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12th April 2021

HMRC confirms that expat employees stuck in the UK because of travel restrictions will not be exempt from tax

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Under the Statutory Residence Test (SRT), a person will be considered a United Kingdom (UK) resident for tax purposes if they have been in the UK for 183 days or more in the current tax year. If they have not, they could still be considered a UK resident if they do not meet any of the automatic overseas tests and meet one of the automatic UK tests or sufficient ties tests instead.

There are three automatic overseas tests which are relevant to employees who work abroad and, if met, that employee will not be considered a UK resident for the tax year. Under the first test, a person will be a non-UK resident if they were resident in the UK for 1 or more of the last 3 tax years but has spent fewer than 16 days in the UK in the current tax year. Under the second test, a person must have been a non-UK resident in the past 3 tax years and spent fewer than 46 days in the UK in the current tax year. The third test allows individuals who work overseas full-time to be considered a non-UK resident provided they spend no more than 90 days in the UK during the current tax year (of which no more than 30 can be spent working for 3 hours or more in the UK), provided also that they do not have a significant break of 30 days or more from working abroad.

HMRC does recognise that the coronavirus pandemic has impacted on a person’s ability to move freely to and from the UK and this has resulted in many people having to remain here unexpectedly. Consequently, there has been an extension to the SRT legislation which allows for up to 60 days spent in the UK to be disregarded if this occurs due to exceptional circumstances beyond a person’s control.  The legislation now includes the travel restrictions imposed by the UK government advising against all but essential travel.

Unfortunately, however, HMRC has confirmed that there will be no relaxation of the UK working day rule or the significant break test under the third automatic overseas test, even if there are days which could be disregarded under the 60-day exceptional circumstances rule.

If you normally work abroad but have been working remotely in the UK due to the pandemic, please contact Alan Taylor or Elaine Morgan to discuss what tax liabilities you may face as a result of inadvertently becoming a UK resident for tax purposes.

Alan Taylor
Alan Taylor

Senior Tax & Trust Manager

Contact me
Elaine Morgan
Elaine Morgan

Senior Tax & Trust Manager

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