How to navigate HMRC and Their Sufficient Ties Test (Without Losing Your Marbles!)

If you’ve left the UK for greener pastures, your UK residency status and what this means for your UK tax affairs is probably the last thing on your mind.

UK resident individuals pay tax in the UK on their worldwide income and gains, whilst non-UK resident individuals only pay tax on their UK situs income (income which derives from the UK). Your tax residency status is assessed for each tax year from 6 April to the following 5 April.

So you’ve packed your bags and are moving overseas, thinking you won’t have to pay the UK’s high tax rates again. You may not be aware that returning to the UK during the tax year can trigger a UK tax residency status with potentially unwanted UK tax and filing consequences.

Whilst the weather is no reason to attract you back to the UK, if you do return to the UK to visit relatives, you should know how many days you can stay in the UK without becoming a UK tax resident.

Depending on the number of ‘ties’ you have with the UK, spending as little as 16 days in the UK could trigger a UK tax residency status!

When would I be considered a UK resident?

If you spend more than 183 days in the UK in a tax year, you will automatically be a UK tax resident for that tax year. You will have to pay UK tax on your worldwide income and gains.

If you spend less than 183 days in the UK, two other tests could still deem you automatically a UK tax resident. These tests get a bit complicated and apply in certain circumstances.

In addition to the automatic UK tests, there are also three automatic overseas tests – if you meet the conditions for one of these in a tax year, you will not be considered a UK tax resident and will not need to worry about paying UK tax on your worldwide income and gains.

If the automatic tests do not catch you, you may not have escaped the clutches of the UK tax system…

So, if I’m not automatically a UK resident or automatically an overseas resident, what happens next?

After assessing the automatic tests and confirming none apply, the next step is to assess the sufficient ties tests. The ties are effectively the connections you have with the UK; this, together with the number of days you spent in the UK in the tax year, will determine your UK tax residency status.

The ties that are considered are the following. Each tie has its definition:

  1. Family Tie
  2. Accommodation Tie
  3. Work Tie
  4. 90-day Tie
  5. Country Tie

How can we help?

Residency can often feel confusing and overwhelming, with the legislation often being unhelpful and complex to understand. However, rest assured the team at Starbox is, as always, here to help!

If you are looking for further support or would like assistance with your tax planning and affairs, please do not hesitate to contact the Starbox team by calling 01273 043678.