Residence Tests for UK Tax Purposes
An individual’s liability to UK Income Tax and Capital Gains Tax depends on their RESIDENCE status in the UK. Broadly speaking, a UK RESIDENT is liable to Income Tax on WORLDWIDE INCOME and A NON-UK RESIDENT is liable to Income Tax on UK INCOME ONLY.
There are several rules to learn to understand an individual’s UK RESIDENCE status.
A key rule which helps to understand the table below: An individual is considered PREVIOUSLY RESIDENT if they have been a UK RESIDENT in ANY of the PREVIOUS 3 TAX YEARS.
|DAYS IN UK||PREVIOUSLY RESIDENT (R)||NOT PREVIOUSLY RESIDENT|
|< 16 DAYS||AUTOMATICALLY NOT RESIDENT||AUTOMATICALLY NOT RESIDENT|
|16 – 45||R IF 4 UK TIES||AUTOMATICALLY NOT RESIDENT|
|46 – 90||R IF 3 UK TIES||R IF 4 TIES|
|91 – 120||R IF 2 UK TIES||R IF 3 TIES|
|121 – 182||R IF 1 UK TIE||R IF 2 TIES|
|> 183||AUTOMATICALLY RESIDENT||AUTOMATICALLY RESIDENT|
Automatically NOT Resident
In addition to the AUTOMATICALLY NOT RESIDENT scenarios in the table above:
- An individual working FULL TIME OVERSEAS who has NOT BEEN IN THE UK MORE THAN 90 DAYS IN THE TAX YEAR.
Is considered AUTOMATICALLY NOT RESIDENT IN THE UK.
In addition to the AUTOMATICALLY RESIDENT scenarios in the table above:
- An individual WORKING FULL TIME IN THE UK or
- An individual whose ONLY HOME IS IN THE UK.
Are also considered AUTOMATICALLY RESIDENT IN THE UK
UK Ties Tests
When none of the AUTOMATIC RESIDENCE TESTS apply then the table above considers the number of UK TIES that an individual has and links this to the number of days an individual spends in the UK.
The 5 UK TIES are:
- SPOUSE / CIVIL PARTNER OR MINOR CHILD (UNDER 18) IN THE UK
- HOUSE IN THE UK THAT HAS BEEN USED IN THE TAX YEAR
- IN THE UK FOR MORE THAN 90 DAYS IN EITHER OF THE 2 PREVIOUS TAX YEARS
- DOING SUBSTANTIVE WORK IN THE UK (CONSIDERED TO BE > 40 DAYS)
- IN THE UK MORE THAN ANY OTHER COUNTRY (IF LEAVING THE UK)