstrate that they have left the UK permanently or indefinitely, for example because they either work full-time abroad for at least a complete tax year or have left the UK for at least three years, will be treated as not resident and not ordinarily resident for income tax purposes from the day after the date of their departure. Once non-resident, individuals can then normally spend up to 182 days in the UK in any tax year and up to 90 days in a tax year on average, taken over a maximum of four tax years and still continue to be treated as not resident.

Individuals who normally live in the UK or who cannot prove that they have left the UK and are absent for shorter periods will continue to be resident in the UK, even if they spend less than 183 days in the UK in any tax year or less than 91 days on average.

Since summer 2008, officials from HM Treasury and HM Revenue and Customs have been consulting with a group of key external stakeholders (representing a wide variety of interests including low income groups) to explore the feasibility of putting the test for tax residence on a statutory basis.