I am sure many people have heard worrying stories about proposed changes to the UK tax system that will affect expats in particular. Her Majesty’s Revenue & Customs (HMRC) has issued a consultation document with the title of ‘Statutory definition of tax residence: a consultation’. This contains proposals for changes regarding the requirements to be classed a non-resident for tax purposes and is open for comment until 9th September 2011.

Once all responses have been received, the proposals will be reviewed and it is expected that there will be several changes to the initial suggestions in the document. The final outcome is not expected to be announced until the early part of 2012, probably as part of the Finance Bill and the new rules are expected to be implemented from 6th April 2012.

The changes are likely to affect those expats who have retained strong links to the UK in terms of retaining a property for their use, whose immediate family live in the UK and spend all their holiday time there too. The changes will be designed so that there is no uncertainly regarding residency, but for many people are likely to be more restrictive as status will not be based solely on the number of days spent in the UK in a tax year.

Until we have confirmation of the final rules, there is little point is speculating  or scaremongering, so I will provide details as appropriate in due course. If you have specific questions, please post here or email me at keren@holbornassets.com

UPDATE 07/12/11   The draft Finance Act 2012 was published yesterday and it has been announced that the introduction of the Statutory Residency Test will be postponed until 6th April 2013. The final legislation is expected in March 2012.