Statutory Residence Test – your tax status

Do you spend time outside of the UK?

If you are based abroad and visit the UK regularly, or are based in the UK but frequently travel abroad, have you considered your residence status for tax?

The UK has a Statutory Residence Test that determines your residence position for tax purposes for the whole of the UK tax year.  If the test determines you are UK resident you are liable to UK tax on your worldwide income and gains.  If you are non UK resident you are only liable to tax on your UK sourced income. Therefore, your UK residence status can have a major impact on the tax you pay in the UK.

If you are domiciled outside the UK i.e. you were born outside of the UK or you expect to return to your home Country at some point but are UK resident, you can choose to only pay tax on your UK sourced income and your foreign income and gains remitted to the UK, rather than your worldwide income and gains. This is called the ‘remittance basis’ of taxation.  If you do choose this route it’s important to segregate your foreign income and gains in to separate bank accounts so you can easily identify the different sources of funds you remit, this ensures the sources which result in the lower tax liability are remitted first.  Otherwise you could potentially remit from a ‘mixed fund’, in this case HMRC would deem the source of income which results in the highest tax to be remitted in priority of the other funds.  You may have to pay an annual charge for claiming the remittance basis, the charge is either £30,000 or £60,000 and depends on how long you have been resident in the UK.  This is a complex area and professional advice should be sought if you are non UK domiciled. 

The Statutory Residence Test (SRT)

There are three tests to the SRT to determine your residence status:

1. Automatic Overseas Test

You will be considered non UK resident if you meet any of the following conditions:

  • You are present in the UK for less than 46 days in the current tax year and have not been UK resident during the previous three years; or
  • You are present in the UK for less than 16 days and have been UK resident in at least 1 of the last 3 years; or
  • You work abroad full time and have spent less than 91 days in the UK, with less than 31 days working in the UK.  If you think this test applies to you, advice should be sought to ensure you meet the full conditions.

2. Automatic UK Test

You will be considered UK resident if you meet any of the following conditions:

  • You are present in the UK for 183 days or more; or
  • You have a ‘home’ in the UK; or
  • You work in the UK full time for at least 365 days without a significant break in the UK.

3. Sufficient Ties Test

If you have not met any of the automatic tests then you need to consider your time spent in the UK as well as your ties to the UK.  The ties are as follows:

  • Family tie

You have a spouse, civil partner or minor child resident in the UK.

  • Accommodation tie

You have a place available to you to live in the UK for at least 91 days and you spend at least one night there in the year. You do not need to own the property.

  • Work tie

Your work in the UK for at least 40 days in the year.  A workday is any day you work for at least 3 hours.

  • 90 day tie

If you spend at least 90 days in the UK in either of the previous two tax years.

  • Country tie

If you spend more days in the UK during the year than in any other Country.  This tie only applies to you if you have been UK resident in 1 or more of the previous 3 years.

Depending on if you are coming or leaving the UK, the number of days you are present at midnight, and your ties to the UK, determine your residence position.

If you are arriving in the UK the number of ties to determine your residence position are shown below:

Days spent in the UKNumber of Ties
01234
Less than 46Not resident under the automatic overseas test
46-90Non-residentNon-resident Non-resident Non-resident Resident
91-120Non-residentNon-residentNon-resident Resident Resident
121-182Non-resident Non-residentResident Resident Resident
183 or moreResident under automatic UK test

If you are leaving the UK the number of ties to determine your residence position are shown below:

Days spent in the UKNumber of Ties
012345
Less than 16Not resident under the automatic overseas test
16-45Non-residentNon-resident Non-resident Non-resident ResidentResident
46-90Non-residentNon-residentNon-resident Resident Resident Resident
91-120Non-resident Non-residentResident Resident Resident Resident
121-182Non-residentResidentResident Resident Resident Resident
183 or moreResident under automatic UK test

As you can see, the more ties you have to the UK mean the fewer days you can spend here without becoming UK resident.

It’s important to note that your residence status can change each year so it’s important to check this annually.

As the SRT determine your residence position for the complete UK tax year (6 April – 5 April) you may qualify to split your tax year in to ‘UK’ and ‘foreign’ parts, essentially changing the date you start or cease to become resident from the normal tax year dates.  There are complex rules regarding claiming split year treatment and we can provide further advice on this to you.

This is a brief overview of the SRT and there are complex rules for the tests listed above.  If you would like professional advice on your residence position please do not hesitate to contact Laura Dickson at laura.dickson@taitwalker.co.uk.