A UK Standard Visitor Visa typically permits individuals to stay in the UK for up to six months at a time, and it is often mistakenly assumed, that you will therefore not become UK tax resident as long as you do not exceed this period. This common error arises because many countries, such as the UAE, have straightforward day count thresholds for becoming a tax resident, leading individuals to incorrectly apply the same criteria to the UK.
However, this approach is unlikely to be sufficient for those who visit the UK frequently; commonly because they have acquired property in the UK and spend extended periods visiting, and/or have children who attend school in the UK.
Visitors should approach this exercise cautiously as the implications of becoming UK tax resident are potentially substantial, by inadvertently bringing non-UK source income and gains into the UK tax net.
Statutory Residence Test
The UK’s test for determining tax residence is set out in the Statutory Residence Test (SRT) which conclusively determines whether an individual is UK tax resident in any given tax year.
It is primarily based on physical presence in the UK and does not consider any test of habitual residence (generally, this is a test which determines the country in which an individual has established the centre of their personal and professional life, for legal purposes) or the intention of the individual, when determining whether they become UK tax resident.
The well-advised visitor may be aware that the number of days they may spend in the UK without becoming tax resident, can be affected by the number of connections they have to the UK. Under the SRT, these connections are known as ‘ties’ which are as follows:
- Family tie;
- Accommodation tie;
- Work tie;
- 90-day tie; and
- Country tie (this tie only applies to individuals who have been a UK resident in at least one of the previous three tax years).
Each of the ties has its own set of conditions or qualifying criteria attached to them. In essence, individuals with few or no ties are more freely able to spend time in the UK without triggering UK tax residence.
In contrast, individuals who for instance own UK property, perhaps spend time working in the UK, or who in previous tax years, spent 90 days or more in the UK, will have these ties which significantly decrease the threshold number of days they may spend, without becoming UK tax resident.
An example
Ali is a non-UK national, employed as a consultant who often works remotely. Ali has a spouse and children who reside in the UK. He also jointly owns a property in the UK with his spouse, where his family resides in. Ali has also spent over 90 days in the UK in each of previous last three tax years. Ali has not been UK tax resident in previous years.
Ali therefore has the following ties:
- 90-Day Tie: Ali has spent more than 90 days in the UK in previous tax years.
- Accommodation Tie: Ali owns a property in the UK, which is available for his use.
- Family Tie: Ali’s immediate family (spouse and children) live in the UK.
With three ties, Ali could spend up to 90 days in the UK in the current tax year without triggering UK tax residency, according to the SRT.
If Ali were to acquire a fourth tie in the same tax year, i.e. the ‘work tie’ on account of having spent the requisite amount of time working in the UK, his days would be severely limited the following tax year, to 45 days, if he wished to remain non-UK resident.
The above example shows that monitoring your UK tax residence goes beyond simple day counting, and it is important for individuals to carefully observe time spent in the UK, particularly in circumstances where they may have ties.
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