WTTG4400 - Test Bii - 'close connection' to Wales - two or more places of residence
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 Wales and be a Welsh taxpayer, if their “main place of residence” has been in Wales for at least as long as it has been in each other individual ‘part of the UK’.
“Part of the UK” is to be interpreted as Wales, England, Scotland 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 Wales, they will be a Welsh taxpayer.
Where, in the course of a tax year, an individual has a “main place of residence” both in Wales 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 Wales exists will be determined by whether his or her main place of residence was in Wales for at least as much of the year as it was in each other individual ‘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 Wales during a particular tax year is compared to the time for which it was in England, Scotland or Northern Ireland individually during the course of that year – not in aggregate.
Where a “close connection” to Wales 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 Welsh taxpayer will have been established.
Examples
N.B. whether a residence constitutes a “main place of residence” for the purposes of Welsh 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 Welsh taxpayer status.
More than one place of residence – all in the same part of the UK
Angela has owned and lived at a house in Caernarfon for a number of years – this is her sole place of residence. In June she sells her house in Caernarfon and moves into rented accommodation in Bangor where she stays until December when she moves into a new house she has purchased in Llandudno.
Angela has had more than one place of residence in the course of the tax year, each in different parts of Wales. However, since all of the places of residence have been in Wales she is a Welsh 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 30 June he stops renting the Birmingham property and purchases a flat in Pontypridd, 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 Pontypridd. On the basis that Donovan’s place of residence was Wales (Pontypridd) for a greater period of time (1 July – 5 April) than it was in each other part of the UK (Birmingham, England from 6 April to 30 June), Donovan has a “close connection” to Wales and is a Welsh taxpayer for the whole of the tax year.
Were the order of the moves to be reversed (i.e. Pontypridd to Birmingham) but the dates stay the same then Donovan would not be a Welsh taxpayer as, on the basis of 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 Abergavenny for a number of years – this is her sole place of residence. In the course of the year she sells her house in Abergavenny and moves into rented accommodation in Glasgow 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: Abergavenny 125 days, Glasgow 115 days and London 115 days.
Emily is a Welsh taxpayer, for the whole of the tax year, on the basis that the period of time for which her place of residence was in Wales was at 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 in WTTG3800 are of relevance.
Bob is single and has worked and owned a flat in Sheffield for many years. He is a member of various clubs and social groups in the city. However, Bob also owns a house outside of Brecon, 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 Sheffield.
Bob has two places of residence but his main place of residence is in Sheffield, 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 Welsh taxpayer.
Rhian has a family home in Treforest with her husband and children but works in Edinburgh. To avoid the commute she rents a flat in Edinburgh which she furnishes herself and where she keeps some of her possessions and stays during the week, returning to the family home in Treforest each weekend. All the friends that Rhian sees socially live in or around Treforest and she is a member of various local sports and social groups in the town.
Despite having a place of residence in Edinburgh throughout the tax year, Rhian’s main place of residence, by virtue of her family, social and other links, is her family home in Treforest. Rhian therefore has a “close connection” to Wales and is thus a Welsh taxpayer.
Solomon is a student at university in Swansea, 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 his doctors and dentist registrations 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 Welsh taxpayer.
Caitlin is a student at university in Bangor and lives in a shared house with friends from her 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 Belfast. The correspondence address on her bank and credit card accounts is still her parents’ house and many of her possessions are there. However, Caitlin spends her university holidays in the house in Bangor, working full-time, only occasionally staying at her parents’ house.
Caitlin only has one place of residence – Bangor. While she uses her 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 Wales. Javier arrives in the UK on 15 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 Wales 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 Welsh taxpayer. To establish whether he is a Welsh taxpayer or not, it is necessary to consider whether he has a place of residence in the UK – Javier’s family residence in the US is therefore not of relevance. Javier’s sole UK place of residence in the UK is in Wales, so he has a “close connection” with Wales and is therefore a Welsh 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 Welsh rates of income tax.