UK Trends and Developments Contributed by: Russell Warren and Michael Langan, King & Spalding LLP
• any UK services performed in a tax year in which an individual is neither UK tax resident nor spends at least 60 days in the UK in the relevant tax year (a new UK workday threshold test) will be deemed to be non-UK services; and • any UK services performed in a tax year will also be treated as if they were non-UK services if three full tax years (in addition to the then-current tax year) have passed, during which time the individual was neither UK resident nor met the UK workday threshold. The consequence of this three-year tail is that non- residents realising qualifying carried interest in the 2029/2030 tax year will not be subject to UK tax pro - vided that they: • become non-UK tax resident and spend fewer than 60 UK workdays in the UK in the 2026/2027 UK tax year; and • spend fewer than 60 UK workdays in the UK in the 2027/2028 and 2028/2029 UK tax years.
As alluded to above, the safe harbour only applies to “qualifying carry” and, to the extent the carry is non‑qualifying and attributable to UK workdays, that carry is fully taxable in the United Kingdom. This is somewhat ameliorated by drafting which provides that, where it is unclear if carry is qualifying or non- qualifying carry, then provided that it is reasonable to assume that the profits would be qualifying on the first workday, a day that would otherwise be treated as a UK workday will instead be treated as a non-UK workday.
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