UK tax residence

Covid-19 Effect on Residency

In light of Covid-19, HMRC has updated its guidance on how the Statutory Residence Test (SRT) will operate as a result of the pandemic.  As part of day counting to determine an individual’s residence, HMRC disregard up to 60 days of those spent in the UK as a result of exceptional circumstances.  What is considered to be exceptional will always depend on the facts and circumstances of each individual case but HMRC have confirmed that the following circumstances will be treated as exceptional if you:

• are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
• find yourself advised by official Government advice not to travel from the UK as a result of the virus
• are unable to leave the UK as a result of the closure of international borders, or
• are asked by your employer to return to the UK temporarily as a result of the virus

After the expiry of 60 days, i.e after 6^th June 2020, any further days spent in the UK because of the travel restrictions will count towards the statutory residency test  with a risk of becoming UK Resident. It is anticipated that HMRC may issue further guidance on this in due course as the rules currently only provide for 60 days to be disregarded which may not be enough given the scale of the pandemic.

Individuals present in the UK to work on COVID-19 related activities

The Chancellor has written to the chair of the Treasury Select Committee to outline temporary changes to the Statutory Residence Test (SRT) for those coming to the country to work on coronavirus (COVID-19) related activity. The proposed changes to the tax legislation will mean that that any period(s) between 1 March and 1 June 2020 spent in the UK by individuals working on coronavirus related activities will not count towards the residence tests.

Your residence status determines your continued UK tax liability. For many years, residence for tax purposes was based on HMRC guidance and case law. On 6 April 2013 a set of annual statutory tests was introduced to make establishing UK residence status more clear-cut.

The first two tests establish if you are automatically UK resident or automatically non-resident. If neither applies to you, your residence status will be determined by the ‘sufficient UK ties’ test.

WMT can help you determine your tax residency position and advise what steps you need to take to gain maximum benefit from it.

Specialist advice

Residence planning

If you want to establish non-resident status when moving abroad, but you still have ties in the UK – such as a house – we can help you plan how many days per tax year you can stay and work in the UK, and the dates of your visits. We can also advise if selling your house will help you secure non-resident status.

Income tax

If you remain a UK resident even after going abroad, you are liable for UK tax on all income you generate in the UK and abroad.

If you become non-resident, you only have to pay UK tax on UK generated income. We can advise you on your tax position and help you  make the most out of your personal allowances.

Capital gains tax

We help you identify and apply the most tax-efficient treatment to your gains whether you are a UK resident or a non-resident either temporarily or for a longer period.

Inheritance tax (IHT)

Unlike income and capital gains tax, your inheritance tax status is determined by your ‘domicile’. We help you understand what this means for you, including all the implications it has for your IHT liability, and the most appropriate ways to reduce or avoid it.

UK property

If you own property in the UK, it’s important to decide what to do with it before you move abroad.  Should you decide to let it, we can advise you on preserving your income from the property and to meet your UK tax reporting obligations.

We help you navigate the complex world of UK residence for tax purposes by advising you on your potential tax liability and ways to minimise its impact. Our proactive tax planning protects your personal and business assets, whether you are about to become non-resident or are planning your return to the UK.

To help you gain maximum benefit from your tax position, we can combine our residency advice with a review of your wider tax liabilities such as inheritance tax and capital gains tax. We can also prepare your personal tax return.

Get in touch with our tax team to find out more about how we can help you.