Residency guide: Should you be paying tax in the UK (to HMRC)

Posted on January 6, 2018

Hey! Tax residency can be a bit funny, but we've got mini road trip for working out whether or not you are tax resident in the UK. Imagine you are a driving down the tax residency motorway - if you get to an exit which applies to you, you take it and you know whether or not you are resident in the UK for tax purposes. If the exit isn't right for you, keep driving along until the next exit. By the way...you'll need to take this trip every tax year (April 6th to April 5th). These 'exits' should cover most circumstances. Now that's clear let's pack our bags and get on the road!

Exit 1: Have you spent 183 days or more in the UK this tax year?

If you are physically present in the UK for 183 days or more (in total) in a tax year you will be classified as resident in the UK for tax purposes. FYI - you are considered to be present in the UK on a particular day if you are in the UK at midnight. If you've taken this exit, then you ARE resident in the UK and your road trip was short and sweet. If not, let's keep going to exit 2...

Exit 2: Do you meet any of the automatic criteria for being an overseas (non-UK) resident?

Fewer than 16 days in the UK

If you are physically present in the UK for FEWER THAN 16 days in total in the tax year you will be non-resident in the UK for tax purposes.

Fewer than 46 days in the UK and not UK-resident in the last 3 years

If you are physically present in the UK for FEWER THAN 46 days in total in the tax year and you have not been tax-resident in the UK for the last 3 years, you will be non-resident in the UK for tax purposes.

Working overseas and spend limited time in the UK

You work full-time overseas for the tax year and spend fewer than 91 days in the UK, and you work for more than three hours in the UK on fewer than 31 days, then you will be non-resident in the UK for tax purposes.

If we've still not found your exit, then let's move on to exit 3...

Exit 3: Do you meet the remaining automatic criteria for being a UK resident?

Have a home in the UK and spend time here

If you have a home in the UK for a period of more than 90 days and you are present in the home on at least 30 separate days, then you WILL be resident in the UK for tax purposes. There's not a good definition for home really - the test is whether a 'reasonable onlooker' would consider it a home.

Have been working in the UK for a while without a significant break

If you work full-time in the UK for 365 days or more with no significant break from UK work, you WILL be resident in the UK for tax purposes.

If we've still not found your exit, then you are super complicated... good for you... let's move on to exit 4...

Exit 4: The sufficient ties test

We would need to write an essay to cover all the nuance if you have made it to exit 4 - it's worked out using something called the 'sufficient ties test'. Therefore, it's time to find yourself a tax accountant. On the plus side, it sounds like you've had an exciting year - good for you and good luck!

---