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Guidance On COVID-19 And The Statutory Residence Test

An individual’s UK tax residency status is determined using the Statutory Residence Test (SRT).

Under the SRT, the number of days an individual spends in the UK during the tax year determines their UK residency position, and many taxpayers and their employers are concerned about the impact that additional unplanned days spent in the UK due to COVID-19-related restrictions will have on their tax residency status.

HMRC have acknowledged that due to the COVID-19 pandemic, there may be circumstances out with someone’s control which result in someone who would otherwise be a non-UK resident for tax purposes spending sufficient days in the UK to a become UK resident. This would result in them being taxable on their worldwide income, if these days could not be treated as being due to exceptional circumstances.

The new guidance states that the following will qualify as exceptional circumstances for the purposes of the SRT:

  • if you are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
  • if you are advised by official Government advice not to travel from the UK as a result of the virus
  • if you are unable to leave the UK as a result of the closure of international borders, or
  • if you are asked by your employer to return to the UK temporarily as a result of the virus

HMRC has stressed that guidance may change at short notice as the situation changes and should be read in conjunction with the current published guidance on exceptional circumstances.

Update: On 9 April, Rishi Sunak wrote a letter to the Head of the Treasury Select Committee stating that the Statutory Residence Test will be temporarily amended to ensure that any individuals spending time in the UK working on COVID-19 related activities between 1 March and 1 June 2020 will not count towards the residence tests.

If you wish to discuss your own position, please contact our International Individuals Taxperts who are here to help.

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