The Statutory Residence Test (SRT) allows expats to work out their UK residence status for a tax year.
The test is applied to each year, so it’s possible for an expat to qualify as a residence for one year but not another.
The test is based on time spent in the UK, including days worked, and ties an expat may have with the country.
Residence is assessed by the results of several tests. They include assessing if a deceased expat was resident and if an expat is resident for a part or split year.
Read this to understand the difference between Residence and Domicile.
The Statutory Residence Test came into force from April 6, 2013 and applies to each tax year since.
When Not To Take The Statutory Residence Test
Expats who spend 183 days or more in the UK for any tax year are UK resident for all that year and should not take the Statutory Residence Test.
Expats are also UK residents if they fail any of the automatic overseas tests or pass the automatic UK test or the sufficient ties test. If this happens, take the automatic UK tests.
If HMRC decides to question your residence, it’s a good idea to keep a log of where you were on each day during a tax year backed up with air, rail, or ferry tickets.
Why Expats Must Take The Statutory Residence Test
Taking the SRT is not only about residence status but where and how much tax you pay in the UK.
UK taxpayers pay tax on their worldwide income and capital gains.
Spending some or all a tax year overseas can mean expats do not pay taxes in the UK but the country where they live.
The Statutory Residence Test decides if an expat is liable for UK income tax, capital gains tax and inheritance tax.
Counting The Number Of Days Spent In The UK
Adding up if you spent more or less than 183 days in the UK sounds straightforward enough but arriving at the correct count is complicated.
Generally, you spend the day in the UK if you are in the country at midnight – these are called qualifying days.
But the counting rules cover transit days and exceptional circumstances that can reduce the count and a ‘deeming rule’ that can add days.
The final count is any qualifying days less any ruled out for exceptional circumstances plus extra qualifying days caught under the deeming rule.
If the total is 183 or more, you are UK resident for tax purposes.
The SRT year
The SRT year is not a calendar year but a tax year, which runs from April 6 of one year to the following April 5 in the UK.
Reducing The Day Count
The SRT counting rules ignore up to 60 days for exceptional circumstances, which HMRC stresses is a limit, not an allowance or entitlement.
A transit day is a day when someone on a through ticket between two countries lands in the UK on one day and leaves the next.
A condition is the passenger cannot take part in activities that are not related to their trip, like visiting family or friends or taking an excursion.
The arrival day is not included in the SRT day count, but the day of departure may be under the deeming rule.
Exceptional circumstances are days someone spends in the UK that are beyond their control, giving them no choice if they stay or go.
HMRC avoids giving a list of events considered exceptional, but does give some examples online
They include time spent recovering or looking after someone suffering from illness or an accident.
Non-exceptional circumstances are viewed as life events, such as birth, marriage, divorce, coming to the UK for medical treatment or missing a flight or ferry due to delays or cancellation.
SRT and coronavirus
The number of days someone is forced to spend in the UK due to coronavirus are counted as exceptional if:
- Someone must go into quarantine or self-isolate on the advice of a health professional
- Cannot travel due to official government advice
- Cannot leave the UK as international borders are closed
- Someone working overseas is ordered to return to the UK by their employer
Increasing The Day Count – The Deeming Rule
The deeming rule catches days someone has spent in the UK but has left before midnight.
Three conditions apply:
- Being UK resident in one or more of the three earlier tax years to the one in question
- Having at least three UK ties in the tax year
- Being in the UK for 30 qualifying days in the tax year but leaving before midnight on each
If all three conditions are met, the deeming rule means that any qualifying days over the 30-day threshold are counted as days spent in the UK.
These extra days are added in the day count as full qualifying days.
This rule is aimed at bringing someone who lives overseas but flies into the UK regularly to work without staying overnight.
The UK Statutory Residency Tests Step-by-Step
To find out if you are classed as UK resident, take the Statutory Residence Test:
- If you spent fewer than 183 days in a tax year in the UK, take the automatic overseas tests.
- If you pass the automatic overseas tests you are non-resident for the tax year. If you fail any of the tests, take the automatic UK tests.
- If you pass the automatic UK tests or the sufficient ties test, you are UK resident for that tax year. If you fail them, you are non-resident for the tax year.
Don’t forget the SRT applies to each tax year, so it’s run the test each April when the tax year ends.
A. The Automatic Non-Residence Tests
- You must have been UK resident in one or more of the three earlier tax years
- You must have spent less than 16 days in the UK during the tax year
Move on to the next test if you do not meet the conditions.
This test does not apply if someone dies during the tax year.
- You must not have been UK resident in the three earlier tax years
- You must have spent less than 46 days in the UK during the tax year
Move on to the next test if you do not meet the conditions
- You are non-resident if you score 35 or more on the sufficient hours test
- You spend less than 91 days in the UK during the tax year
- You work for more than three hours a day in the UK for less than 31 days
- You have no significant break working overseas
B. The Automatic UK Residence Tests
- You are UK resident if you spent 183 days or more in the UK during the tax year
You are UK resident if:
- You have a home in the UK for some or all the tax year
- You had a UK home for at least 91 days in a row across one or two tax years
- You spent 30 or more of those 91 days at your home
- You had no overseas home or if you did, you spent fewer than 30 days there during the tax year
If you have two UK homes, run the test for each but only one of them must meet the conditions.
You are UK resident if the following three conditions apply:
- You worked full-time in the UK every day during any period of 365 days in a row
- More than 75% of the days you worked in the 365-day period when you worked more than three hours were in the UK
- At least one day when you worked for three or more hours in the UK is in the 365-day working period and the tax year in question
If you do not meet the automatic overseas or UK tests, move on to the sufficient ties test
C. The Sufficient Ties Test
Ties are an expat’s connections with the UK. The tests are a combination of time spent in the UK together with any connections with the country.
The ties are:
A family tie is a UK resident during the tax year who is:
- A spouse or civil partner who you are not separated from
- Someone you are not married to who you are living with as a spouse or civil partner
- Your child aged under 18 years old who you spend more than 61 days with during the tax year, including part days.
The accommodation tie applies if someone has a home, holiday home or somewhere else where they can live in the UK and:
- The accommodation is available for them to live in for 91 days or more during the tax year
- They spend one or more nights there during the year
- They stay at the home of a close relative for 16 or more nights during the year
Close relatives are parents, grandparents, brothers, sisters, or grandchildren aged 18 or over. The definition includes full and half-blood relatives and adopted children.
Gaps in availability of 16 days or less count as available accommodation.
A work tie means doing more than three hours work a day for at least 40 days in a tax year, including days when someone leave the country.
90 Day Tie
The 90-day tie applies to anyone spending 90 days a year in the UK during the earlier two tax years to the year in question.
You will have a country tie to the UK if you are in the UK at midnight on the greater number of days in the tax year.
If you spend an equal number of nights in two or more countries including the UK in the tax year, you will still have a country tie with the UK.
How Ties Combine With Days Spent In The UK
The test is simple – the more ties you have with the UK, the fewer days you can spend in the country before becoming resident.
The first table applies to someone UK resident for one or more of the past three years, while the second applies to someone non-resident in one of the past three years.
Days v Ties if UK resident in one or more of the three earlier tax years
|Days spent in the UK in the tax year under consideration||UK ties needed|
|16 – 45||At least 4|
|46 – 90||At least 3|
|91 – 120||At least 2|
|Over 120||At least 1|
Days v Ties if non-resident in the three earlier tax years
|Days spent in the UK in the tax year under consideration||UK ties needed|
|46 – 90||All 4|
|91 – 120||At least 3|
|Over 120||At least 2|
SRT for Expats Working Overseas
HMRC will view an expat scoring more than 35 on the sufficient hours test as working full time overseas.
Scoring the Sufficient Hours Test
The sufficient hours test is a five-step calculation to find out if an expat works full time overseas.
1. Count your ‘disregarded days’
These are the days when an expat works for three or more hours in the UK, including days when working overseas on the same day
2. Count the hours worked overseas
Take any days worked either for an employer or as self employed and count the number of hours worked in the tax year. Count hours at work, not contracted hours while ignoring hours worked on any disregard days
The result is the number of ‘net overseas hours’
3. Calculate the reference period
Take the number of days in the tax year – 365 or 366 for a leap year – and subtract:
- The number of disregarded days
- Any days counted as gaps in employment
- Any other days reducing the reference period
The result is the ‘reference period’
Extra rules allow some non-working days:
- Days when someone would have worked but were on sick leave
- Days spent on leave or parenting leave
- Other non-working days included in sick leave, annual leave, or parenting leave
Disregard days are excluded from calculating the reference period.
4. Work out the number of sufficient hours
Working out the number of sufficient hours is a two-step calculation:
- Divide the reference period by 7
If the result is more than 1 but not a whole number, round down to the nearest whole number, but if less than one, round up to 1
For example, if the result is 32.65, round down to 32, or round up 0.66 to 1
- Divide the net overseas hours worked out in step 2 by the number from the last calculation.
If the result is 35 or more, then the expat has passed the sufficient hour test, while a result of less than 35 fails the test.
If the test involves split year treatment, use the split year relevant period result instead of the reference period.
Gaps in Employment
The SRT recognises that someone may spend time unemployed during a tax year.
The three accepted scenarios are:
- Changing employers during the tax year or split year relevant period
- If there is a gap spent unemployed
- The employee does not work during the job gap
Any days spent not working are deducted from the reference period (Step 3 of scoring the sufficient hours test).
The limit is no more than 15 days for one gap unemployed or 30 days for two or more job changes.
This rule does not apply to the self-employed.
SRT and Split Year Treatment
SRT classes someone as UK resident or non-resident for a full tax year.
Expats leaving the country to live or work overseas or coming to the UK from overseas can split the tax year in to two parts. For one part, they are tax-treated as UK resident and non-resident for the other.
Learn about the Split Year Treatment here.
Applying the SRT to Deceased Expats
Executors must deal with any taxes a deceased expat may owe in the UK.
Special rules and extra tests apply to working out if the deceased was UK resident for all or part of a tax year.
Taking SRT Advice
The Statutory Residence Test is a notoriously complicated set of rules best worked through with a qualified professional familiar with the law.
This guide explains many of the tests and rules but should not be considered as advice.
Statutory Residence Test FAQs
The Statutory Residsfgence Test is a complex set of rules that determine if expats are UK resident for tax or not.
Taking the test means working carefully through the rules and correctly counting the number of days you spent in the UK.
Here are some answers to the most popular questions about the Statutory Residence Test.
The Statutory Residence Test decides if you are UK resident or not – and if you are you must pay UK income and capital gains taxes on your worldwide income and sales of assets.
Tax law talks about UK residents and non-residents with no mention of expats. Expats can be resident or non-resident in the UK depending on their personal circumstances which can only be decided by taking the Statutory Residence Test. You can’t decide you are non-resident – the tests will work it out for you.
Taking advice on your residence status is a good idea before leaving the UK for overseas, but you can’t take the Statutory Residence Test until the tax year has ended because you may not know how many days you have spent in the UK.
It’s a good idea to keep logs – one for travel, one for work and one for country ties. These will help you with taking the test and you may be asked by HMRC to proof where you were at certain times during a tax year.
Although you will pay UK taxes, you also get UK tax benefits, like tax relief on pension contributions and investments in the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS).
The answer depends on your personal circumstances, like family, accommodation and if you work full0time overseas. Generally, that’s the aim of the Statutory Residence Test – working out if you are tax resident or not.
It’s unlikely you are non-resident in your first tax year overseas. It depends on the date you left the country, so you will fall under split year treatment that will class you as resident for part of the year and non-resident for the rest.
SRT qualifying days are those where you are in the UK at midnight, but a lot of rules and tests apply to part days, depending on your personal circumstances.