04 August 2021
How do I know if I am a UK resident for tax purposes?
Services:
International Tax Planning
UK Residency and Tax
Here in the UK, the country you live in may not actually be your residence for tax purposes!
If you normally live between the UK and another country, or are living primarily overseas but have UK income and make regular visits, you will need to consider your tax residency each year to ensure you are reporting the correct income to HMRC.
We do this in the UK by following a number of prescribed tests called the Statutory Residency Test (SRT) which will tell you if you are a UK tax resident or not.
Why does this matter?
If the SRT determines that you are a resident in the UK, you will be taxable in the UK on both your UK and overseas income in the tax year.
However, if you are non-UK resident, you only need to pay tax on your UK income and perhaps not even all of it!
In general, if you visit the UK for less than 16 days each tax year (or 46 days where you have lived overseas for more than 3 years), then you will not be tax resident here. However, the SRT can get more complicated when UK visits exceed these number of days or where you have moved to or from the UK in the year.
How has this been affected by the Coronavirus Pandemic?
As you can imagine, the 2020/21 tax year will be an anomaly for a number of individuals who may have spent significantly more time in the UK than initially intended due to travel restrictions imposed by the UK government as a response to the coronavirus pandemic.
HMRC have therefore released additional guidance detailing when a day spent in the UK can be ignored for the purposes of the residency test and other necessary modifications, which adds a further layer of complication to the residency test.
More information on the residency test can be found here: https://www.gov.uk/tax-foreign-income/residence
Haines Watts
We work with a wide range of businesses and individuals both in the UK and overseas.
If you are concerned that you may be affected by the above and would like us to review your residency position for the current or previous tax years, please contact us.
