Finance Act 2013

PART 2 Key concepts

Introduction

21 This Part of this Schedule defines some key concepts for the purposes of this Schedule.

Days spent

22 (1) If P is present in the UK at the end of a day, that day counts as a day spent by P in the UK.

(2) But it does not do so in the following two cases.

(3) The first case is where—

(a) P only arrives in the UK as a passenger on that day,

(b) P leaves the UK the next day, and

(c) between arrival and departure, P does not engage in activities that are to a substantial extent unrelated to P’s passage through the UK.

(4) The second case is where—

(a) P would not be present in the UK at the end of that day but for exceptional circumstances beyond P’s control that prevent P from leaving the UK, and

(b) P intends to leave the UK as soon as those circumstances permit.

(5) Examples of circumstances that may be “exceptional” are—

(a) national or local emergencies such as war, civil unrest or natural disasters, and

(b) a sudden or life-threatening illness or injury.

(6) For a tax year—

(a) the maximum number of days to which sub-paragraph (2) may apply in reliance on sub-paragraph (4) is limited to 60, and

(b) accordingly, once the number of days within sub-paragraph (4) reaches 60 (counting forward from the start of the tax year), any subsequent days within that sub-paragraph, whether involving the same or different exceptional circumstances, will count as days spent by P in the UK.

23 (1) If P is not present in the UK at the end of a day, that day does not count as a day spent by P in the UK.

(2) This is subject to the deeming rule.

(3) The deeming rule applies if—

(a) P has at least 3 UK ties for a tax year,

(b) the number of days in that tax year when P is present in the UK at some point in the day but not at the end of the day (“qualifying days”) is more than 30, and

(c) P was resident in the UK for at least one of the 3 tax years preceding that tax year.

(4) The deeming rule is that, once the number of qualifying days in the tax year reaches 30 (counting forward from the start of the tax year), each subsequent qualifying day in the tax year is to be treated as a day spent by P in the UK.

(5) The deeming rule does not apply for the purposes of sub-paragraph (3)(a) (so, in deciding for those purposes whether P has a 90-day tie, qualifying days in excess of 30 are not to be treated as days spent by P in the UK).

Days spent “in” a period

24 Any reference to a number of days spent in the UK “in” a given period is a reference to the total number of days spent there (in aggregate) in that period, whether continuously or intermittently.

Home

25 (1) A person’s home could be a building or part of a building or, for example, a vehicle, vessel or structure of any kind.

(2) Whether, for a given building, vehicle, vessel, structure or the like, there is a sufficient degree of permanence or stability about P’s arrangements there for the place to count as P’s home (or one of P’s homes) will depend on all the circumstances of the case.

(3) But somewhere that P uses periodically as nothing more than a holiday home or temporary retreat (or something similar) does not count as a home of P’s.

(4) A place may count as a home of P’s whether or not P holds any estate or interest in it (and references to “having” a home are to be read accordingly).

(5) Somewhere that was P’s home does not continue to count as such merely because P continues to hold an estate or interest in it after P has moved out (for example, if P is in the process of selling it or has let or sub-let it, having set up home elsewhere).

Work

26 (1) P is considered to be “working” (or doing “work”) at any time when P is doing something—

(a) in the performance of duties of an employment held by P, or

(b) in the course of a trade carried on by P (alone or in partnership).

(2) In deciding whether something is being done in the performance of duties of an employment, regard must be had to whether, if value were received by P for doing the thing, it would fall within the definition of employment income in section 7 of ITEPA 2003.

(3) In deciding whether something is being done in the course of a trade, regard must be had to whether, if expenses were incurred by P in doing the thing, the expenses could be deducted in calculating the profits of the trade for income tax purposes.

(4) Time spent travelling counts as time spent working—

(a) if the cost of the journey could, if it were incurred by P, be deducted in calculating P’s earnings from that employment under section 337, 338, 340 or 342 of ITEPA 2003 or, as the case may be, in calculating the profits of the trade under ITTOIA 2005, or

(b) to the extent that P does something else during the journey that would itself count as work in accordance with this paragraph.

(5) Time spent undertaking training counts as time spent working if—

(a) in the case of an employment held by P, the training is provided or paid for by the employer and is undertaken to help P in performing duties of the employment, and

(b) in the case of a trade carried on by P, the cost of the training could be deducted in calculating the profits of the trade for income tax purposes.

(6) Sub-paragraphs (4) and (5) have effect without prejudice to the generality of sub-paragraphs (2) and (3).

(7) Assume for the purposes of sub-paragraphs (2) to (5) that P is someone who is chargeable to income tax under ITEPA 2003 or ITTOIA 2005.

(8) A voluntary post for which P has no contract of service does not count as an employment for the purposes of this Schedule.

Location of work

27 (1) Work is done where it is actually done, regardless of where the employment is held or the trade is carried on by P.

(2) But work done by way of or in the course of travelling to or from the UK by air or sea or via a tunnel under the sea is assumed to be done overseas even during the part of the journey in or over the UK.

(3) For these purposes, travelling to or from the UK is taken to—

(a) begin when P boards the aircraft, ship or train that is bound for a destination in the UK or (as the case may be) overseas, and

(b) end when P disembarks from that aircraft, ship or train.

(4) This paragraph is subject to express provisions in this Schedule about the location of work done by people with relevant jobs on board vehicles, aircraft or ships.

Rules for calculating the reference period

28 (1) This paragraph applies in calculating the “reference period” (which is a step taken in determining whether P works “sufficient hours in the UK” or “sufficient hours overseas” as assessed over a given period of days).

(2) The number of days in the given period may be reduced to take account of—

(a) reasonable amounts of annual leave or parenting leave taken by P during the period (for all employments held and trades carried on by P during the period, whether in the UK or overseas),

(b) absences from work at times during the period when P is on sick leave and cannot reasonably be expected to work as a result of the illness or injury in question, and

(c) non-working days embedded within a block of leave for which a reduction is made under paragraph (a) or (b).

(3) But no reduction may be made in respect of any day that is a “disregarded day” (see paragraphs 9(2) and 14(3) in Part 1 of this Schedule).

(4) For any particular employment or trade, “reasonable” amounts of annual leave or parenting leave are to be assessed having regard to (among other things)—

(a) the nature of the work, and

(b) the country or countries where P is working.

(5) Non-working days are “embedded within” a block of leave only if there are, as part of that block of leave—

(a) at least 3 consecutive days of leave taken before the non-working day or series of non-working days in question, and

(b) at least 3 consecutive days of leave taken after the non-working day or series of non-working days in question.

(6) A “non-working day” is any day of the week, month or year on which P—

(a) is not normally expected to work (according to P’s contract of employment or usual pattern of work), and

(b) does not in fact work.

(7) In calculating the reductions to be made under sub-paragraph (2)—

(a) if it turns out, after applying sub-paragraph (3), that the reasonable amounts of annual leave or parenting leave or, as the case may be, the absences from work on sick leave do not add up (across the period) to a whole number of days, the number in that case is to be rounded down to the nearest whole number, but

(b) any such rounding is to be ignored for the purposes of sub-paragraph (2)(c).

(8) If—

(a) P changes employment during the given period,

(b) there is a gap between the two employments, and

(c) P does not work at all at any time between the two employments,

the number of days in the given period may be reduced by the number of days in that gap.

(9) But—

(a) if the gap lasts for more than 15 days, only 15 days may be subtracted, and

(b) if there is more than one change of employment during the period, the maximum number of days that may be subtracted under sub-paragraph (8) for all the gaps in total is 30.

Significant breaks from UK or overseas work

29 (1) There is a “significant break from UK work” if at least 31 days go by and not one of those days is—

(a) a day on which P does more than 3 hours’ work in the UK, or

(b) a day on which P would have done more than 3 hours’ work in the UK but for being on annual leave, sick leave or parenting leave.

(2) There is a “significant break from overseas work” if at least 31 days go by and not one of those days is—

(a) a day on which P does more than 3 hours’ work overseas, or

(b) a day on which P would have done more than 3 hours’ work overseas but for being on annual leave, sick leave or parenting leave.

Relevant jobs on board vehicles, aircraft or ships

30 (1) P has a “relevant” job on board a vehicle, aircraft or ship if condition A and condition B are met.

(2) Condition A is that P either—

(a) holds an employment, the duties of which consist of duties to be performed on board a vehicle, aircraft or ship while it is travelling, or

(b) carries on a trade, the activities of which consist of work to be done or services to be provided on board a vehicle, aircraft or ship while it is travelling.

(3) Condition B is that substantially all of the trips made in performing those duties or carrying on those activities are ones that involve crossing an international boundary at sea, in the air or on land (referred to as “cross-border trips”).

(4) Sub-paragraph (2)(b) is not satisfied unless, in order to do the work or provide the services, P has to be present (in person) on board the vehicle, aircraft or ship while it is travelling.

(5) Duties or activities of a purely incidental nature are to be ignored in deciding whether the duties of an employment or the activities of a trade consist of duties or activities of a kind described in sub-paragraph (2)(a) or (b).

UK ties

31 (1) What counts as a “UK tie” depends on whether P was resident in the UK for one or more of the 3 tax years preceding year X.

(2) If P was resident in the UK for one or more of those 3 tax years, each of the following types of tie counts as a UK tie—

(a) a family tie,

(b) an accommodation tie,

(c) a work tie,

(d) a 90-day tie, and

(e) a country tie.

(3) Otherwise, each of the following types of tie counts as a UK tie—

(a) a family tie,

(b) an accommodation tie,

(c) a work tie, and

(d) a 90-day tie.

(4) In order to have the requisite number of UK ties for year X, each tie of P’s must be of a different type.

Family tie

32 (1) P has a family tie for year X if—

(a) in year X, a relevant relationship exists at any time between P and another person, and

(b) that other person is someone who is resident in the UK for year X.

(2) A relevant relationship exists at any time between P and another person if at the time—

(a) P and the other person are husband and wife or civil partners and, in either case, are not separated,

(b) P and the other person are living together as husband and wife or, if they are of the same sex, as if they were civil partners, or

(c) the other person is a child of P’s and is under the age of 18.

(3) P does not have a family tie for year X by virtue of sub-paragraph (2)(c) if P sees the child in the UK on fewer than 61 days (in total) in—

(a) year X, or

(b) if the child turns 18 during year X, the part of year X before the day on which the child turns 18.

(4) A day counts as a day on which P sees the child if P sees the child in person for all or part of the day.

(5) “Separated” means separated—

(a) under an order of a court of competent jurisdiction,

(b) by deed of separation, or

(c) in circumstances where the separation is likely to be permanent.

33 (1) This paragraph applies in deciding for the purposes (only) of paragraph 32(1)(b) whether a person with whom P has a relevant relationship (a “family member”) is someone who is resident in the UK for year X.

(2) A family tie based on the fact that a family member has, by the same token, a relevant relationship with P is to be disregarded in deciding whether that family member is someone who is resident in the UK for year X.

(3) A family member falling within sub-paragraph (4) is to be treated as being not resident in the UK for year X if the number of days that he or she spends in the UK in the part of year X outside term-time is less than 21.

(4) A family member falls within this sub-paragraph if he or she—

(a) is a child of P’s who is under the age of 18,

(b) is in full-time education in the UK at any time in year X, and

(c) is resident in the UK for year X but would not be so resident if the time spent in full-time education in the UK in that year were disregarded.

(5) In sub-paragraph (4)—

(a) references to full-time education in the UK are to full-time education at a university, college, school or other educational establishment in the UK, and

(b) the reference to the time spent in full-time education in the UK is to the time spent there during term-time.

(6) For the purposes of this paragraph, half-term breaks and other breaks when teaching is not provided during a term are considered to form part of “term-time”.

Accommodation tie

34 (1) P has an accommodation tie for year X if—

(a) P has a place to live in the UK,

(b) that place is available to P during year X for a continuous period of at least 91 days, and

(c) P spends at least one night at that place in that year.

(2) If there is a gap of fewer than 16 days between periods in year X when a particular place is available to P, that place is to be treated as continuing to be available to P during the gap.

(3) P is considered to have a “place to live” in the UK if—

(a) P’s home or at least one of P’s homes (if P has more than one) is in the UK, or

(b) P has a holiday home or temporary retreat (or something similar) in the UK, or

(c) accommodation is otherwise available to P where P can live when P is in the UK.

(4) Accommodation may be “available” to P even if P holds no estate or interest in it and even if P has no legal right to occupy it.

(5) If the accommodation is the home of a close relative of P’s, sub-paragraph (1)(c) has effect as if for “at least one night” there were substituted “a total of at least 16 nights”.

(6) A “close relative” is—

(a) a parent or grandparent,

(b) a brother or sister,

(c) a child aged 18 or over, or

(d) a grandchild aged 18 or over,

in each case, including by half-blood or by marriage or civil partnership.

Work tie

35 (1) P has a work tie for year X if P works in the UK for at least 40 days (whether continuously or intermittently) in year X.

(2) For these purposes, P works in the UK for a day if P does more than 3 hours’ work in the UK on that day.

36 (1) This paragraph applies for the purposes of paragraph 35.

(2) It applies in cases where P has a relevant job on board a vehicle, aircraft or ship.

(3) When making a cross-border trip as part of that job—

(a) if the trip begins in the UK, P is assumed to do more than 3 hours’ work in the UK on the day on which it begins,

(b) if the trip ends in the UK, P is assumed to do fewer than 3 hours’ work in the UK on the day on which it ends.

(4) Those assumptions apply regardless of how late in the day the trip begins or ends (even if it begins or ends just before midnight).

(5) For the purposes of sub-paragraph (3)(a), it does not matter whether the trip ends on that same day.

(6) A day that falls within both paragraph (a) and paragraph (b) of sub-paragraph (3) is to be treated as if it fell only within paragraph (a).

(7) In the case of a cross-border trip to or from the UK that is undertaken in stages—

(a) the day on which the trip begins or, as the case may be, ends is the day on which the stage of the trip that involves crossing the UK border begins or ends, and

(b) accordingly, any day on which a stage is undertaken by P solely within the UK must (if it lasts for more than 3 hours) be counted separately as a day on which P does more than 3 hours’ work in the UK.

90-day tie

37 P has a 90-day tie for year X if P has spent more than 90 days in the UK in—

(a) the tax year preceding year X,

(b) the tax year preceding that tax year, or

(c) each of those tax years separately.

Country tie

38 (1) P has a country tie for year X if the country in which P meets the midnight test for the greatest number of days in year X is the UK.

(2) If—

(a) P meets the midnight test for the same number of days in year X in two or more countries, and

(b) that number is the greatest number of days for which P meets the midnight test in any country in year X,

P has a country tie for year X if one of those countries is the UK.

(3) P meets the “midnight test” in a country for a day if P is present in that country at the end of that day.