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Residency Uncovered

Rachael Griffin examines the new Statutory Residence Test which can be used to determine whether an individual is resident or not in the UK.

The Finance Bill 2013 Schedule 43 contained the long-awaited legislation for the UK’s first statutory residence test. The bulk of the detail remained untouched, however there were some interesting changes.The rules, collectively known as the ‘statutory residence test’, apply from 6 April 2013, and can be used to determine for the relevant tax year whether an individual is resident or not in the UK for tax purposes.

There are a number of tests to apply, but the basic rule is that:

‘An individual (“P”) is resident in the UK for a tax year (“year X”) if:
(a) the automatic residence test is met for that year, or
(b) the sufficient ties test is met for that year.

If neither of those tests is met for that year, P is not resident in the UK for that year.’

The automatic overseas test

There are five automatic overseas tests, three of which are described below (tests 4 and 5 are only relevant if the individual dies). The test will automatically determine that an individual is non-resident in the UK for a tax year if they fall under any of the following conditions:

  1. They were resident in the UK in all of the previous three tax years and they are present in the UK for fewer than 16 days in the current tax year; or
  2. they were not resident in the UK in all of the previous three tax years and they are present in the UK for fewer than 46 days in the current tax year; or
  3. they work ‘sufficient hours overseas’* in the year of assessment, there are no significant breaks from overseas work, the number of days in which more than 3 hours are worked in the UK is less than 31 and the number of days spent in the UK is less than 91.

The automatic UK tests

There are four automatic UK tests. Below is a brief description of three of the tests but I have not replicated them in full due to their length. The fourth test is relevant if the individual dies.

An individual will be regarded as resident in the UK where:

  • they are present in the UK for 183 days or more in a tax year; or
  • they have a home in the UK for all or part of the assessment year and spend a sufficient amount of time in that home in that year and at least one period of 91 consecutive days occurs while the individual is at home, or at least 30 days of that 91 day period fall within the assessment year; or
  • they work ‘sufficient hours’ in the UK, as assessed over a period of 365 days.

If the tests described above do not conclude an individual is UK resident then the sufficient ties test needs to be considered.

Sufficient ties test

The following connecting factors, which remain unchanged, should be relevant to an individual’s residence status, but only when linked to the amount of time the person spends in the UK where:

  • family is resident in the UK;
  • the individual has accommodation in the UK which is used during the tax year;
  • the individual does substantive work in the UK;
  • the individual spends 90 days or more in the UK in either of the previous two tax years; and
  • spends more time in the UK than other countries (only applicable if the individual has been resident in the UK for one or more of the three tax years preceding the assessment year).

The tables below show how many UK ties are sufficient.

Where an individual was resident in the UK for one or more of the three tax years preceding the assessment year:

Days spent in the UK in the assessment year Number of ties that are sufficient
More than 15 but not more than 45 At least 4
More than 45 but not more than 90 At least 3
More than 90 but not more than 120 At least 2
More than 120 At least 1


Where the individual was not UK resident for three of the preceding tax years of the assessment year:

Days spent in the UK in the assessment year Number of ties that are sufficient
More than 45 but not more than 90 All 4
More than 90 but not more than 120 At least 3
More than 120 At least 2


The legislation is more complex than the draft that was provided in December 2012. However, the aim of the legislation is to provide certainty and the level of detail provided should give more guidance and clarity then the array of court cases and HMRC practice on when an individual would be regarded as UK tax resident.

* they work overseas for an average of at least 35 hours per week, whether they are an employee or self-employed. It is not necessary to work at least 35 hours every week during the period; it is enough that this average figure is met over the period in question.

The information provided in this article is not intended to offer advice.

It is based on Old Mutual Wealth's interpretation of the relevant law and is correct at the date shown at the top of this article. While we believe this interpretation to be correct, we cannot guarantee it. Old Mutual Wealth cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.

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