Individuals can check whether they meet the criteria to be non-resident by examining the ‘Statutory Residence Test’. To become non-resident under the Statutory Residence Test, the individual must either:
- Meet one of the Automatic Overseas Tests. This would involve either spending very little time in the UK in a tax year, or else by having left the UK to take up full-time work overseas. Meeting one of the Automatic Overseas Tests is the most straightforward way in which to achieve non-residence.
- Or, if they can’t meet one of Automatic Overseas Tests, they would need to ensure that they have a permanent home overseas and not one in the UK (in order to avoid meeting the Automatic Residence Test). In addition, they would need to ensure that they are considered non-resident under the Sufficient Ties Test (which may mean reducing time spent in the UK and/or reducing ties the UK).
Automatic Overseas Tests
The Automatic Overseas Tests place emphasis on the amount of time someone spends visiting UK after they leave.
Under the Automatic Overseas Tests, a previously resident individual can be classified as non-resident in a tax year if they meet one of the following criteria:
- If an individual has been UK resident in any of the three previous tax years, they will need to spend less than 16 days in the UK in a tax year in order to be non-resident for that tax year. Note that if the individual was not resident in any of the previous three tax years then they need to spend less than 46 days, rather than 16 days.
- If an individual has left the UK to take up full-time overseas work, the they will be non-resident as long as they are present in the UK for less than 91 days and spend less than 31 days working in the UK. (Detailed guidance is provided on what meets the criteria of full-time overseas work can be found here).
If none of the Automatic Overseas Tests are met, individuals who wish to have non-resident status should aim to not meet the Automatic Residence Tests. If they do not meet the Automatic Residence Test, then they are subject to assessing their residence situation under the Sufficient Ties Test, where there is further scope to meet the conditions for non-residence.
Automatic Residence Tests
As discussed, meeting any one of the Automatic Residence Tests will mean the individual is automatically UK resident, in which case it is not necessary to check the Sufficient Ties Test. Therefore an individual wishing to be non-resident should ensure they do not meet one of these tests.
Out of the various Automatic Residence Tests (which are discussed in more detail here), there is one that it is importnant to bear in mind for the purpose of achieving non-residence: if the individual has a home in the UK in which they stay for 30 days or more in the tax year, and they do not have a permanent home overseas, then they will be automatically resident.
Therefore if the individual has a home in the UK, it would be helpful to set up a permanent home overseas for themselves after leaving the UK. If they have a home in the UK they should consider letting it out The permanent home created overseas doesn’t need to be one which they own, since a leased property overseas can still count as a permanent home.
Sufficient Ties Test
If neither the Automatic Overseas Tests, nor the Automatic Residence Tests, are met, it is still possible to become non-resident under the SRT by reference to two variables: (1) days spent in the UK; (2) ties to the UK.
Put simply, the less time an individual spends in the UK, and the less ties the individual has to the UK, the more likely they are to meet the criteria to be non-resident under the Sufficient Ties Test.
For an individual leaving the UK the following ties are relevant:
This tie applies where the individual has a UK resident spouse (or civil partner), or a resident minor child. However, a child under 18 may not count as a tie if the child is solely in the UK for their education and that child spends no more than 20 days in the UK outside of school term time.
This tie applies where the individual has a place to live in the UK which is available for a continuous period of over 90 days in the relevant year, and the individual spent at least one night there in the year.
This tie applies where the individual has 40 or more UK workdays in the relevant year. A day of work is a day in which more than three hours of work is done.
This tie applies wher the individual has been present in the UK for over 90 days in one of the previous two tax years.
This tie applies where the individual has spent more days in the UK in the relevant tax year than any other single country
Once the individual has checked the number of ties to the UK they had in the tax year they can see whether they are resident based on the number of days spent in the UK:
|Ties to the UK||Maximum number of days before becoming resident|
|If 4 or more ties to the UK||No more than 15 days|
|If 3 or more ties to the UK||No more than 45 days|
|If 2 or more ties to the UK||No more than 90 days|
|If 1 or more ties to the UK||No more than 120 days|
|If no ties to the UK||No more than 182 days|
John left the UK in 2019/20. He doesn’t meet the Automatic Overseas Tests, nor the Automatic Residence tests. Therefore he examines the Sufficient Ties Test. He has 2 ties to the UK. Therefore he knows that if he will be non-resident as long as he doesn’t spend more than 90 days in the UK in each tax year.
Individuals who don’t meet the conditions for non-residence under the SRT
There will be individuals who, for various reasons, may still be regarded as resident in the UK under the SRT, but who are resident in another country and believe that it is in that other country that they are ‘more’ resident.
This is where tax treaties can help. The tax treaty between the UK and the other country can be used to determine the jurisdiction in which the individual is ultimately resident, sometimes referred to as ‘treaty residence’. Even though the individual may not meet the criteia for non-residence under the SRT, they may still be able to establish that they are non-resident through the use of a tax treaty between the UK and the other country in which they are tax resident. See Double Tax Agreements.
Individuals leaving the UK part-way through a tax year
Finally, as most individuals will be leaving part-way through a tax year, it may be worthwhile for them to consider whether they meet one of the conditions (known as ‘cases’) for Split Year Treatment, in the year in which they leave. This will allow them to ‘split’ the tax year into a resident part and a non-resident part.