The proposed statutory residence test

HM Treasury and HMRC have published Statutory definition of tax residence and reform of ordinary residence: a summary of responses which not only contains the summary of responses but also draft legislation and further options. The statutory residence test (SRT) will apply to individuals for income tax CGT and IHT but not for non-tax purposes including disappointingly NIC.

The basic framework consists of:

• automatic tests for non-residence (see box 1);
• automatic tests for residence (see box 2); and
• connection factors and day counting tests for individuals who were not automatically non-resident or resident.