Press Room

6 Nov 2019

The UK Statutory Residency Test

Like most countries, the UK seeks to tax its residents on their worldwide income and non-residents on their UK source income. This makes the question of whether you are resident in the UK, or not, one of vital importance.

Until the recent past, the UK still based their decision of whether an individual was tax resident on common and case law, with the principles dating back to the days of sailing ships. Why worry about the day of departure and arrival, when anyone leaving the UK was likely to be gone for months as they sailed slowly to their destination?

This caused a considerable amount of uncertainty, not helped by the HMRC “guidance” on the subject (ask Mr Gaines-Cooper what he thinks about guidance that cannot be relied upon!). To provide certainty, and definitely in a case of be careful what you wish for, the Statutory Residence Test was introduced from 6 April 2013.

The test does provide certainty, but at the cost of being hideously complex. It can require levels of record keeping not usually seen outside of a medical trial and take years off your life, as you try to follow it all through. In the test, a friend’s couch could count as a permanent home, but a house you own and use regularly (say, as a holiday home) may not.

A day is only a day in the UK if you are still here at midnight, unless it is a deemed day, when any time in the UK will count. Also, what is a day? A work day is different to a day in the UK!

If you are leaving the UK (or for that matter thinking of relocating here – and many seem to be doing so), a detailed analysis of the rules is absolutely necessary.

Julian Nelberg

Julian is Head of the Private Client group at Andersen LLP. His clients include international high net worth individuals, senior executives, trusts and companies.

Email: Julian Nelberg