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The Statutory Residence Test determines an individual’s residency status in the UK for tax purposes during a tax year.
Your UK residence status decides if you need to pay UK tax on income earned from abroad.
- If you’re not a UK resident, you only pay UK tax on income earned in the UK. You don’t have to pay tax on foreign earnings.
- If you’re a UK resident, you usually pay UK tax on all income, whether from the UK or another country. However, special tax rules apply if your permanent home (“domicile”) is outside the UK.
The Statutory Residence Test consists of three tests that apply in the following order:
Automatic Overseas Tests
If you meet ANY of these tests, you will be a non-resident in the UK in a tax year. The three main tests are:
- Sixteen days test: you spend less than sixteen days in the UK during a tax year and were a UK resident in one or more of the previous three tax years.
- Forty-six days test: you spend less than forty-six days in the UK during a tax year and were NOT a UK resident in ANY of the previous three tax years.
- Full-time overseas work: you work sufficient hours overseas and only visit or work in the UK on a limited basis.
Automatic UK Tests
If none of the above tests are met, you need to consider the three automatic UK tests. If you meet ANY of the following three tests, you will be automatically resident in the UK in the tax year:
- One hundred eighty-three days test: if you spend at least 183 days in the UK, you will be a UK resident in the tax year (in practice, you should apply this as the first test. If you meet this test, you do not need to consider other tests).
- Full-time UK work: The individual works full-time in the UK during ANY 12 months, part of which should fall in the current tax year (There should not be any significant breaks).
- A home in the UK test: you have a UK home, which is:
-
- Available for 91 consecutive days or more (30 days must fall in the current tax year)
- The home is actually used for at least 30 days during the tax year.
- There is no overseas home; if there is one, you spend less than 30 days in an overseas home during a tax year.
Sufficient Ties Test
Suppose you still can’t determine the tax residence status using the above two tests. In that case, you need to apply the sufficient ties test, which considers the number of ties with the UK, residence status in the previous three tax years and the number of days spent in the UK during the tax year.
| Number of ties | Number of days that an arriver can spend in the UK without becoming a UK resident (Non-UK resident in all three prior years) | Number of days that a leaver can spend in the UK without becoming a UK resident (UK resident in at least one of the three prior years) |
| 1 | 182 days | 120 days |
| 2 | 120 days | 90 days |
| 3 | 90 days | 45 days |
| 4 | 45 days | 15 days |
| 5 | N/A | 15 days |
Types of Ties:
- Family Tie: you have a spouse, civil partner, cohabiting partner, or minor child who is a UK resident except for a minor child who is a UK resident due to full-time education and who spends limited time in the UK outside their term time.
- Accommodation Tie: you have accommodation in the UK available for 91 continuous days in a tax year, and you spend at least one night there. You can ignore accommodation at the home of a close relative if you spend less than 16 nights during the tax year.
- Work Tie: you work in the UK for at least four hours per day for at least 40 days. This would also include time spent during work-related travel and training.
- 90-day Tie: You spent at least ninety days in one of the previous two tax years.
- Country Tie: You were a UK resident in one of the previous three tax years, and UK is the country in which you spend the greatest number of days in the tax year (a day is counted when you are present in the UK at midnight except during transiting through the UK). You also need to consider a deeming rule, which applies when you were a UK resident in one of the previous tax years and have at least three UK ties for the current tax year. This deeming rule restricts the number of departure days that you can exclude to a maximum of 30 days.
Split Year Treatment
Generally speaking, a person is a UK resident for the whole tax year, or they are not. However, split-year treatment may apply in cases where a person enters or exits the UK part-way through a tax year.
When split-year treatment applies, a portion of the year is referred to as an “overseas part”, and the person is taxed as a non-UK resident during that time. If split-year treatment is applicable, several conditions must be met to establish the length of the relevant periods. You should take care before relying on split-year treatment because it does not apply to all income/capital gains tax provisions.
Definitions
- Days: You can exclude a maximum of 60 days in the UK during a tax year if you can’t travel due to exceptional circumstances such as severe illness or travel restrictions, such as during COVID-19.
- Full-time work in the UK or overseas for automatic residence: you work 35 hours a week on average for 12 months without any significant break. You are deemed to be in full-time overseas work if you spend less than 91 days in the UK and work for more than four hours a day in the UK for less than 31 days.
- Home: can be a building, part of a building, a vehicle, or vessel or structure of any kind that has a sufficient degree of permanency or stability to be counted as a home
- Accommodation: this can be a home, a holiday home, or a temporary retreat. The accommodation is considered available for the accommodation tie for any gap of fewer than 16 days in the property’s availability. For instance, an individual returning to a hotel or temporary accommodation could fall under this category.
Our advice on the Statutory Residence Test
While the SRT (Sufficient Ties Test) can give a clear answer regarding UK tax residence, it’s essential to understand that the SRT rules are complex and include specific definitions. Therefore, it’s crucial for individuals to carefully review the detailed rules based on their specific situation and seek professional advice to ensure they make the right decisions. Our specialist accountants are here to assist you in navigating through these complex rules and definitions, enabling you to determine your tax residency status in the UK. If you want expert advice on the SRT, please contact Peer Accountants at 0121 369 0695 or email us at info@peeraccountants.co.uk. We will guide and support you at every step of the way.