The statutory residence test was introduced in 2013/14 to provide certainty to those who need to determine their tax residence for a given year. But how do the rules work in practice and what traps might be lurking to catch out the unwary?


Until 2013/14 the question of whether an individual was resident or not in the UK for tax purposes was based on a supposedly simple day count in any one year. There was no statutory legislation governing this, only HMRC?s published guidance in booklet IR20 .

One particular individual, Robert Gaines-Cooper, took great pains to ensure he stayed below the limits for days present in the UK and claimed that he was non-resident for several decades. HMRC disagreed, pursuing him for unpaid tax dating back to 1982, despite his not meeting any of the conditions for residence set out in IR20. HMRC eventually won the case (which was appealed unsuccessfully in the Supreme Court), citing amongst other things that IR20 was only ever intended to be guidance and (conveniently) did not represent the law (see Follow up ).

Pro advice. The Gaines-Cooper case is a useful reminder that HMRC?s guidance can be and often is successfully challenged.

The saga directly led to the development and eventual introduction of the statutory residence test (SRT) in the Finance Act 2013 . The aim of this is to give certainty to individuals in respect of their residence status in any given tax year. How does it work?

Example. Ieuan is a UK-domiciled individual who has spent several years outside the UK. However, he has spent the 2013/14 year living and working in a number of countries, including the UK. He is confused by the SRT and, with the 2013/14 tax return deadline fast approaching, has approached you for advice as to whether he is resident or not for the year. He has given you the following key information:

Occupation: Self-employed civil engineer

Number of days in the UK: 98 (none in the prior five years)

Number of work days in the UK: 53

Number of work days in Dubai: 104

Number of work days in Hong Kong: 13

Ieuan typically works ten hours a day when working, and took an initial six-month lease on a flat in Cardiff when he undertook a contract there in September 2013. As he is hoping to work in the UK again in the future, he kept the flat on and is renting it indefinitely. He is single and owns an apartment in Dubai, where he spends most of his non-working time.


The SRT is potentially a three-stage logical process. It first seeks to determine whether an individual is definitively not resident for any given tax year. If a definitive answer cannot be reached, then the second test – that for definitive UK residence – is undertaken. If this does not provide a conclusive answer, then the third ?tiebreaker? test must be applied, which considers the number of connecting factors the individual has to the UK. These tests can be confusing so we?ve summarised them in three flow charts (see Follow up ).


The first consideration is whether the individual was tax resident in the UK in any of the previous three tax years. Dependent on the answer to this, the next consideration is whether the individual has been present in the UK for fewer than either 46 days (if ?no?) or 16 days (if ?yes?). If the individual has been present for less than the relevant day count for the tax year in question, they are classed as definitively not UK resident for that year. If these day counts are exceeded, the individual can still be definitively non-resident if they are working full-time abroad, is present in the UK for no more than 90 days, and has no more than 30 UK work days in the tax year. If these considerations are not met, we move on to the second test.

Pro advice 1. Full-time work abroad for this purpose broadly means employment or self-employment constituting at least an average of 35 hours per week (per the legislation), with no significant break.

Pro advice 2. A day in the UK for SRT means being present at midnight (subject to certain other rules such as the deeming rule (see Follow up )).

Example. Ieuan was not resident in the UK in any of the three preceding tax years, but spent more than 45 days in the UK. He does not meet the full -time work abroad conditions, averaging less than 35 hours per week (and presumably has a significant break), exceeds the 90-day count, and exceeds the 30-day work day count. He must therefore proceed to Test 2.


The second test begins by considering if the individual is present in the UK for at least 183 days in the tax year.

Pro advice. If you know this is the case, there?s no point proceeding with the SRT at all – an individual present in the UK for 183 days or more in a tax year will always be classed as resident.

Assuming the answer is ?no?, the test then looks at whether the individual has their only home in the UK for a period of 91 consecutive days, at least 30 of which fall in the tax year.

Pro advice. ?Home? can include any accommodation with sufficient permanence, and does not require ownership. It can potentially therefore include a house, flat, hotel or even a caravan or houseboat.

If the answer is ?yes?, the individual can be definitively classed as resident. If not, their UK work pattern must be looked at. The test seeks to ascertain whether the individual in the tax year averages 35 hours per week, has no significant break from this work and has more than 75% of their work days in the UK. If all three conditions are satisfied, the individual is resident, and if not, we must consider the third test.

Example. Ieuan is not present in the UK for at least 183 days, and does not have his only home in the UK. He clearly does not meet any of the UK working tests, and so must proceed to Test 3.


The third test is designed to be a tiebreaker where the first two tests do not provide a definitive result, and combines the day count for the year with the number of connecting factors the individual has in a matrix. The first consideration (as in Test 1) is whether the individual was resident in any of the three preceding tax years.

The answer determines whether there are four or five potential connecting factors to consider, and how many days the individual can subsequently spend in the UK given the number of factors which are present. These are presented in Tables 3A and 3B in the Test 3 flow chart (see Follow up ). The five ties are: family resident in the UK (spouse/civil partner/live-in partner and/or minor children); substantive UK work (at least 40 days of three+ hours? work in the tax year); accessible UK accommodation; spent more than 90 days in the UK in either of the prior two tax years; and more days in the UK than any other individual country (only a factor if answering ?yes? to the initial question on prior residence).

Pro advice. Accessible accommodation means anywhere that is available for at least 91 days with no breaks of 16 or more consecutive days. Whether the accommodation is occupied is irrelevant.

Example. Ieuan has not been resident in the UK in the previous three tax years. He has no family and has not spent 90 days in the UK in either of the prior two tax years. He does, however, have substantive UK employment and accessible accommodation in the UK. He has two connection factors. Per Table 3B, he would need three connection factors to be resident so he?ll be non-resident in 2013/14; however it?s worth noting that if his day split were the same in the next year, he would also have the 90-day connecting factor, and have three connecting factors. He would therefore be classed as resident – which is important as it would bring all his worldwide earnings into the UK income tax charge.

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