It’s important to know if you are a UK resident as your residence status determines your UK tax liability and entitlement to Income Tax allowances and exemptions.
As a UK tax resident, you must pay tax on the income you receive from UK sources. If you are UK domiciled, you will also have to pay UK tax on your worldwide income. If you are a resident but not domiciled in the UK, you can use the remittance basis where you will only pay tax on any non-UK income if you bring the money into the UK and don't have to pay UK tax on overseas income - if you leave it offshore.
Some circumstances will make you an ‘automatic’ resident in the UK. However, if you are not an automatic resident - the number of days you spend in the UK in addition to other factors will determine your residence position. Read on to understand how to determine your UK residence status - using the four major residence tests in the UK.
SRT allows you to work out your residence status for a tax year by taking the following into account:
Usually, physically being in the UK for 183 days or more automatically makes you a UK resident, and there is no need to consider any other tests.
You can test if you are a resident in the UK for the whole tax year using the:
There are three tests to consider in this test. You will be considered a non-UK resident for the tax year if:
There are three tests to consider in this test. You are a UK resident for the tax year if:
Carry out the sufficient ties test if you do not meet either the automatic overseas tests or the automatic UK tests.
The test will help you work out if your ties (connections to the UK), taken together with the number of days you spend in the UK, will make you resident in the UK for that tax year.
If you were not a UK resident in any of the three tax years before the one you are considering, you will need to check if you have any of the following:
This table shows UK ties needed if you were a UK resident for one or more of the three tax years before the tax year under consideration
Days spent in the UK in thetax year under consideration | UK ties needed |
16 - 45 | At least 4 |
46 - 90 | At least 3 |
91 - 120 | At least 2 |
Over 120 | At least 1 |
If you were resident in the UK in one or more of the three tax years before the one you are considering, you also must check whether you have a country tie.
This table illustrates UK ties needed if you were a UK resident in none of the three tax years before the tax year under consideration.
Days spent in the UK in thetax year under consideration | UK ties needed |
46 - 90 | All 4 |
91 - 120 | At least 3 |
Over 120 | At least 2 |
Each of the ties has its own set of conditions or qualifying criteria attached to them. The more UK ties you have, the fewer days you can spend in the UK before becoming a UK resident.
If you have already paid tax on your foreign income, you will need to report your overseas income on your Self-Assessment tax return. You can also claim Foreign Tax Credit relief on your self-assessment tax return.
At Spondoo Accountants, we understand that Tax residence is a complicated area, that is why we will be happy to help you with your personal circumstance. Contact us for guidance!