A Guide to Determining UK Tax Residency
Determining your tax residency status in the UK is a crucial step in understanding your tax responsibilities. Since 6th April 2013, the UK tax authorities have implemented the Statutory Residency Test (SRT) to ascertain whether individuals are residents or non-residents for tax purposes. Here, we break down the three main types of tests under the SRT: Automatic Overseas Tests, Automatic UK Tests, and the Sufficient Ties Test.
The Statutory Residency Test (SRT)
The UK tax year runs from 6th April to 5th April of the following year. A UK resident day is one where an individual is physically present in the UK at midnight. For instance, if an individual arrives in the UK at 10 am on Day 1 and departs at 10 pm on Day 2, they will have spent one resident day in the UK.
When considering UK residency, the SRT should be conducted in the following order:
1st Automatic UK Test
1st Automatic Overseas Test
2nd Automatic Overseas Test
3rd Automatic Overseas Test
2nd Automatic UK Test
3rd Automatic UK Test
Sufficient Ties Test
Automatic Overseas Tests
The three automatic overseas tests determine if an individual is automatically considered non-resident in the UK for the tax year. To qualify, the individual must meet one of the following criteria:
1st Automatic Overseas Test: The individual was UK resident for at least one of the previous three tax years and spends fewer than 16 days in the UK in the current tax year.
2nd Automatic Overseas Test: The individual was non-resident in all three previous tax years and spends fewer than 46 days in the UK in the current tax year.
3rd Automatic Overseas Test: The individual works full-time abroad, spends fewer than 91 days in the UK, and fewer than 31 of those days working in the UK in the current tax year.
Automatic UK Tests
Similarly, the three automatic UK tests determine if an individual is automatically considered a resident in the UK for the tax year. To qualify, the individual must meet one of the following criteria:
1st Automatic UK Test: The individual spends at least 183 days in the UK during the tax year.
2nd Automatic UK Test: The individual’s only home is in the UK, and they have visited it for 30 or more days in the tax year. Alternatively, they have a UK home and an overseas home but visit the overseas home for fewer than 30 days.
3rd Automatic UK Test: The individual works full-time in the UK, defined as working more than 75% of their working days without significant breaks.
The Sufficient Ties Test
If an individual's residency cannot be determined by the automatic tests, the Sufficient Ties Test comes into play. This test examines the individual's connections to the UK and the number of days spent in the UK.
The connecting ties are:
Family Tie: Having a spouse, civil partner, or minor children who are UK residents.
Accommodation Tie: Having available accommodation in the UK for a continuous period of 91 days or more and spending at least one night there during the tax year.
Work Tie: Working in the UK for more than three hours a day for at least 40 days in the tax year.
90 Day Tie: Being present in the UK for more than 90 days in either or both of the previous two tax years.
Country Tie: Spending more days in the UK than in any other country, applicable only if the individual was a UK resident in one of the previous three tax years.
Once the number of ties applicable for a tax year has been established, the next step is to combine this with the review of the number of days spent in the UK. The more ties an individual has with the UK, the fewer days they can spend in the UK without becoming tax resident.
The tables below shows the individuals tax residency position based on the number of ties and number of resident days spent in the UK.
Resident in the UK for at least 1 of 3 Prior Tax Years
| Days in the UK in a Tax Year | 0 Ties | 1 Tie | 2 Ties | 3 Ties | ≥ 4 Ties |
|---|---|---|---|---|---|
| Less than 16 Days | Non-Resident | Non-Resident | Non-Resident | Non-Resident | Non-Resident |
| 16 to 45 Days | Non-Resident | Non-Resident | Non-Resident | Non-Resident | Resident |
| 46 to 90 Days | Non-Resident | Non-Resident | Non-Resident | Resident | Resident |
| 91 to 120 Days | Non-Resident | Non-Resident | Resident | Resident | Resident |
| 121 to 182 Days | Non-Resident | Resident | Resident | Resident | Resident |
| Greater than 182 Days | Resident | Resident | Resident | Resident | Resident |
Non-Resident in the UK for All 3 Prior Tax Years
| Days in the UK in a Tax Year | 0-1 Ties | 2 Ties | 3 Ties | ≥ 4 Ties |
|---|---|---|---|---|
| Less than 16 Days | Non-Resident | Non-Resident | Non-Resident | Non-Resident |
| 16 to 45 Days | Non-Resident | Non-Resident | Non-Resident | Non-Resident |
| 46 to 90 Days | Non-Resident | Non-Resident | Non-Resident | Resident |
| 91 to 120 Days | Non-Resident | Non-Resident | Resident | Resident |
| 121 to 182 Days | Non-Resident | Resident | Resident | Resident |
| Greater than 182 Days | Resident | Resident | Resident | Resident |
Understanding your tax residency status is essential for ensuring compliance and efficiently planning your tax position.
If you need assistance navigating the complexities of the UK tax residency, our team at The Tax Whisperers Limited is here to help.
Contact us for advice tailored to your specific circumstances.