Residence and Domicile Review - Days of arrival and departure to count toward residence status

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24 January 2008

Included in the 2007 Budget Report was an announcement of a review of the residence and domicile rules. Among the proposals was a change to the way in which residence status for UK tax purposes is determined. Currently, the day on which a person arrives in the UK or leaves the UK does not count towards the 183 days presence in the UK that are used to decide whether or not the person is resident in the UK for UK tax purposes. (Income Tax Act 2007, section 832)

HMRC has published draft Finance Bill legislation and guidance that explain the new rule that is intended to come into force from 6 April 2008. In deciding whether a person has spent less than 183 days in the UK for residence purposes, days of arrival in and departure from the UK will have to be included. This includes a day on which a person both arrives in and departs from the UK, unless the person is a passenger in transit, i.e. remains in a part of an airport or port that is not accessible to members of the public in the period between the arrival and departure.

Other provisions in the draft Regulations relate to the introduction of a £30,000 charge for persons who choose to use the remittance basis for the taxation of their foreign earnings. However, this is a self-assessment matter, not a payroll/PAYE matter.

The draft Regulations are still subject to Parliamentary approval and the measures could, in principle, change from those described above.

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Further information:
Residence and Domicile Review
Draft Finance Bill legislation
Explanatory notes
FAQs