Statutory Residence Test

Understanding your residence status is crucial for determining your UK tax liabilities. At AHACCOUNTANTS, we provide tailored advice for individuals in the Nottingham area to help you navigate the complexities of the Statutory Residence Test (SRT).

The SRT offers a structured process to ascertain an individual’s UK residency status for income tax, capital gains tax, and inheritance tax purposes. This status then informs your tax obligations, which may also involve double tax treaties with other countries.

Counting Days

A “day of presence” in the UK counts as any day you were in the country at midnight, with a few exceptions:

1. If you arrive as a passenger and leave the next day without engaging in substantial activities in the UK.
2. If exceptional circumstances beyond your control prevent your departure, and you intended to leave as soon as possible.

If you were resident in the UK in one of the last three years and have at least three ties to the UK, you’ll need to add any days spent in the UK beyond 30 to your count.

Three Tests of the SRT

The SRT consists of three tests applied in this order:

1. Automatic Overseas Test (AOT): If you meet any condition here, you are not considered resident for the relevant tax year:

1. • Resident in the UK in one or more of the last three years and present for fewer than 16 days.
   • Not resident in the last three years and present for fewer than 46 days.
   • Work full-time abroad, present in the UK for fewer than 91 days, and no more than 30 working days in the UK.

2. Automatic Residence Test (ART): If the AOT is not satisfied, the ART checks if any of the following apply:

1. • Present in the UK for 183 days or more.
   • Have a home in the UK and are present there for at least 30 separate days.
   • Carry out full-time work in the UK for 365 days, with at least 75% of that time spent in the UK.

3. Sufficient Ties Test (STT): If neither of the first two tests applies, you’ll assess your ties to the UK based on the number of days present and connection factors, which include family, accommodation, work, previous UK days, and the country tie.

Special Considerations

• International Transport Workers: Specific adaptations apply to those working on international transport vessels, affecting how residency status is determined.
• Split Year Rules: If you become resident or non-resident partway through a tax year, there are rules allowing you to split the year appropriately.

Anti-Avoidance Rules

To prevent exploitation of residency rules for tax benefits, individuals with a history of UK residency must maintain non-resident status for five years to avoid tax liabilities on certain types of income or capital gains upon their return.