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Residency notes

Non-residents are liable to tax on income arising in the UK. The Non-Resident Landlord Scheme applies to non- resident individuals. The letting agent (or the tenant if there is no letting agent) must deduct tax from the rent and pay it to HM Revenue & Customs unless approval has been given for the rent to be paid without a tax deduction. The application form for this approval is form NRL 1.

If an individual is in the UK for some temporary purpose and not with the intention of establishing residence in the UK, he/she is non-resident unless he/she is in the UK for six months or more in a tax year. The day of arrival in the UK and the day of departure are ignored.

In forming a view of whether the individual has the intention of establishing residence in the UK, HM Revenue & Customs will consider (among other things) whether or not he/she visits the UK for an average of 91 days or more each year. A rolling four year average will be considered. However, HM Revenue & Customs are entitled to consider any other factors in determining the intentions of the individual. For example, an American held the lease of a shooting box in Scotland and spent two months there every year was held to be resident.

When an individual leaves the UK he/she is treated as being provisionally non-resident from the date of emigration. This is done using the "Split Year Treatment" in completing the Income Tax Return and calculating tax due.

Capital Gains made by non-residents are not subject to Capital Gains Tax as long as they satisfy certain further conditions. The rules for deciding residency outlined above apply. However, for most of those emigrating the Split Year basis is not available and gains made before the 6th April following the date of emigration are still taxable in full. There are two further tests:- If he/she was resident in four (or more) out of the last seven years immediately preceding the year of departure and the individual becomes UK resident again with less than five full tax years between the date of becoming non-resident and the date of becoming resident again then Capital Gains remain taxable regardless of residency.

Many thousands of pages have been written on the subject of residency. It is therefore impossible to give anything other than the roughest outline in a document such as this. There are many exceptions and rules other than those described above. You should not rely on the foregoing. You should always take professional advice specific to your circumstances. We would be pleased to advise our clients upon request.