Here are the general rules for determining non-resident status in the UK:
• Days spent in the UK: An individual will be considered non-resident if they spend less than 16 days in the UK in a tax year (or 46 days if they have not been classed UK resident for the three previous tax years).
• Working in the UK: An individual will be considered non-resident if they work abroad full-time (ie at least 35 hours in an average week) and were in the UK for less than 91 days and no more than 30 of these were spent working in the UK.
• Permanent home in the UK: An individual will be considered non-resident if they do not have a permanent home in the UK.
This means that they do not have a place where they live permanently, and they do not intend to return to the UK permanently.
Exceptions to the rules
There are some exceptions to the rules for determining non-resident status. For example, an individual may still be considered non-resident even if they spend more than the maximum number of days in the UK if they can demonstrate that they have strong ties to another country, such as a spouse, children, or property.
Tax implications of non-resident status
If an individual is considered non-resident for UK tax purposes, they will only be liable to pay UK tax on income that is sourced from the UK. This means that they will not have to pay UK tax on income that is earned overseas.
Determining an individual's UK tax residency status depends on two primary factors: days spent in the UK and ties to the UK.
Days Spent in the UK
The number of days an individual spends in the UK during a tax year significantly impacts their tax residency status. Generally, an individual is considered UK resident if they spend 183 days or more in the UK during a tax year. However, even if an individual spends less than 183 days in the UK, they may still be considered UK resident if they have sufficient ties to the UK.
Ties to the UK
Ties to the UK refer to the individual's connections to the country, such as:
Permanent home: Owning or maintaining a home in the UK is a strong indicator of UK residency.
Family: Having a spouse, partner, or children living in the UK can establish ties to the country.
Employment: Working full-time or part-time in the UK strengthens an individual's UK ties.
Social activities: Regularly participating in social activities or clubs in the UK indicates a strong connection to the country.
Sufficient Ties Test
The Statutory Residence Test (SRT) introduced in 2013 determines an individual's UK tax residency status based on a combination of days spent in the UK and ties to the UK. The test evaluates an individual's ties to the UK under three categories:
1. Accommodations: Owning or having access to accommodation in the UK.
2. Family: Having a spouse, partner, or children living in the UK.
3. Other ties: Employment, social activities, and other connections to the UK.
Deemed Domicile
In addition to tax residency, individuals also have domicile status, which refers to their permanent home. An individual can be UK domiciled even if they are not UK resident. Deemed domicile rules apply to individuals who have been UK resident for 15 out of the last 20 tax years, regardless of their intentions.
Implications of UK Tax Residency
UK tax residency has significant implications for individuals' tax liabilities. UK residents are subject to UK income tax on their worldwide income and gains, while non-UK residents are only liable to UK tax on income and gains arising in the UK.
Seeking Professional Guidance
Determining UK tax residency status can be complex, and individuals should seek professional guidance from tax advisors to ensure accurate assessment and compliance with UK tax regulations.
It is important to note that the rules for determining non-resident status are complex and can be subject to change. If you are unsure whether or not you are considered non-resident for UK tax purposes, you should seek professional advice.
