With just seven days to go before George Osborne delivers the nation's budget and we all find out how much richer or poorer we're all going to be, David Russell, who runs Guardian Wealth Management's office in Qatar, says expats should focus more on April 2013.
While the forthcoming budget is one British expatriates should keep an eye on, the date that needs to be marked in their diaries should be April 2013. This is when the residency ruling from HMRC is expected, which will categorise expatriates to determine residency and UK tax liabilities.
The residency test was due to come into effect this coming April, but has been delayed for another year in order for HMRC to continue its consultation on the impact the changes are likely to make. The measures will be included in the Finance Bill 2013 and take effect from April 6 of the same year.
Russell explains that the new residency test will classify expatriates into categories determining their degree of residency. “For example, Category A might be completely non-resident; B will be quasi-resident; down to D which would be the category where HMRC would view an expat as being pretty well UK resident.
Which category an expat fits into depends on issues such as where the kids are educated, where the spouse is living, houses owned and other economic influences coming from the UK. Expats will have to start separating themselves from the UK as much as possible if they want to remain non-resident for UK tax purposes.”
Up until now it has been hard for expatriates to know when owning a piece of property, or stepping back onto UK soil for a home visit, means they could be overstepping a line and so jeopardising their own status as non-resident for tax purposes.The new rules will clarify this to some extent, it also means some expatriates will find themselves in a category they had not previously anticipated.
The delay in having the residency test put back a year was a disappointment to many advisers who were keen to have fixed certainties with which to assist their clients about residency rules.
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