The Statutory Residence Test – or, am I a UK taxpayer?
The Statutory Residence Test was introduced from April 2013 to determine your tax residence; it sets out what makes you UK resident for tax purposes.
With the ease of global travel we have a lot more freedom to choose where we want to live and work. So why should it matter whether we are resident in the UK for tax? Well, if you are UK tax resident then you pay tax on all of your worldwide earnings. And if not, then you will not be entitled to the same tax allowances as a UK resident.
The Statutory Residence Test works as follows:
- If you spend 183 days or more in the UK then you are a UK resident for taxes.
- But you will automatically be resident overseas for tax and not the UK if
1. You spend less than 16 days in the UK or
2. You were not a resident of the UK for the last three years and spend fewer than 46 days a year in the UK or
3. You work full time (i.e.35 hours a week) overseas, spend less than 91 days in the UK, and work fewer than 31 days in the UK, and make fewer than 6 trips to the UK
- You will be automatically taxed in the UK if
1. You had a home in the UK and spent at least 30 days in a 91 day period there, and spent less than 30 days in an overseas home or
2. You work full time in the UK
If none of the above determines your country of residence then there are a number of tests applied relating to the country with which you have the most ties.
HMRC of course will want to argue that you should pay your taxes here and have devised detailed rules that run to about 84 pages.
To make sure you have got it right, best advice is to keep a clear record of where you were both on working and non-working days, how many hours you worked and when you traveled.