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The new UK Statutory Residence Test

A new Statutory Residence Test (SRT) has been introduced with effect from 6 April 2013. HMRC published their long awaited and detailed guidance on the application of the test in December 2013.

The purpose of the test is to place on a statutory footing, and therefore clarify, what factors determine an individual's residency. The question of where an individual is resident is essential in determining whether they have any liability to UK Income Tax and Capital Gains Tax.

The new test focuses on the number of connections an individual has to the UK in order to determine residency. Specifically the test looks at the number of days an individual spends in the UK, where they work, where they have a home and any time spent abroad.

If an individual does not satisfy the "automatically resident in the UK test", the focus then shifts to whether the individual has sufficient ties to the UK. Each tie is given a different weight and relevance depending on the situation of the individual concerned. The SRT has been expressly designed so that it is harder to become non resident than it is to become resident.

The test is, in essence, a three step process:

STEP 1: Are you conclusively non UK resident or conclusively UK resident?

Conclusively non UK residentConclusively UK resident
You have not been resident in all of the 3 previous tax years and have been present in the UK for fewer than 46 days in the current tax yearYou have been present in the UK for 183 days or more in a tax year
You have been resident in the UK in one or more of the previous 3 tax years and have been present in the UK for fewer than 16 days in the current tax yearYou only have one home and it is in the UK (holiday homes and "temporary retreats" to be ignored). Or you have a home in the UK for 91 days or more, are present there on 30 days or more and have no foreign home for 91 consecutive days or spend less than 30 days in any such foreign home. Key factors in assessing what is a "home" are the degree of permanence and stability
You left the UK to carry out full-time work abroad and were present in the UK for less than 91 days in the tax year and have spent no more than 30 days working in the UK in the tax yearYou are carrying out full-time work in the UK

(Note: the UK tax year runs from 6 April to the following 5 April.)

If the answer to the above question is 'not conclusive', then proceed to STEP 2.

STEP 2: Have you been UK resident for any of the past three tax years?

YESYou are classified as a Leaver (i.e. you are undertaking this "test" in an attempt to show your UK residence has ended and that you have left the UK).
NOYou are classified as an Arriver (i.e. you are undertaking this "test" to confirm whether your arrival/activity in the UK has qualified you as UK resident).

Once classified as above, you proceed to STEP 3.

STEP 3: Do you meet the sufficient ties test and therefore qualify as UK resident?

There are five ties that can apply and a tie will be counted even if applicable for only part of the tax year. The ties are:

Family - an individual's family will count as a tie if a spouse, civil partner or "common law equivalent" is resident in the UK (though not in the case of separated couples). This tie also includes children under the age of 18 who are resident in the UK with whom the taxpayer spends at least 60 days or more in the UK. However, a child will not count if in full-time education in the UK and if that child spends fewer than 21 days in the UK when not at the educational establishment, excluding term breaks.

Accommodation - an individual's accommodation arrangements will count as a tie if they have available (even if not necessarily owning) a place to reside in whilst in the UK for 91 days or more continuously and if they actually stay there at least once (including a spouse's or minor child's residence). Accommodation of close relatives will count on the same basis if stayed at for 16 or more nights.

This tie does not include, for instance, some short-term accommodation in hotels and temporary lodging with relations. It should be noted though that frequent and regular stays at the same hotel over a long period will be viewed as a tie.

It is apparent from such widely drafted criteria that the focus of this tie is to encompass a broad range of possible locations (indeed also a wide range of structures such as vehicles and vessels) as "ties" to the UK. It is important to note that this definition is different from the definition of "home" addressed in STEP 1.

Employment - employed work of 40 days' or more duration in the UK in the tax year will qualify as a tie. A day will count if at least three hours of work is carried out in the UK during that day, whether or not the individual is present in the UK at midnight. This includes work‑related travel and training.

Day counting - 91 days or more spent in the UK in either/both of the previous two tax years will be regarded as a tie. A person will be treated for these purposes as being in the UK on any day when they are in the UK at midnight of that day.

A day of transit will not count as a day in the UK if the individual arrives in the UK as a passenger, departs from the UK on the next day, and during his or her stay in the UK does not engage in any activity "substantially unrelated to" their passage through the UK.

An anti-avoidance measure is included, to avoid individuals taking advantage of these day-counting rules. If an individual was resident in the UK in at least one of the previous three tax years, has at least three ties to the UK, and is in the UK for more than 30 days but absent at midnight on those days, then any additional days accrued above the initial 30 days will be counted irrespective of the midnight rule.

Presence (this tie is applicable to Leavers only) - the individual spends more days in the UK in the tax year than in any other single country.

Residence is then assessed as set out below - via a combination of an individual's days in the UK at midnight and the number of ties to the UK (as set out above).


Days spent in the UKImpact of UK ties
Less than 46 daysNot UK resident
46 – 90 daysResident if 4 ties, otherwise not resident
91 – 120 daysResident if 3 ties or more, otherwise not resident
121 – 182 daysResident if 2 ties or more, otherwise not resident
183 days or moreAlways resident


Days spent in the UKImpact of UK ties
Less than 16 daysNot UK resident
16 – 45 daysResident if 4 ties or more, otherwise not resident
46 – 90 daysResident if 3 ties or more, otherwise not resident
91 – 120 daysResident if 2 ties or more, otherwise not resident
121 – 182 daysResident if 1 tie or more, otherwise not resident
183 days or moreAlways resident

If you do not meet the sufficient ties test, you are not UK tax resident.

Additional provisions:

Split year treatment

The SRT includes concessionary rules which cover the situation of an individual who leaves the UK or comes to the UK part way through a tax year and operate to break that tax year down into UK resident and non UK resident parts. The new rules will not apply in all cases and detailed advice should be taken.

Transitional election

If an individual is required to determine their residency status for a tax year prior to the formal introduction of the SRT on 6 April 2013 (a pre-commencement year and often required for the purposes of STEP 1), then an election can be made for the previous three tax years to be assessed either under the old rules or the new SRT system. An election to use the SRT in such cases must be made to HMRC in writing within a year of the end of the relevant tax year and is irrevocable.

Exceptional circumstances

Up to 60 days spent in the UK during a tax year due to "exceptional circumstances" will be exempt from day counting. This exemption applies, for instance, in cases of a sudden or life-threatening illness or injury to dependants and so long as the individual intends to leave the UK as soon as circumstances allow.

Short term emigration from the UK

Rules similar to the existing Capital Gains Tax rules apply to some forms of investment income. Essentially these rules could treat income that arises in a non resident period as arising in the year of return to the UK if the individual has been resident in four out of the previous seven tax years and becomes resident again in any of the following five tax years.

It would not apply however for all kinds of income - for example employment income, self-employment income, bank interest or dividends from listed companies. The main target seems to be dividends paid by closely controlled companies. The position for non UK domiciled taxpayers is more complex because of the operation of the remittance basis, and this requires detailed advice.

Ordinarily resident

The extent of ordinarily resident status has been significantly reduced under the SRT.

Note: This is intended to be general guidance only and is not to be relied on as legal advice in any particular case. It only covers the position under UK domestic law.

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