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HMRC internal manual

Scottish Taxpayer Technical Guidance

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HM Revenue & Customs
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Tests for Scottish taxpayer status: Test Bii: 'close connection to Scotland' – two or more places of residence in the UK

Where, in the course of a tax year, an individual has more than one place of residence in the UK (either through a move from a single place of residence to another or by having more than one place of residence throughout the tax year), they will have a ‘close connection’ with Scotland and be a Scottish taxpayer, if their main place of residence has been in Scotland for at least as long as it has been in any other individual ‘part of the UK’.

Part of the UK’ is to be interpreted as Scotland England, Wales and Northern Ireland.

Where, in the course of a tax year, an individual has more than one ‘main place of residence’ but all in the same part of the UK, they will have a ‘close connection’, to that part of the UK. If that part of the UK is Scotland they will be a Scottish taxpayer

Where in the course of a tax year, an individual has a ‘main place of residence’ both in Scotland and elsewhere in the UK, (this may occur through a move from a single place of residence to another; or where there is more than one place of residence throughout the tax year) - whether a ‘close connection’ with Scotland exists will be determined by whether his or her main place of residence was in Scotland for at least as much of the year as it was in any one other part of the UK

It is important to note that, for the purposes of this test, the time for which a main place of residence was in Scotland during a particular tax year is compared to the time for which it was in England, Northern Ireland or Wales individually during the course of that year not in aggregate.  

Where a close connection to Scotland or any other part of the UK is established using this test no further tests need be considered as whether the individual in question is or is not a Scottish taxpayer will have been established.

Examples

Note:  Whether a residence constitutes a ‘main place of residence’ for the purposes of Scottish taxpayer status is a qualitative, rather than quantitative test. The examples are provided by way of illustration but the addition or subtraction of factors may lead to different answers to the question of Scottish taxpayer status.

More than one place of residence – all in same part of the UK

Angela has owned and lived at a house in Falkirk for a number of years – this is her sole place of residence. In June she sells her house in Falkirk and moves into rented accommodation in Stranraer where she stays until December when she moves into a new house she has purchased in Inverness.

Angela has had more than one place of residence in the course of the tax year, each in different parts of Scotland. However, since all of the places of residence have been in Scotland she is a Scottish taxpayer.

More than one place of residence – move from one single place of residence to another

Donovan has rented and lived at a house in Birmingham for a number of years – this is his sole place of residence. On June 30th he stops renting the Birmingham property and purchases a flat in Aberdeen, moving in immediately and living there for the rest of the tax year.

In the course of the tax year Donovan has two places of residence – one in Birmingham and one in Aberdeen. On the basis that Donovan’s place of residence was in Scotland (Aberdeen) for a greater period of time (July-April 5th) than it was in any other part of the UK (England – Birmingham from 6th April to June 30th ), Donovan has a close connection to Scotland and is a Scottish taxpayer for the whole of the tax year.

Were the order of the moves to be reversed (i.e. Aberdeen to Birmingham) but the dates stay the same then Donovan would not be a Scottish taxpayer as, on the basis the length of time at each place of residence, a close connection to England would exist.

Emily has owned and lived at a house in Fort William for a number of years – this is her sole place of residence. In the course of the year she sells her house in Fort William and moves into rented accommodation in Swansea where she stays until moving into a new house she has purchased in London. The period of time each location constituted her place of residence in the course of the tax year was as follows: Fort William 125 days, Swansea 115 days and London 115 days.

Emily is a Scottish taxpayer, for the whole of the tax year, on the basis that the period of time for which her place of residence was in Scotland was a least as great (and in this case greater) than the periods of time her place of residence was in any one of the other parts of the UK.

More than one place of residence – more than one place of residence at any given time

Where at any given time an individual has more than one place of residence the establishment of a ‘close connection’ rests on which place of residence constitutes the individual’s ‘main place of residence’. It is in considering this status that illustrative factors outlined at paragraph 45 are of relevance.   

Bob is single and has worked and owned a flat in Carlisle for many years. He is a member of various clubs and social groups in the city. However, Bob also owns a house outside of Oban, where he likes to go walking and fishing most weekends and for longer in the summer holidays. Both properties are furnished with Bob’s possessions but his doctors, dentist and opticians registration are all in Carlisle.

Bob has two places of residence but his main place of residence is in Carlisle, as this is the residence with which he has the closest connection, both in terms of social and functional links and in which he spends the most time. Bob is therefore not a Scottish taxpayer.

Jane has a family home in Kilmarnock with her husband and children but works in Cardiff. To avoid the commute she rents a flat in Cardiff which she furnishes herself and where she keeps some of her possessions and stays during the week, returning to the family home in Kilmarnock each weekend. All the friends that Jane sees socially live in or around Kilmarnock and she is a member of various local sports and social groups in the town.

Despite having a place of residence in Cardiff throughout the tax year, Jane’s main place of residence, by virtue her family, social and other links, is her family home in Kilmarnock. Jane therefore has a ‘close connection’ to Scotland and is thus a Scottish taxpayer.   

Solomon is a student at university in Glasgow, living in a house with friends from his course. He works part-time to help cover his rent and tuition fees and his name is on the phone and utility bills for the house. His parents live in Norwich and he returns to the family home outside of every term time. The correspondence address on his bank and credit card accounts are the family home in Norwich, most of his possessions are there and he is doctors and dentists registration are also in Norwich.

Solomon’s main place of residence, the place with which he has closest connection is his parent’s house, his family home in Norwich. Solomon is not a Scottish taxpayer.

Rebecca is a student at university in Stirling and lives in a shared house with friends from the course. She works part-time to help cover rent and tuition fees and her name is on the phone and utility bills for the house. Her parents live in Cardiff. The correspondence address on her bank and credit card accounts is still at her parents’ house and many of her possessions are there, however, Rebecca spends her university holidays in the house in Stirling, working full-time, only occasionally staying at her parent’s house.

Rebecca has only one place of residence – Stirling. While she uses he parents’ home for correspondence and many of her possessions are there she spends very little time there so it cannot constitute her place of residence.

Javier is a US Citizen, employed by a US Company. He is sent on a two year assignment to work for a company in Scotland. Javier arrives in the UK on 15th October and under the Statutory Residence Test (SRT) is treated as UK resident for tax purposes, albeit on a split year basis for the year of arrival. Javier rents a house in Scotland for himself in which he lives over the two years of the secondment. His family remain in the US throughout the assignment and Javier returns home to the US for holidays.

Since Javier is treated as UK resident for tax purposes under the SRT it is possible for him to be a Scottish taxpayer. To establish whether he is a Scottish taxpayer or not it is necessary to consider whether he has a place of residence in the UK – Javier’s family residence in the USA is therefore not of relevance. Javier’s sole UK place of residence in the UK is in Scotland, so he has a close connection with Scotland and is therefore a Scottish Taxpayer for the tax year. However, the split year treatment for his year of arrival means that only his income subsequent to his arrival in the UK is subject to the Scottish rate of income tax.