The purpose of the Statutory Residence Test (‘SRT’) is to determine whether or not an individual is resident for tax purposes in the UK. If an individual is tax resident in the UK it can have a major impact on their liability to UK tax.
Determining whether an individual is resident or non-resident under the SRT means firstly counting the number of days they have spent on the UK in the tax year that is being examined (tax years run from 6 April to the following 5 April).
Once this is done, the following steps are taken:
- Check whether any of the tests in the Automatic Overseas Tests are met. If any of the tests are met, the individual is not UK resident.
- If the above is not met, the criteria in the Automatic Residence Tests are checked. If any of the tests are met, the individual is UK resident
- If neither (1) nor (2) are met, it is necessary to move to the Sufficient Ties Test, which looks at the connections the individual has to the UK, in conjunction with the number of days spent in the UK. This will provide an answer as to whether the individual is resident or not.
Counting UK Days
The number of days an individual spends in the UK plays a major role in determining whether an individual is present in the UK.
A day of UK presence is a day in which the individual is in the UK at midnight.
For example, if an individual arrives in the UK on Friday morning and leaves on Sunday evening, they would have been in the UK two days, since they spent two midnights in the UK. There are exceptions to this, though they generally won’t apply for most individuals (see below).
Automatic Overseas Tests
The Automatic Overseas Tests determine whether an individual can be treating as automatically UK non-resident.
An individual meets the Automatic Overseas Test if they meet any one of the following three conditions in the relevant tax year (i.e. in the tax year they are checking their residence status for):
- Resident in the UK in at least one of the previous three tax years, and were present in the UK for less than 16 days in the relevant tax year.
- Not UK resident in any of the previous three tax years, and were present in the UK for less than 46 days in the relevant tax year.
- Works full time outside the UK for at least a complete tax year, and were present in the UK for less than 91 days in the relevant tax year. In addition, less than 31 workdays were spent in the UK in the relevant tax year.
If the individual meets one of these tests, then they do not need to look through the Automatic Residence Test or the Sufficient Ties Test. They are automatically non-resident.
If the individual does not meet the above, but were expecting that they would be non-resident, they may still achieve this under the Sufficient Ties Test. However, they first need to work through the Automatic Residence Test.
Automatic Residence Tests
The Automatic Residence Tests determine whether an individual can be treating as automatically UK resident.
An individual meets this Test if they meet any one of the following three conditions in the relevant tax year (i.e. in the tax year they are checking their residence status for):
- Present in the UK for 183 days or more in the relevant tax year
- Have a home in the UK for over 90 days and are present in it for at least 30 days in the relevant tax year. The definition of home is drawn widely, and can even include a hotel room. An individual may be able to escape this condition if they have an overseas home in which they spent 30 days or more.
- Carries out full time work in the UK over a 365 day period, of which all or part falls within the tax year, and 75% of the days in that period are days in which more than three hours of work are done in the UK, and at least one of those days fall in the current tax year.
If the individual meets one of these tests, then they do not need to look through the Sufficient Ties Test. They are automatically UK resident.
It may be that an individual does not meet any of the Automatic Overseas Tests for a particular tax year, and that this is because the individual left the UK part-way through the tax year. In that case, it is possible (subject to fulfilling criteria) to claim Split Year Treatment, and ‘split’ the tax year into a period of residence and non-residence.
Sufficient Ties Test
If neither the Automatic Overseas Test nor the Automatic Residence Test is met, the individual will need to determine their residence status on the basis of the Sufficient Ties Test. This determines an individual’s residence position on the basis of two variables (1) days spent in the UK; (2) ties to the UK (e.g. having a family in the UK). For an interactive calculator, see Sufficient Ties Test: Calculator.
First, determine the number of ties to the UK in the tax year:
This tie applies where the individual has a UK resident spouse (or civil partner), or a 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 where 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. IMPORTANT: This tie only needs to be considered where the individual is a ‘leaver’. A leaver is an individual who has been UK resident in at least one of the three prior tax years.
The test works on the basis that the more ties that an individual has in the UK, the fewer the number of UK days before becoming resident. It also makes a difference whether the individuals was UK resident in the most recent three tax years or not.
If UK resident in at least one of the three previous tax years:
|Days spent in the UK to be classified as UK resident||UK ties|
|Fewer than 16 days||Always non-resident|
|16 – 45||4 or more|
|46 – 90||3 or more|
|91 – 120||2 or more|
|Over 120||1 or more|
Simple Example: an individual has 95 days UK days of presence in the tax year, and has two ties to the UK. That individual therefore = UK resident.
If not UK resident in any of the three previous tax years:
|Days spent in the UK to be classified as resident||UK ties|
|Fewer than 46 days||Always non-resident|
|46 – 90||All 4|
|91-120||3 or more|
|Over 120||2 or more|
Simple Example: an individual has 50 days of UK presence in the tax year, and has four ties to the UK. That individual therefore = UK resident.
Frequently Asked Questions
I have examined the SRT and it shows that I am resident for tax purposes in the UK. However, I am also resident for tax purposes in another country.
If there is a tax treaty between the UK and the other country it is possible to us the treaty to determine the ultimate country of tax residence. Please see here for more details.
I have examined the SRT and it shows that I am not resident for tax purposes in the UK. But I do not believe I’m resident in any other country. Is that possible?
Although rare, some individuals may find that because of their movement habits in a tax year, they are not tax resident in any country.
I came to the UK part way through the tax year. Will I be subject to UK tax for the whole tax year?
Often it is possible to split the tax year into a resident and non-resident period, using split year tax treatment. Please see here.
Definitions for the Purposes of the SRT
Day of UK presence: this will be a day in which an individual is in the UK at midnight. If an individual arrives in the UK on Friday morning and leaves on Sunday evening, they would have been in the UK two days, since they spent two midnights in the UK. There are two exceptions (1) where an individual is only in transit through the UK: arriving on one day, and leaving the next, and without engaging in activities unrelated to their passage through the UK; (2) where the individual would not have been present in the UK had it not been for exceptional circumstances which are beyond their control. In addition, where an individual has been UK resident in one of the previous 3 tax years, and has 3 or more ties to the UK, it is necessary to add the following to the total days of UK presence: any days where they haven’t been present at midnight and where that figure exceeds 30 days
Working day: a day in which more than 3 hours of work are performed.
Full time work: an average of 35 hours per week. Adjustments may be made for gaps between employments, holidays, and sick leave.
Accommodation: this is defined broadly, and in certain situations can include hotel rooms.
Home: a home can include a building as well as a vessel or vehicle
Adam and his wife left the UK a 10 years ago, to live in Germany. His wife moved back to the UK two years ago, to look after her elderly parents. Adam has continued to live in Germany, where he is employed. Adam has made more visits to the UK in the last two years, on account of his wife now living there. This has prompted him to consider whether he may be UK resident for tax purposes and, if he is, what tax year he became resident.
For 19/20 and 20/21, Adam had the following ties to the UK:
- UK resident family (spouse resident in the UK)
- Substantive UK employment (Adam had over 40 UK workdays)
- Accessible UK accommodation (his wife stayed at her parents home, where he often stayed too on his visits)
Adam spent 80 days in the UK. As above he had three ties to the UK.
= under the SRT he was not UK resident.
Adam spent 100 days in the UK. As above, he had three ties to the UK.
= under the SRT he would be UK resident for this tax year.
Comments: Although Adam is UK resident in the UK under the SRT it is likely that he is still resident for German tax purposes. This could mean that he is liable to tax on the same income in both countries. Consequently, it will likely be necessary to examine the Double Taxation Agreement between the two countries (see here). It is likely that as a result of having a permanent home in Germany, Adam’s ultimate tax residence will be in Germany, though this aspect will need to be properly checked. Note that it will still require Adam to file a UK tax return that discloses this position, and shows the tax relief that he will be able to claim as a result of utilising the double taxation agreement.