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Statutory Residence Test

Statutory Residence Test

What is it?

The UK introduced a Statutory Residence Test (SRT) on 6 April 2013. It allows you to determine your residence status for each UK tax year. Your residence status affects the level of UK income tax and capital gains tax which you pay. In addition, your residency and domicile status impacts the amount of Inheritance Tax which is payable on your estate.

Who is it for?

The SRT is for individuals who needs to work out their residence status for a tax year and also for those who live part of the year in the UK and the rest of the year abroad.

How does it work?

The test looks at how much time is spent in the UK, how much work is done, and the connections the individual has to the UK.  Having ties to the UK, such as a place to live, work connections and family members here, can cause someone to be UK resident depending on the days spent here in a tax year.

There are three parts to the test:

  • Automatic overseas test – when an individual is always non-resident;
  • Automatic UK test – when an individual will be treated as UK resident; and
  • Significant ties test – looking at the UK connections and days in the UK to determine residency

These tests are looked at in turn until a residence determination is reached.

What should I do next?

Anyone who is concerned about their residence status should review their position.  This includes those leaving the UK, coming to the UK, or those who live elsewhere but may have connections here.

If you would need help with a Statutory Residence Test, or advice on how your residency affects your personal tax position, please contact Liz Higgins, our Head of Private Client Tax.

 


First published 3 November 2020
Last Updated 3 November 2020

3 November 2020
First published. 


 

This is for information purposes only. No action should be taken without seeking specific professional advice. Thank you.

Find out more about Liz Higgins

Liz Higgins

Liz Higgins

Liz is the Head of Private Client Tax at Critchleys LLP.

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