Are you tax resident in the UK?

6th November 2019

ON 6TH April 2013, the UK government implemented a legal residence test. This test determines the tax status of everyone residing in the UK permanently or for some time.

Let’s review the legislation

The test was introduced due to the already existing uncertainty related to the tax status of UK residents. The statutory residence test came into existence following HMRC guidance and tax law. The test is pretty simple to apply for, and it also produces precise cut results. However, there are some complicated cases which the legislation handles with complex rules. It is, therefore, vital for people to understand it entirely if they are looking for the correct residence status. Let’s have a necessary review of all the rules to understand this better.

The Statutory Residence Test

There are three parts to the statutory residence test:

  • Automatic residence tests
  • An automated overseas analysis
  • And a sufficient ties test

The tests are worked through systematically to determine the special residence status of a person.

What are the ‘automatic overseas tests’?

If you meet any of the conditions for automatic overseas tests, you will not be considered a resident for the taxation year, which will be regardless of whether you fulfil any of the automated UK tests or the sufficient ties test. Therefore it is essential to consider the automatic overseas test before anything else.

There are four automatic overseas tests in total. All of them will make you non-UK resident for taxation purposes. They are set out in detail in HMRC’s guide, which is available on GOV.UK. Let’s have a look at them briefly:

• You were living as a resident in the UK in at least one of the three past taxation years, and you stay for less than 16 days in the UK in the test year.
• You were living as a resident in the UK for none of the past three taxation years, and you stay for less than 46 days in the UK in the test year.
• You work abroad full time during the year and only work in the UK for no more than 30 days while living in the UK for fewer than 91 days.

It is imperative to take a look at the guide, as it sets out the conditions in full detail and gives significant explanations that will assist you with understanding whether you meet the requirements. Generally, an individual is treated as being in the UK for a day when they are present in the UK at midnight.

What are the ‘automatic UK tests’?

If you meet any of the automatic UK tests (and don’t match any of the automated overseas tests), you are naturally a resident of the UK for the taxation year.

There are four automatic UK tests in total. Once more, they are set out in detail in HMRC’s guide, which you can discover on GOV.UK. Extensively they are as per the following:

  • You live like a resident for at least 183 days or more in the UK in the taxation year.
  • You have a home in the UK, and you spend over 90 days consecutively in that home out of which at least 30 days should fall under the current taxation year. During this time, you do not have an overseas home, or if you do have a home overseas, then you spend no more than 30 days there.
  • You work full time in the UK for 365 days or more (there are likewise further conditions in connection to this test). Note that this test is for at least two taxation years.

It is essential to take a look at the guide as it sets out the conditions in full and gives significant explanations that will assist you with understanding whether you meet the requirements.

What is the ‘sufficient ties test’?

In case you don’t meet the conditions for any of the automatic overseas tests or any of the automated UK tests for a taxation year, you should go for the sufficient ties test to decide your residence tax status. The sufficient ties test considers a blend of the number of days you spend in the UK in the taxation year and the number of relations you have with the UK. You must look into a table to decide if the combination makes you a resident of the UK for that taxation year.

Which relations you need to consider, differ marginally upon whether you were a resident of the UK for at least one of the previous three taxation years. The relationships you have to consider are:

  • Family tie;
  • Accommodation tie;
  • Work tie;
  • 90-day tie;
  • Country tie (which you feel just if you were a resident in at least one of the past three taxation years).

It is critical to take a look at the guidelines on GOV. The UK, as it sets out the conditions in full details and gives a significant explanation that will assist you with understanding whether you meet the requirements.


It is important to note that the relations are looked at differently. Either as a leaver (he/she has been a resident for at least one or more of the previous three taxation years) or an arriver (has not been a resident of the UK for the last three taxation years).

The table below shows rules for arrivers:

Days spent in the UKNumber of relations that are sufficient for residence
Fewer than 46 daysAlways non-resident
46-90 daysAt least four relations
91-120 daysAt least three relations
121-182 daysAt least two relations
183 days or moreAlways resident

The table below shows rules for leavers:

Days spent in the UKNumber of relations that are sufficient for residence
16-45 daysAlways non-resident
46-90 daysAt least four relations
91-120 daysAt least three relations
121-182 daysAt least two relations
183 or moreAlways resident

Other important things to note

Applying for the SRT is not an easy task. There are several complications, including the following:

• In certain conditions, a few days of presence in the UK might be dismissed
• A taxation year might be divided into a time of non-residence and a time of residence under specific circumstances

If you were exiled from the UK, then different rules apply to you. It is better to consult the UK guidelines regarding this to be sure about where you fall in the category of residents. If you are in another nation, but you spend time in Britain every year or hold property there, you are seen as a UK resident, which would make your overall salary and profits eligible to UK annual tax on income, as well as inheritance tax and capital gains tax.

It does not only impact people who have recently left the UK. Regardless of whether you have lived abroad for a long time, you may still be required to register with HMRC and pay the annual tax.

UK tax and residence

Your residence status in the UK determines whether you are eligible to pay tax on income generated by working remotely. People who are not residents have to pay tax on their UK salary. They don’t have to pay the UK government tax on the income earned in another country.

Residents of the UK usually have to pay income tax on the total sum of their pay. It does not matter if it was earned in the UK or abroad. However, there are special rules set apart for all residents of the UK who have permanent homes elsewhere.

How To Work Out Your Residence Status:

If you need to figure out whether you are a resident of the UK, then you need to know the number of days you have spent in the UK in a taxation year. A tax year is from 6 April to 5 April of the following year.

You are automatically a UK Resident if you either:

  • Have spent a total of 183 days or more within the boundaries of the UK in a taxation year
  • Have owned a home in the UK, and it was your only home. You must have lived or rented the apartment for at least 91 days. Out of these 91 days, you must have spent several 30 days in that residence in a taxation year.

You are automatically not a resident of the UK if you either:

  • Have spent less than a total of 16 days in the United Kingdom. Which applies to 46 days if in case you have not been categorized as a resident of the UK in the past three taxation years.
  • Work in a foreign country on a full-time basis. Which applies if the average number of hours worked in a week adds up to 35. Moreover, if you have spent less than a total of 91 days in the UK and out of these, you did not spend more than 30 days working.

Still can’t figure out?

There are instances where the situation is pretty complicated. In such cases, there are two things that you can do:

  • you can either refer to the HMRC guide on the Statutory Residence Test
  • or you can get help from a professional accountant to help you figure out your residency status.

What you need to know about your residency status when you move

If you continually move in and out of the UK, then there are separate rules for you. In such a case, the taxation year is divided into two: a resident and a non-resident part. In simpler terms, it means that you only have to pay tax on your foreign income depending on the number of days you spend living in the UK. This process is more commonly known as the split-year treatment.

However, it is essential to note that for this to apply, you should not have spent time in a foreign country for at least half of the taxation year. If you have, then you are not eligible for the split tax treatment. Moreover, there are several other conditions that you need to meet to receive the dividend tax treatment. To figure out your eligibility for the split tax treatment, you would have to do the following:

  • You either thoroughly read chapter five of the guide made by HMRC on the Statutory Residence Test
  • Or you directly contact HMRC because who can guide you better in this regard.

What If your situation changes?

In case your residence status is changed, then you have the opportunity to change it going from one tax year to the next. However, you would have to keep a check of your status in case your situation changes. For instance:

  • You start spending either less or more time inside the UK
  • You either sell or buy a home in the UK market
  • You shift from one job to another
  • You either have children or if you get married or if your family shifts from the UK to somewhere else or shifts from somewhere else to the UK.

Capital Gains and Residence

The method to work out the residence status for any capital gains is precisely the same as you do it for your income, e.g. if you’re selling a second home or even shares.

All UK residents are eligible to pay tax on all their UK capital gains as well as their foreign profits. Whereas all the non-residents are obligated to pay tax only on their income as well as capital gains on the following:

  • Their UK land or property
  • Or in case they return to the UK

Imagine a scenario where you make short repeated visits

For status of residence, it doesn’t make a difference whether your visits to the UK are for the same reason, different reason or different periods. The quantity of days spent in the UK is one factor which should be considered when considering your UK home status.

What records would it be a good idea for you to keep?

If you invest a ton of energy roaming around the UK, you should keep a journal of where you are every day, regardless of whether you are in the UK at midnight every day, which will enable you to self evaluate your tax residence status? You may also need to track how long you spend working in the UK and abroad on a specific day, or the length of a trip inside the UK, for particular pieces of the SRT. There is more data on record-keeping in segment 7 of the RDR3 guidelines on GOV.UK.

Residency

You will be considered a resident of the UK for tax purposes if you’re in the country for 183 days or more for each taxation year, which is valid for the UK HMRC and the different governments around the globe. Furthermore, if you work abroad for over one year, you should not be back in the UK for over 91 days during the time abroad.

In case you are in an emergency to visit the UK, the HMRC may make an exemption, given you can prove that you surpassed the breaking points.

Domicile explained

Your domicile is made in the country where your permanent home is. The first home you live in when you are born. If your parents were not in a legal marriage at the time of your birth, then your domicile is made of the home that your mother stays. However, this varies from individual to individual and should be confirmed with HMRC. Regardless of whether you move to another country, except if you make a particular move, it is improbable that your home will change.

Remittance basis

The remittance basis is accessible if you are a tax resident, but not domiciled in the UK. Which means that you will have to pay tax on your foreign income and gains which are brought into or transferred to the UK. The salary which you earn abroad and keep abroad won’t be taxed in the UK under the remittance premise.

It is essential to claim the remittance basis every year. You may request it every time it occurs rather than from year to year. You don’t have to pay any tax on your remote payor gains if they are under £2,000 in the taxation year or if you don’t transfer it to the country.

The most effective method to claim the remittance basis

To claim the remittance basis, you would need to present a self-assessment government form by the 31 January every tax year. When you have submitted the form, you will lose your tax-free income and gains allowance. As of now, it is set from the initial £11,500 of your pay every year.

By claiming the remittance basis, you also have to pay annual charges. The number of days you have spent in the UK as a resident will determine the amount that you have to pay in yearly fees. If you have been in the UK for:

  • 7 out of 9 past taxation years – £30,000 in annual charges
  • 12 out of 14 past taxation years – £60,000 in yearly charges

Claiming the remittance basis is a complex process. However, you can always contact the HMRC or a certified accountant to help you.

More information

In the UK, your migration status and tax residence status are not legitimately related and should be considered independently. Your migration status is your privilege to enter, live and work in the nation based upon your visa or nationality. Your tax residence status must be looked upon when landing in the UK on a permit.

The Statutory Residence Test (SRT) was presented by the HMRC in 2013 to help citizens figure out their tax resident status. Which helped people calculate the taxes they have to pay in a given tax year. These tests are to be taken each tax year, and every tax year is reviewed separately.

If you are a UK resident getting ready to pay taxes, your initial status is calculated as a Tax resident. After that, you can take the tests to identify if you qualify as a tax resident or if you are eligible to have the tax year split in two, one as resident period and the other as non-resident period.

The Bottom Line

The whole process of figuring out your tax residency status is not an easy task. But for some, it is not as complicated. People who fall in the conditions laid out by the UK government can move forward with their residence status and pay the tax. However, there are still several complications that need to be addressed before anything is done.

Moreover, there are complex cases where you are just stuck and cannot say for sure in which category you fall. It is essential here to utilize the HMRC guidelines. If that does not make sense, then it is advisable to refer to a professional accountant.

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