Statutory residence rules came into operation on 6 April 2013, providing a structured approach to the question of UK tax residence.
HMRC have published various interpretations of the legislation in their manuals, tax return supporting notes and separate guidance notes. Here is our overview of the statutory residence rules. There are various and more detailed tests which apply in specific circumstances.
Residency tests are in three parts
Automatic UK tests; the automatic overseas tests and the sufficient ties test. The basic rule is that you are UK tax resident if you meet at least one of the automatic UK tests and none of the automatic overseas tests, or you meet the sufficient ties test. As a starting point, you will always be tax resident in the UK if you spend 183 days or more in the UK in the tax year in question.
Automatic UK tests
- Spend at least 183 days or more in a tax year in the UK;
- Have only one home (or have two or more homes) and all of which are in the UK;
- Carry out full-time work in the UK.
Where the individual has both UK and overseas homes, the rules are complex and take into consideration not only how long the homes are held for, but also the duration of time spent in them. In broad terms, you can disregard any place where you are present for fewer than 30 separate days in the tax year.
There are detailed rules on what counts as sufficient working hours in the UK, looking at periods of 365 days and requiring that you do not have significant breaks from UK work.
Sufficient ties test
Broadly, this applies where the automatic tests above are not conclusive and therefore, your circumstances are complex. This test is on a sliding scale – the more days you spend in the UK, the fewer ties you need in order to be UK tax resident.
The ties are:
Family tie – your spouse or partner is UK tax resident; or your children under 18 are UK tax resident. There are various exceptions for those children who visit the UK for the purposes of full-time education, or where you see them for fewer than 61 days and additional rules for the year in which the child turns 18.
Accommodation tie – you have accommodation that is available to you for a continuous period of at least 91 days and you spend at least one night there in the tax year. Also where you spend 16 or more nights in the home of a close relative.
Work tie – you do at least 40 days work in the UK in the tax year, a working day is one where you work for more than 3 hours.
90 day tie – you spent 90 days or more in the UK in either of the previous two tax years.
Country tie – you spend more days in the UK in the tax year than in any other single country – this tie is relevant only if you were UK resident in one or more of the 3 previous tax years.
Automatic overseas tests
- Resident in the UK in one or more of the previous three tax years and present in the UK for fewer than 16 days in the current tax year.
- Not resident in the UK in all of the previous three tax years and present in the UK for fewer than 46 days in the current tax year.
- Work full-time overseas (with no significant breaks). This is provided you are present in the UK for fewer than 91 days in the tax year and no more than 30 days are spent working in the UK in the tax year.
Note: A working day is a day in which more than three hours has been spent working. There are additional sub-tests to determine whether sufficient hours are spent working overseas. If you are concerned this is the case, we can advise you. Frequent short-stay visitors should be especially careful with these rules. Where an individual dies during a tax year further details can be supplied.
Days spent in the UK
It’s worth noting that you’re considered to have spent a day in the UK if you’re here at the end of the day (i.e. midnight). However, there are other rules which apply in some circumstances including; a rule which counts certain days as UK days even if you are not in the UK at midnight, transit day rules and time spent in the UK due to exceptional circumstances.
Other countries have their own rules for determining residence for tax purposes. It’s possible that you may be resident in the UK whilst also resident in another country under their tax rules. This is dual tax residence. In most cases, if you are dual resident there will be a double taxation agreement between the UK and that other country, which will determine your residency status and provide guidance as to which country will have the primary taxing rights in respect of different classes of income and gains.
Please note that this Tax facts page is for general information purposes only. You should seek professional advice before action is either taken or refrained from as a result of information contained herein. Content last updated: 29/6/18.
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