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Introduction

Residence is an important tax concept as it determines whether an individual is liable to UK income tax, capital gains tax and inheritance tax. Residence must be decided on a year-by-year basis.

Until 2013/14, the statutory definition of residence was very brief. In order to determine someone’s residence status it was necessary to consult the extensive case law on the subject and heavy reliance was placed on guidance published by HMRC. Although the individual is entitled to rely on the HMRC guidance if they fall clearly within it, several cases (most notably the Gaines-Cooper case), highlighted the shortcomings of this guidance and left some individuals in an uncertain position.

It is against this background that the statutory residence test (also referred to as the SRT) was introduced with effect from 6 April 2013.

This guidance note provides an overview of:

1. •

   the tax implications of UK residence

2. •

   the statutory residence test that applies for income tax, capital gains tax and inheritance tax from the 2013/14 tax year onwards

3. •

   the rules up to and including the