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Do UK expats fully understand the Statutory Residence Test
| Published: | 25 Apr at 6 PM |
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With so many changes being introduced as regards tax on pensions, it’s important for UK expats to understand the implications of the Statutory Residence Test.
Introduced in April 2013, the SRT was intended to clarify decision-making about residency or non-residency, but ended up creating more confusion due to its wording. Making the right decision can make a huge difference to expat tax liabilities.
There are three qualifying conditions for non-tax residency, with the first being non-residents must have been living overseas for the past three tax years and have spent fewer than 46 days in the country during the present tax year. The second allows living in the UK for one of the past three tax years but having visited for less than 16 days in the current tax year.
The third condition applies to offshore workers in full-time positions who live in Britain for less than 91 days a year and have worked in the UK less than 31 days in the present tax year. On the other hand, tax residents are those living in the UK for 183 or more days in the present tax year and those who have no residence overseas and have lived for more than 30 days in the UK.
Those who work in the UK for an average of 35 hours a week or more than three hours a day for 75 per cent of the tax year are tax-resident, and if a person has been non-resident for three tax years, personal ties are considered. Five questions define personal ties, with the first being family resident in the UK and the second relating to accessible accommodation.
The third asks whether work has been undertaken for over 40 days in the current tax year and the fourth refers to visits to the UK for a period of over 91 days in either of the two previous tax years. The final question asks whether the person has lived in any overseas country for a longer period than in the UK.
Introduced in April 2013, the SRT was intended to clarify decision-making about residency or non-residency, but ended up creating more confusion due to its wording. Making the right decision can make a huge difference to expat tax liabilities.
There are three qualifying conditions for non-tax residency, with the first being non-residents must have been living overseas for the past three tax years and have spent fewer than 46 days in the country during the present tax year. The second allows living in the UK for one of the past three tax years but having visited for less than 16 days in the current tax year.
The third condition applies to offshore workers in full-time positions who live in Britain for less than 91 days a year and have worked in the UK less than 31 days in the present tax year. On the other hand, tax residents are those living in the UK for 183 or more days in the present tax year and those who have no residence overseas and have lived for more than 30 days in the UK.
Those who work in the UK for an average of 35 hours a week or more than three hours a day for 75 per cent of the tax year are tax-resident, and if a person has been non-resident for three tax years, personal ties are considered. Five questions define personal ties, with the first being family resident in the UK and the second relating to accessible accommodation.
The third asks whether work has been undertaken for over 40 days in the current tax year and the fourth refers to visits to the UK for a period of over 91 days in either of the two previous tax years. The final question asks whether the person has lived in any overseas country for a longer period than in the UK.
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