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COMMENTARY: Residence in the UK for tax purposes

Druces IWF – International Wealth and Fiduciary

How do you become tax resident in the UK?

Residence is a concept concerned with a person’s physical presence in the UK. The rules for determining a person’s UK residence are governed by the Statutory Test for Residence.

Once an individual is considered resident in the UK, they are taxable for income tax and capital gains tax purposes on their worldwide income and gains save for the use of the remittance basis of taxation if they are non-UK domiciled.

An individual is automatically resident in the UK under any of the following tests:

  • 183-day test – whereby an individual spends 183 days or more of the tax year in the UK.
  • UK home test – an individual who has a UK home in which he/she is present on at least 30 days a year in the UK, and is present in the UK for a period of at least 91 consecutive days, does not have a home overseas (or has one in which he/she is present for 29 days or less in that period).
  • Full time work in the UK test – an individual who works full time in the UK for the tax year and at least 75% of those working days are in the UK.

Alternatively, an individual may be automatically non-resident in the UK where:

  • 16-day test – an individual who was UK tax resident in one of the three preceding tax years and spends less than 16 days in the UK in the tax year under assessment.
  • 46-day test – an individual who is not UK resident in one of the three preceding tax years and spends less than 46 days in the UK in the tax year under assessment.
  • Full time work overseas test – an individual who works full time overseas for the tax year and works in the UK for less than 31 days in the year and spends less than 91 days of the year in the UK. 

If an individual’s residence has not been determined by any of the automatic UK tests, the individual needs to consider whether they have sufficient ties to the UK.

The number of days that would make an individual a UK resident depends on whether they were UK resident in any of the previous three tax years and how many ties to the UK they have in the tax year in question.

The ties are:

  • Accommodation;
  • Dependant family; 
  • Work;
  • More than 90 days of presence in either of the preceding two tax years; and
  • More days of presence in the UK than any other country.

We often advise clients to manage their days carefully and normally recommend that they plan to spend a few days below the figure that would make them UK resident (to allow for any unforeseen circumstances that may arise).

There are a number of technical rules that may apply to certain classes of individuals such as children at boarding school or how the above ties apply such as dependent family arriving in the same year, but these are beyond the scope of this article.

Further information

We hope that this guidance is useful. If you do have further questions or require advice on this topic, please contact Robert Macro or Paul Levy from our international wealth and fiduciary team.

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