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Understanding the statutory residence test

 

Understanding the statutory residence test

At the start of the 2013/14 tax year, the government introduced the statutory residence test (SRT) to determine the residential status of people who generate income in the UK. The SRT is designed to make it easier for the government to identify UK residents and to make it simpler for individuals to determine whether they need to pay tax to HMRC.

How does the SRT work?

The SRT consists of 3 separate tests: the automatic overseas test, the automatic UK test and the sufficient ties test. Individuals must pass either of the sufficient ties or automatic UK tests, and not meet the conditions of the automatic overseas test in order to be considered a resident of the UK.

The automatic overseas tests

The automatic overseas tests consist of 4 conditions. You will not be classified as a UK resident if you meet any of the following:

 

  • you lived in the UK for 1 or more of the past 3 tax years and spent less than 16 days in the UK during the current tax year

  • you did not reside in the UK during the past 3 tax years and have spent less than 46 days in the UK during the current tax year

  • you have a full-time job overseas and spent less than 91 days in the UK during the current tax year; you must spend 31 of those days working for 3 hours or more.

The automatic UK tests

Should you not meet any of the automatic overseas tests, the automatic UK tests will be applied. You will considered a UK resident if:

 

  • you spend 183 days or more in the UK in a given tax year

  • you spend more than 90 days in a UK-based home at which you are resident for at least 30 days in a tax year

  • you have spent a minimum of 12 months working full-time in the UK.

     

The sufficient ties tests

Your ties to the UK will be considered if the automatic tests fail to establish whether you’re a UK resident. There are 5 factors that are used to determine your ties to the UK:

 

  • Family members: your spouse, civil partner or children under 18 live in the UK.

  • Work: you work for more than 3 hours a day on 40 or more days during the tax year.

  • Accommodation: you have a home in the UK for 91 or more continuous days; you spend 1 night or more in the home during the tax year, or a minimum of 16 nights are spent in the home of a close relative.

  • The 90 day rule: you were in the UK for 90 days or more in either of the past 2 tax years.

  • Country: you spend more of your time in the UK than any other country.

Contact us

You should seek professional help if you are unsure whether you a UK resident.

Get in touch with our team by calling 01628 631 056 or emailing geoffk@knightandcompany.co.uk for assistance.