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How to determine your tax status in the UK

Let’s assume you’ve already talked to an immigration advisor and chosen a type of visa you require. Now it’s time to think about finances and how to be prepared for the move. First you need to identify a date when you’ll become a UK tax resident and have to declare income as required by the UK tax authorities.

We often hear people say that to be classed tax resident one has to be a UK citizen, or spend in the country at least 183 days a year. This is not right.

Statutory Residence Test

Your immigration and tax statuses in the UK are not directly interconnected. While the former one is based on the type of visa you have, the latter one can only be established with the Statutory Residence Test (SRT) introduced by the HMRC in 2013. It has several parts and helps identify the applicant’s tax status even if they have spent in the UK only a few days.

The tax year in the UK starts on April 6 and ends on April 5 the following year. To calculate how many days you spent in the UK for tax purposes, you need to consider days when you are in the country at the end of the day (midnight).

  1.  If you spent 183 or more days in the UK in the tax year, you’re automatically resident.
  2.  If you spent less than 183 days in the UK, consider the 3 automatic overseas tests. If you meet 1 of these, you are not UK resident:
  • you spent fewer that 16 days in the UK if you have been classed as UK resident for the 3 previous tax years;
  • you spent fewer that 46 days in the UK if you haven’t been classed as UK resident for the 3 previous tax years; or
  • you have worked overseas during the tax year.
  1.  If your situation is more complicated, consider 2 automatic UK tests. If you meet 1 of these, you are automatically UK resident:
  • Was your only home in the UK?
  • Did you work full-time in the UK?
  1.  If you do not meet any of the automatic overseas test or any of the automatic UK tests, you should use the sufficient ties test. These ties can be a family tie (spouse or children under 18 that are resident in the UK), an accommodation tie, a work tie, or a 90-day tie (if you have spent more than 90 days in the UK in either or both of the previous 2 tax years). Each tie gives you one point. Total points will establish your tax status.

In this case even those that spent in the UK only 46 days can be classed as tax residents, or even 16 days if they had already been in the UK before.

Test results and exceptions

If based on the test results you are classed as tax resident, two main rules apply to you like to any other UK resident:

  • You are tax resident for the whole tax year from April 6 till April 5 and you must declare all your income received during that period;
  • You must declare and pay taxes on all your worldwide income irrespective of the country and source of its origin.

However, there might be exceptions to these two rules based on personal circumstances. For example, when moving to the UK to settle you will most probably become its tax resident from the arrival date instead of the tax year start date.

Besides, all non-domiciles, i.e. those who were not born in the UK, can choose to be taxed on the remittance basis. They will only be taxed on income earned in or brought to the UK.

You also need to be aware of double taxation when you have to pay taxes in two countries. It can be avoided if the UK has a double taxation treaty with the country where you are tax resident.

All aspects must be considered when moving to the UK to avoid surprises and difficulties. Experts at Imperial & Legal use a comprehensive approach to customise solutions for every client taking into consideration all the nuances of their situations. Qualified lawyers will support you during your stay in the UK in immigration and tax issues, real estate and other potential issues you might have.

To discuss your requirements, please contact our specialists or call us on +44 (0)203 490 41 21.

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