- Individual Tax
- US Tax Overview
- UK Tax Overview
UK Residency and Knowing the Rules
Statutory Residence Test
The statutory residence test took effect from 6 April 2013 and establishes an individual’s status of residence, or non-residence, in the UK.
This consists of the following three methods:
- The ‘automatic overseas test’
- The ‘automatic residence test’
- The ‘sufficient ties test’
Automatic Overseas Test
You are automatically non-resident for a tax year if you meet any one of the following conditions:
- You were resident in the UK in one or more of the previous 3 tax years but present in the UK for fewer than 16 days in the tax year;
- You were not resident in all of the previous 3 tax years and present in the UK for less than 46 days in the current tax year;
- You work full time overseas and:
– You spend fewer than 91 days in the UK in the tax year, and;
– The number of days you work in the UK is no more than 31 days (a work day is any day when an individual does more than 3 hours of work).
If you do not meet any of these automatic overseas tests you should then move on to the Automatic Residence Test below.
Automatic Residence Test
You will automatically be treated as resident in the UK if you meet any one of the following conditions:
- You spend 183 days or more in the UK in the tax year;
- You have a home in the UK:
– For a period of more than 90 days;
– You are present in that UK home on at least 30 separate days during the tax year;
– While you have that UK home, there is a period of 91 consecutive days when you have no home overseas or have one or more homes overseas in none of which you are present for more than 30 days during the tax year;
- You work full time in the UK for 365 days or more, subject to certain conditions.
If you do not meet any of the automatic overseas tests or any of the automatic UK residence tests, then you will look to the ‘sufficient ties test’.
The Sufficient Ties Test
This test examines your ties to the UK in the following areas:
- Family tie: the individual’s spouse or civil partner or minor children live in the UK;
- Accommodation tie: the individual has accessible accommodation in the UK;
- Work tie: where an individual works substantively in the UK;
90-day tie: the individual spends 90 days or more in the UK in either of the two previous tax years;
- Country tie: the individual spends more time in the UK than elsewhere.
These ties are combined with day counting to determine whether an individual is resident or not.
Confused by residency or need US Tax advice for UK residents?
Keep in mind that the rules are different for ‘arrivers’ (those who were not resident in the last 3 years) and ‘leavers’ (those who were resident in one or more of the last 3 years). If there is any understandable confusion in interpreting this series of tests to establish residency status, we would highly recommend a consultation, as this is an important first step for all future planning.
Did you Know?
Fact SevenThanks to FATCA banks must disclose their American account holders to the IRS or local tax authority.
Fact SixThe IRS is actively looking for non compliant US persons.
Fact FiveIt takes an average of 16 hours to do IRS Form 1040.
Fact FourThere are over 500 IRS tax forms.
Fact ThreeSince 1916, illegal income has been taxable.
Fact TwoUS persons must file tax returns no matter where they live and work.
Text One7 million Americans abroad
only 500,000 compliant