Does The Coronavirus Lockdown Impact Tax For Stranded Expats?

Lisa Smith, BA (Hons), CeFA
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While most people are worrying about their health and money during the coronavirus crisis, for expats tax is a concern as well.

With billions of people locked down across many countries, some wealthy expats are forced to stay in the place where they were when non-essential travel was banned.

Other expats may have returned home to visit family, while others are marooned abroad.

Tax may not be a priority for these expats but spending time somewhere you are not normally resident could impact residence status and unravel carefully laid financial plans if you are unsure of coronavirus tax residence rules during the lockdown.

But as tax residence in most countries is based on counting days within the borders, HM Revenue & Customs has published some additional guidance for expats.

Travel restrictions strand expats

In the UK, the statutory residence test determines tax status.

Typically, spending 183 days or more in the UK during a tax year is an indicator of tax residence – and that makes someone liable to UK taxes on their worldwide income and gains.

The coronavirus lockdown started in the UK on March 23 – 30 days ago.

The likelihood is the lockdown and travel restrictions on flights will last until at least the end of May, adding about another 40 days to the lockdown.

The SRT does make clear four exceptional circumstances for avoiding expat reclassification as a UK tax resident.

Exceptional circumstances

These exceptional circumstances are:

  • Self-isolating or other quarantine measures on the advice of a medical professional
  • Obeying government advice not to travel from the UK as a result of the virus
  • Staying in the UK because international borders are closed
  • Your employer directs you to return to the UK temporarily as a result of the virus.

“Events resulting from the impact of the virus are changing rapidly and this guidance may change at short notice as situations change,” said an HMRC spokesman.

“The coronavirus (COVID-19) pandemic may impact your ability to move freely to and from the UK or, require you to remain unexpectedly in the UK.

“Whether days spent in the UK can be disregarded due to exceptional circumstances will always depend on the facts and circumstances of each individual case.”

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