tax Acclaim ltd Chartered Tax Tdvisers (UK)
Statutory Residence Test
“Whilst the first set of automatic tests may at first appear to be straightforward, it should be noted that there are 'sub tests' within the automatic tests.”

The Statutory Residence Test is used to determine a taxpayer's residence status and is relevant to all individuals living and working overseas.

There are three separate steps to the test, which are listed below;

-Automatic overseas test
-Automatic UK test
-Sufficient ties test (STT)

Whilst the first set of automatic tests may at first appear to be straightforward, it should be noted that there are 'sub tests' within the automatic tests and up to five separate UK ties for the final sufficient ties test.

It should also be noted that the term 'full time work abroad' has now been replaced by 'working sufficient hours overseas' and there is a separate five step calculation to determine whether those working under full time contracts overseas do in fact satisfy the number of required hours as set out in statute.

Care must also be taken in the following cases
-Split tax years – this is no longer automatic. The individual must satisfy one of eight specific cases and within each case separate conditions apply. A non UK resident can arrive in the UK part way through a tax year and remain non UK resident. Likewise, a UK resident may leave the UK part way through a tax year and remain UK resident

-UK work days –depending on the number of hours worked in the UK, these may count as days spent working here.

-Holidays – when these are taken will be relevant in calculating whether an individual has worked sufficient hours overseas.

-Pilots and other workers on board aircraft, ships and other vehicles -may not be regarded as working sufficient hours overseas.

-Exceptional circumstances – these are now very restrictive and situations that you may regard as exceptional may not be viewed in the same way by HMRC.

-Changes in employment/redundancy and those spending work days in the UK.

-UK accommodation – this is relevant for some but not all tests in determining residence status.

-Those working overseas but having a UK resident spouse – again, this is relevant for some but not all tests in determining residence status.
Factors to consider
One day spent working in the UK can cause the third automatic UK test to be met (if a taxpayer has not satisfied any of the automatic overseas tests).

One nights accommodation in the UK can provide a 'connecting tie' with the UK for the purposes of the sufficient ties test (STT).

A 'connecting tie' under STT can include an unmarried couple living together as husband and wife where one remains UK resident.

Taxpayers returning to or leaving the UK may not satisfy the split year residence cases . If so, they may be taxable on their overseas earnings,  overseas investment income and any gains arising for that year. This is subject to any Double Tax Treaty being available with the UK.

If you have any doubts over your residence status or require planning advice then please do not hesitate to contact us.
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