The British Non Residency Test

Many British Expats will assume that once they are living in another country, that they are no longer under the watchful eye of the British Inland Revenue.

However, it has recently been shown that many of us have misunderstood the actual rules.

Leaflet number IR20 defines a non-resident as one who spends less than 91 days on average per year in the UK. However, this ruling was replaced in April 2009 by HMRC6.

However, being resident in the UK is not simply a question of the number of days you spend in the country. You also need to look at your ties to the country.

A recent case of a British Expat, Robert Gaines-Cooper, who has lived overseas since 1976, but has kept property and other business links to the UK, has ended up being deemed as Tax Resident in the UK, due to these links.

The Court of Appeal upheld the Inland Revenue claim, on the basis that taxpayers must show a “distinct break” from social and family ties to the home country, and that spending all but 91 days outside the country is necessary, but not sufficient to establish non-resident status.

This case could have wide reaching effects on many British living overseas, who still own UK property, or receive an income from the UK.

Fortunately though, for those of us in Australia, we have a Double Taxation agreement, which means that we only end up paying the higher of either countries tax rates.


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