Introduction Background
114.At Budget 2012, the Government announced that it would abolish the concept of ordinary residence. This represents a major simplification to the UK tax system which was welcomed by those who responded to HM Treasury consultations in June 2011 and June 2012. The second consultation included draft legislation which is substantially the same as that in this Schedule except for the simplified new rules relating to overseas workday relief.
115.Three references to ordinary residence have been retained in primary (direct) tax legislation. They are in section 693 of ITTOIA 2005 (Ulster Savings Certificates, which refers to ordinary residence in Northern Ireland), section 38 of ITA 2007 (blind person’s allowance which refers to ordinary residence in Scotland or Northern Ireland) and section 841 of ITA 2007 (which concerns the certification of ordinary residence outside the UK by a High Commissioner or Agent-General). The Government does not want to change the scope or application of any of these provisions. In addition, a fourth reference in section 228(6) of TCGA 1992 has been left alone on the basis that the provision is no longer of relevance.
116.The concept of ordinary residence will continue to apply for the time being in circumstances where transitional rules are in point, for example in relation to FOTRA securities issued on the basis that the holder is not ordinarily resident.
117.There are a number of places in secondary legislation where the term ‘ordinary residence’ is used. Where the term is clearly being used in an income tax context the Government will abolish the reference. Two statutory instruments came into force on 6 April 2013 (2013/557 and 2013/615). A third statutory instrument (SI 2013/1810) concerning certain rules applying to temporary non-residents (and incidentally removing references to ordinary residence) was laid in July 2013 to apply from 6 April 2013. A fourth statutory instrument concerning Authorised Investment Funds will be laid in time to come into force on 6 April 2014.