21 September 2011

UK Statutory Residency Test

Christopher Groves
Partner | UK

On 18 June 2011 the Treasury launched its consultation on a new statutory test for what constitutes tax residency in the UK. The new test is designed to provide certainty for taxpayers in assessing their residency treatment. While this certainty will be welcomed, it does come at a price and some of the permissiveness of the current regime will be lost. For many individuals, this will be a price worth paying. The new rules are intended to be introduced with effect from 6 April 2012.

The Safe Harbours

The effect of the new rules is firstly to introduce a number of ‘safe harbour’ guidelines within which an individual cannot be treated as tax resident in the UK. These are:

  1. for those who have not been UK resident in the previous three years, spending less than 45 days in the UK;
  2. for those who have been UK resident in the last three years, spending less than 10 days in the UK; and
  3. working abroad full time.

At the other end of the spectrum, those who spend more than 182 days in the UK or who work in the UK full time will always be treated as resident.

For those who fall in between, there will be a sliding day count scale that will determine whether an individual will be treated as UK resident depending on the number of ‘factors’ that link him to the UK. Rather than look at all an individual’s facts, there will be only five ‘factors’ that are considered under the new test.

The Factors

  1. Family – whether your spouse (or civil or unmarried partner) and minor children are UK resident.
  2. Accommodation – whether you have an ‘accessible’ home in the UK.
  3. Employment – whether you have ‘substantive’ employment in the UK (more than 45 days’ work a year).
  4. UK day count – whether you spent more than 90 days in the UK in either of the previous 2 tax years.
  5. Overall day count – whether you spend more days in the UK than your any other jurisdiction (this is only relevant for those who have been resident in the UK in the previous 3 years).

Individuals who have been UK resident in the last 3 tax years (‘Leavers’) are treated differently to those who have not (‘Arrivers’). Leavers will have to go further to be treated as non-resident as the table below shows.


The Test Days in the UK Leaver Arriver
Fewer than 10 Always non-resident Always non-resident  
10 – 44 days Resident with 4 factors Always non-resident  
45 – 89 days Resident with 3 factors Resident with 4 factors  
90 – 119 days Resident with 2 factors Resident with 3 factors  
120 – 182 days Resident with 1 factor Resident with 2 factors  
183 days or more Always resident Always resident










So, consider a single man not previously resident in the UK. He buys a house here (1 factor) but is not employed in the UK and has not spent more than 90 days a year in the UK. As he satisfies just one factor, he could spend up to 182 days in the UK next year. The year after, he will have a second factor (the 90 day factor) and so will need to reduce his days spent in the UK to 119. If he were then to start co-habiting with a UK resident, he would have a third factor and will need to reduce his days further still to 89 if he wishes to remain non-UK resident.

By comparison, consider a married woman who wishes to cease to be UK resident before she sells her business. Her husband wishes to carry on working in the UK until he retires in a few years. Assuming she spends more time in the jurisdiction of her new home, she will satisfy 3 factors (family, accommodation and the 90 day count) and so will need to spend less than 45 days in the UK to be treated as non-UK resident.

For more details on the proposed new rules please see our comprehensive stop press and other materials here.

Christopher Groves Partner | London

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