An individual’s residence status for UK tax is determined using the statutory residence test (SRT).
The SRT flowchart overleaf is designed to assist individuals in determining their residence status. The legislation and guidance is lengthy and the flowchart and notes can only give a brief summary of the key points. In particular, the flowchart gives only an indication of residence and should not under any circumstances be relied upon to determine UK residence status.
In certain circumstances, the tax year can be split, with the individual being UK resident for part of the year and non-UK resident for the remainder. Detailed advice on split year treatment is essential, if relevant.
Determination of residence status is complex and monitoring of any change in circumstances is required on an ongoing basis. The definitions of these circumstances are listed on the right. Relevant changes in your circumstance that need to be considered as part of the SRT decision making (such as acquiring accommodation) should immediately be notified to your usual contact at Smith & Williamson if you would like us to monitor your residence status.
The SRT has only applied from the 2013/14 tax year onwards. Prior to this, UK tax residence status was determined on the basis of case law. HMRC provided guidance on an individual’s tax residence position, but there were no statutory rules. Please consult your usual contact at Smith & Williamson if you require guidance on your pre-2013/14 tax residence position.
Exceptional circumstances and Covid-19
In limited exceptional circumstances, specific days spent in the UK can be ignored when counting days for various of the tests set out in the flowchart overleaf. The exceptional circumstances concession will only apply where the person’s inability to leave the UK is out of their control and applies for a maximum of 60 days in any one tax year. HMRC has confirmed that specific circumstances relating to the Covid-19 pandemic,such as official Government advice not to travel from the UK, will be considered exceptional. However, HMRC will consider the facts and circumstances of each case individually, so advice should be sought before placing any reliance on the concession.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.