Part 2.Key concepts
Days spent
47.Paragraph 22 specifies what counts as a day spent in the UK for the purposes of this Schedule.
48.Sub-paragraphs (1) and (2) of paragraph 22 specify that if P is in the UK at the end of a day, that day will count as a day spent in the UK, subject to the two exceptions set out in sub-paragraphs (3) to (6) of paragraph 22.
49.Sub-paragraph (3) of paragraph 22 specifies that where P is in transit through the UK, leaves the UK the day after arrival, and does not engage in any activities substantially unrelated to their transit, then the day of arrival will not count as a day spent in the UK.
50.Sub-paragraphs (4) and (6) of paragraph 22 specify that where P is only present in the UK at the end of a day because of exceptional circumstances beyond P’s control that prevented P from leaving, and P intends to leave as soon as those circumstances permit, that day will not count as a day spent in the UK up to a maximum of 60 days in a tax year.
51.Sub-paragraph (5) of paragraph 22 gives examples of circumstances that may be exceptional.
52.Paragraph 23 provides that if P is not present in the UK at the end of a day that day does not count as a day spent in the UK, subject to the exception provided by the deeming rule in sub-paragraph (4).
53.Sub-paragraphs (2) to (4) of paragraph 23 provide that even if P is not present in the UK at the end of a day, that day will count as a day spent in the UK if P was UK resident in one or more of the 3 tax years immediately preceding the tax year in which the day falls, P has 3 or more UK ties for the tax year in which the day falls and P is present in the UK at some point (but not at the end of the day) on more than 30 days in that tax year. Where this deeming rule applies, only the excess over 30 such days is added to the tally of days spent in the UK.
54.Sub-paragraph (5) of paragraph 23 provides that in establishing whether P has 3 UK ties for a tax year, the deeming rule in sub-paragraph (4) does not itself apply in calculating whether P has a 90-day tie.
Days spent “in” a period
55.Paragraph 24 specifies that days spent in the UK are aggregated for any period specified in this Schedule.
Home
56.Paragraph 25 contains provisions to assist in interpreting the word “home”. Sub-paragraph (1) of paragraph 25 provides that a person’s home could be a building or part of a building or, for example, a vehicle, vessel or structure of any kind. Sub-paragraph (2) of paragraph 25 states that whether there is a sufficient degree of permanence or stability about P’s arrangements for a place to count as P’s home will depend on all the circumstances of the case. Sub-paragraph (3) of paragraph 25 provides that 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. Sub-paragraph (4) of paragraph 25 provides that a place may count as a home whether or not P holds any estate or interest in it. This means, for example, that rented property or property which P lives in but which is owned by someone else, such as P’s parents, may still count as P’s home in appropriate circumstances. Sub-paragraph (5) of paragraph 25 provides that 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. This would apply, for example, where P had rented out the property on arms’ length commercial terms and was unable to live in the property.
Work
57.Paragraph 26 specifies when an individual is considered to be working for the purposes of this Schedule.
58.Sub-paragraphs (1) to (3) of paragraph 26 specify that P is considered to be working if P is doing something in the performance of duties of an employment held by P or in the course of a trade carried on by P. In deciding whether or not something is being done in the course of duties of an employment, regard must be had to whether, if value were to be received by P for doing that thing, it would be employment income as defined in section 7 of ITEPA. Similarly, in deciding whether or not something is being done in the course of a trade, regard must be had to whether, if expenses were incurred by P, they could be deducted in calculating the profits of the trade for income tax purposes.
59.Sub-paragraph (4) of paragraph 26 specifies that time spent travelling counts as time spent working if the cost of the journey, if met by P, could be deducted in calculating P’s earnings from the associated employment under one of the ITEPA provisions specified or in calculating the profits from the associated trade (making the assumption that P is chargeable to tax). Time spent working while travelling also counts as work for the purposes of this Schedule, irrespective of the tax deductibility position of that travel.
60.Sub-paragraph (5) of paragraph 26 specifies that time spent training counts as time spent working if the training is provided or paid for by the employer to help P perform the employment, or the cost of the training could be deducted in calculating the profits of the trade for income tax purposes.
61.Sub-paragraph (8) of paragraph 26 provides that a voluntary post where P has no contract of service does not count as employment for the purposes of this Schedule.
Location of work
62.Paragraph 27 sets out the rules for determining where work is actually carried out for the purposes of the statutory residence test.
63.Sub-paragraph (1) of paragraph 27 specifies that, for the purposes of this Schedule, work is considered as being done at the location where it is actually done rather than where an employment is held or a trade is carried on.
64.Sub-paragraph (2) of paragraph 27 specifies that, for the purposes of this Schedule, work done during travel to or from the UK by air or sea or via a tunnel under the sea will be assumed to be work done overseas, including work done during the part of the journey in or over the UK.
65.Sub-paragraph (3) of paragraph 27 specifies that, for the purposes of this Schedule, travelling to or from the UK begins when P boards an aircraft, ship or train and ends when P disembarks.
66.Sub-paragraph (4) of paragraph 27 specifies that the location of work rules are subject to the specific rules for people with relevant jobs on board vehicles, aircraft or ships. Such people are defined in paragraph 30 and the special rules are in paragraph 36.
Rules for calculating the reference period
67.Paragraph 28 sets out supplementary rules that feed into the calculation of the “reference period” which is part of the “sufficient hours in the UK” test at paragraph 9 and the “sufficient hours overseas” test at paragraph 14. Paragraph 28 sets out how certain days reduce the reference period, as required by step 3(b) within paragraphs 9(2) and 14(3). The days in question are days of annual, parenting or sick leave, non-working days embedded within a block of such leave, and days that are part of certain gaps between employments.
68.Sub-paragraph (2) of paragraph 28 sets out that the reference period may be reduced to take account of reasonable amounts of annual leave, parenting leave and absences from work at times during the period when P is on sick leave and cannot reasonably be expected to work. Reductions may also be made for non-working days embedded within each block of such leave.
69.Sub-paragraph (3) of paragraph 28 ensures that no day may reduce the reference period under paragraph 28 if it already reduces the reference period by virtue of being a “disregarded day”. So there is to be no reduction from the reference period for the types of leave set out in this paragraph in relation to any disregarded days, which are defined at sub-paragraph 9(2) of the “sufficient hours in the UK” test and at sub-paragraph 14(3) of the “sufficient hours overseas” test and which are deducted from the reference period by virtue of step 3(a) within those sub-paragraphs.
70.Sub-paragraph (4) of paragraph 28 sets out that the nature of P’s work and where P does the work will be relevant to what is considered to be ‘reasonable amounts’ of annual or parenting leave.
71.Sub-paragraph (5) of paragraph 28 sets out that non-working days will be considered to be “embedded within” a block of leave if there are three or more consecutive days of leave taken before and after the non-working days in question. The effect of these rules is that only non-working days that form part of a longer period of leave (such as a block of several months of maternity leave) reduce the reference period. Without this such non-working days would form part of the reference period and P would have to work longer hours in P’s working weeks to make up for them. But other non-working days (not embedded within a longer block of leave) are effectively part of P’s normal working week and so do form part of the reference period over which the 35-hour test is measured.
72.Sub-paragraph (6) of paragraph 28 sets out that a non-working day is defined as a day on which P is not normally expected to work for contractual reasons or as part of P’s normal pattern of work and is a day on which P does not in fact work.
73.Sub-paragraph (7) of paragraph 28 sets out that the total of reasonable amounts of annual leave, parenting leave and absences from work on sick leave are to be rounded down for the purposes of reductions to the reference period where those totals do not add up to a whole number of days.
74.Sub-paragraphs (8) and (9) of paragraph 28 provide that gaps between changes of P’s employment (during which time P does not work) may also be excluded from the reference period up to a total of 15 days for each change in employment, and subject to a maximum of 30 days in the tax year.
Significant breaks from UK or overseas work
75.Paragraph 29 sets out the definition of “significant break” for the purposes of the “sufficient hours in the UK” test at paragraph 9 and the “sufficient hours overseas” test at paragraph 14. A significant break is a period of at least 31 consecutive days on each of which P does less than three hours’ work, and where those days were not annual leave, sick leave, or parenting leave.
Relevant jobs on board vehicles, aircraft or ships
76.Paragraph 30 identifies the individuals to whom special rules apply because they have a job the duties of which are carried out when travelling and where substantially all the trips undertaken involve crossing international borders. P will be within this group of workers even if, for example, P occasionally performs duties on domestic journeys.
77.Examples of such individuals include international airline pilots and lorry drivers, fishermen who fish in international waters and people working on cruise ships.
UK ties
78.Paragraph 31 lists what counts as a UK tie for the purposes of this Schedule, depending on whether or not P was UK resident for one or more of the 3 tax years immediately preceding the tax year for which the test is applied. The UK ties are defined in paragraphs 32 to 38. Paragraph 31 specifies the requisite number of ties set out in paragraphs 18 and 19 must consist of different types of tie. So, for example, a family tie only counts once for a year regardless of the number of relatives that P has in the UK.
Family tie
79.Paragraph 32 specifies that P is considered to have a family tie for a tax year if P has a relevant relationship with another person in that tax year and that other person is someone who is resident in the UK in that tax year. P will have a relevant relationship with another person if that other person is P’s husband or wife or civil partner (so long as they are not separated) or someone P is living together with in that manner. P also has a family tie for a tax year if P has a child under age 18 who is UK resident in that tax year, unless P sees that child on no more than 60 days in that tax year, or the part of that tax year before the child reaches the age of 18.
80.Paragraph 33 sets out special rules for establishing whether, for the purposes of paragraph 32 only, a person with whom P has a relevant relationship is UK resident for a tax year. Sub-paragraph (2) of paragraph 33 provides that, in working out whether that other person is resident for the purposes of determining whether P has a family tie, their own family tie to P is to be disregarded. Sub-paragraphs (3) to (6) of paragraph 33 provide that a child of P’s under the age of 18 who is UK resident is to be treated as non-resident if they are in full-time education in the UK and would not be UK resident if the time spent in full-time education were to be disregarded. This test will only apply if the child spends fewer than 21 days in the tax year in the UK outside term-time. Half-term breaks and other breaks during a term are treated as term-time.
Accommodation tie
81.Paragraph 34 specifies that P is considered to have an accommodation tie for a tax year if P has a place to live in the UK and that place is available to P for a continuous period of 91 days or more during the tax year (ignoring gaps of fewer than 16 days when it is unavailable). P is considered to have a place to live in the UK if P has one or more homes in the UK, a holiday home, temporary retreat or something similar in the UK or if accommodation is otherwise available to P where P can live when P is in the UK. P does not need to own or have an interest in the accommodation, but must spend at least one night in it during the tax year or, if it is the home of a close relative as defined in sub-paragraph (6) of paragraph 34, P must spend at least 16 nights in it during the tax year in order to have an accommodation tie.
Work tie
82.Paragraph 35 specifies that P has a work tie for a tax year if P does more than 3 hours’ work a day in the UK on at least 40 different days in the tax year.
83.Paragraph 36 specifies that if P has a job within the scope of paragraph 30, then any day on which P starts a work-related cross-border trip in the UK is treated as one on which P did more than 3 hours’ work in the UK. Any day on which P completes a work-related cross-border trip in the UK that began overseas is treated as one on which P did less than 3 hours’ work in the UK. Any day on which P both starts a cross-border trip in the UK and completes it in the UK is treated as one on which P did more than 3 hours’ work in the UK. If a cross-border trip is undertaken in stages across a number of days, the trip is considered to have started, or to be completed, on the day during which P crosses the UK border. Any day on which a stage of the trip takes place wholly within the UK will, so long as it takes more than 3 hours, be considered to be a UK work day.
90-day tie
84.Paragraph 37 specifies that P is considered to have a 90-day tie for a tax year if P spends more than 90 days in the UK in either or both of the two tax years immediately preceding that year.
Country tie
85.Paragraph 38 specifies that P is considered to have a country tie for a tax year if the country P is in at midnight for the greatest number of days in that year is the UK. P will also have a country tie for a tax year if P is in more than one country at midnight for the same number of days in that tax year if one of those countries is the UK and there is no country in which P has spent a greater number of midnights in that tax year.
