Residency and domicile
A guide to what makes a person UK resident or non-resident.
Residency and domicile are two separate, and quite different, legal concepts, with quite different effects. Domicile ceases to be relevant for UK tax purposes after 5th April 2025, but some transitional relief is available. For a non-resident, domicile has not been relevant in dealing with income tax or Capital Gains Tax . Elements of UK tax for which domicile was relevant are now governed by new rules with a connection to residency.
Am I a UK resident or am I considered to be non-resident?
Since April 2013 we have new law that introduces precise tests for residency or non-residency. The new rules are split into three parts. The first is a simple set of three situations and if you satisfy any one of them you are automatically non-resident. The second is a set of three questions and if you satisfy any one of them you are automatically UK resident. The third is more complicated to deal with cases where you cannot satisfy any of the automatic tests. It awards points for various aspects of your personal situation called “ties”. Then the number of points you score for your ties and the number of days you spend in the UK are compared with a table to show whether you are UK resident or not. While the first two tests are very straightforward the third is complicated. If you have any doubts about your residency status you should contact us.
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The following is an incomplete extract from the HMRC guidance provided here as introduction.
Automatic overseas tests
You are automatically non-resident for a tax year if you meet any one of the following tests.
First automatic overseas test
You were resident in the UK for one or more of the three tax years preceding the tax year, and you spend fewer than 16 days in the UK in the tax year. If an individual dies in the tax year then this test does not apply.
Second automatic overseas test
You were resident in the UK for none of the three tax years preceding the tax year, and you spend fewer than 46 days in the UK in the tax year.
Third automatic overseas test
You work full-time overseas for the tax year without any significant breaks from that overseas work, and:
- You spend fewer than 91 days, excluding deemed days, in the UK in the tax year, and
- the number of days in the tax year on which you work for more than three hours in the UK is fewer than 31. The full-time overseas part of the test does not apply to you if you are an international transportation worker.
If you do not meet any of these automatic overseas tests you should look at the automatic UK tests below.
If you meet any of the automatic UK tests you are resident. If you do not meet any of the automatic UK tests you will need to consider the sufficient ties test.
Automatic UK tests
Subject to not meeting any of the automatic overseas tests, you are automatically resident in the UK for a tax year if you meet any one of these tests:
First automatic residence test
You spend 183 days or more in the UK in the tax year.
Second automatic residence test
The second automatic residence test is relevant if you have a home in the UK. You will meet this test where:
- you have a home in the UK for a period of more than 90 days, and
- you are present in that UK home on at least 30 separate days (individual or consecutive days) during the tax year, and
- while you have that UK home, there is a period of 91 consecutive days, some of all of which falls within the tax year in question, when you have no home overseas, or have one or more homes overseas in none of which you are present for more than 30 (not necessarily consecutive) days during the tax year.
If you have more than one home in the UK, you should consider each of those homes separately to see if you meet the test. You need only meet this test in relation to one of your homes.
Third automatic residence test
You must work an average of 35 hours per week over a 365 day period with no significant breaks from UK work (apart from normal holiday, sickness, etc.). More than 75% of the days when you work more than three hours per day must be worked in the UK and you must work in the UK for more than three hours on at least one day in the tax year.
Sufficient ties test
If you do not meet any of the automatic overseas tests or any of the automatic UK tests, you should use the sufficient ties test to help you decide your UK residence status for a tax year. This test examines your ties to the UK in the following areas:
- family
- accommodation
- work
- number of days spent in the UK
- whether you spend more time in the UK than elsewhere and applies rules to determine whether those ties are sufficient for you to be considered UK resident for tax purposes.
The sufficient ties test can also apply to a deceased person.
The number of days you spend in the UK in a tax year dictates the number of UK ties that are needed for you to be UK resident.
TABLE A: UK ties needed if you were UK resident for one or more of the three tax years before the tax year under consideration
| Days spent in the UK in the tax year under consideration | UK ties needed to be a UK tax resident |
|---|---|
| 16-45 days | 4 or more ties |
| 46-90 days | 3 or more ties |
| 91-120 days | 2 or more ties |
| over 120 days | 1 or more ties |
TABLE B: UK ties needed if you were not UK resident for one or more of the three tax years before the tax year under consideration
| Days spent in the UK in the tax year under consideration | UK ties needed to be a UK tax resident |
|---|---|
| 46-90 days | 4 or more ties |
| 91-120 days | 3 or more ties |
| over 120 days | 2 or more ties |
Different tables apply to the residency of deceased persons and to those who arrive in the UK in the tax year and those who leave the UK during the tax year “Split Year treatment”.
Before attempting to apply the above tables you should study the definition of “day” and should study the conditions required to acquire a “tie”.
The new statutory residence test is complicated and requires expert skills to apply it. If you have any doubt as to your residency status or want help in planning future visits please contact us.
The above notes are only a rough guide to the UK statutory residence test. It must also be pointed out that many of the words, terms and phrases herein have a special meaning given to them which we have not repeated in this article.
Get in touch with us to discuss your residency matters
Domicile
The non-dom regime will end from April 2025 and, together with it, the concept of domicile and the complex remittance basis rules.
The replacement for the non-domicile regime will be a residence-based test, which allows individuals relocating to the UK to be taxed only on their UK source income and gains for the first four tax years, with no UK tax on any foreign income and gains arising in those years, even if brought to the UK. To be within this four-year Foreign Income and Gains (FIG) regime, individuals must be within their first four tax years of UK residence, following a period of 10 tax years consecutive non-UK residence.
Key points
Until the changes take place on 5th April 2025 the regime which has been largely unchanged since 2017 will prevail. The following applies until 5th April 2025 only.
Your country of domicile is often described as the country you consider to be your “mother country”. But if you were born in the UK you will normally be challenged if you claim that you are domiciled elsewhere. Everyone has a domicile, but it can change. For example a second generation of a migrant family may consider that their country of birth (and not the parents’ country of birth) is their domicile. If a person remains in the UK for more than fifteen years, it will be presumed that the UK is the new domicile.
UK residents who are not domiciled in the UK will normally pay UK tax on all their income arising outside the UK unless they use the remittance basis. There is a charge for using the remittance basis starting at £30,000 for those who have been UK resident for seven out of the last nine years (before that there is no charge). This applies to those satisfying certain additional tests as to how long they have been UK resident. The charge increases when you have been resident in the UK more than twelve years out of the last twenty years and the remittance basis is not available after you have been resident in the UK for more than fifteen out of the last twenty years. Special rules apply if the unremitted income and gains amount to £2,000 or less.
Other aspects of the new arrangements are described at Income from abroad.
