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UK Taxation of employees

UK Taxation of Employees: Statutory Residence Test – New Rules

Probably the biggest incentive for UK expats working in Saudi Arabia is the prospect of being here long enough and having the right employment contract etc. to qualify for becoming UK non-resident for tax purposes. However this is a complicated issue and the rules are changing all the time.

Currently there is no single statutory test for residence in the UK. An individual who is in the UK for 183 days or more in a tax year will be UK resident. Someone who spends no time in the UK in a tax year is unlikely to be deemed resident. In other cases, Her Majesty’s Revenue & Customs (HMRC) and, if necessary, the courts determine an individual’s residence status from case law principles. Recent cases have demonstrated the difficulties that can arise from this process.

HM Treasury has recently published a consultation document regarding statutory definition of tax residence and the possible implementation of a statutory residence test (SRT) to be introduced from the start of the 2012-13 tax year.

Two briefing documents regarding these issues have kindly been provided to BBG members by Suleman Mulla, Director – Tax and Zakat Services with KPMG Al Fozan & Al Sadhan, for which we are grateful.

These are available to registered users of this site only.

Edward Ogilvie

BBG Chairman