Statutory Residence Test – Finance Act 2013 (UK)
An individual spends a day in the UK for SRT purposes if he is in the UK at the end of the day. However, is not treated as spending a day in the UK if the day is a transit day with no work or the individual is in the UK due to specified exceptional circumstances beyond his control for a maximum of 60 days. In specific circumstances an individual can be deemed to spend a day in the UK even though not in the UK at the end of the day.
Working full-time overseas
The individual must work sufficient hours overseas (average 35 hours per week disregarding certain defined days) in the tax year with no significant breaks from overseas work. They must also spend fewer than 91 days in the UK and work (for more than three hours a day) in the UK for fewer than 31 days.
All homes are in the UK
An individual will be regarded as resident if the individual has a home in the UK for more than 90 days in which the individual is present on at least 30 separate days. In addition for 91 consecutive days, at least 30 of which are in the tax year, the individual must have no home overseas in which the individual is present on 30 separate days in the tax year. If the individual has more than one home in the UK the test must be met in relation to at least one of those homes when considered separately from the other home(s).
Works sufficient hours in the UK
The individual must work sufficient hours in the UK over a 365 day period (average 35 hours per week disregarding certain defined days) with no significant breaks. More than 75% of the days in the period when the individual does more than three hours work per day must be worked in the UK and the individual must work for more than three hours in the UK on at least one day in the current year.
A work day in the UK for the purposes of the SRT is a day on which more than three hours work is performed. Work includes incidental and non incidental duties and most travel. Although the distinction between incidental and substantive duties is not relevant for the purposes of the SRT, the distinction remains important for the purposes of calculating the tax liability of employees. When the employee is regarded as being non UK resident, incidental duties will continue to be deemed to be performed offshore and only substantive UK duties are taxable.
Sufficient ties test
When an individual does not meet any of the automatic overseas tests nor any of the automatic UK tests, the individual’s residence will depend upon the number of UK ties the individual has and the number of days spent in the UK.
UK resident family
A family tie exists if a person’s spouse, civil partner or minor child is resident in the UK in the relevant tax year. A person with whom the individual is living as husband and wife or as if they were civil partners is also included. Where a minor child is UK resident because they are in full-time education in the UK, they will not be treated as UK resident for family tie purposes unless they spend more than 20 days in the UK outside of term time during the tax year.
Although an individual can only be regarded as resident for a complete tax year, special rules apply when an individual commences or ceases residence. The tax year may be split in to an overseas part and a UK part for certain purposes but this requires detailed advice.