United Kingdom — Tax: Tax Residency

Why this matters

Understanding tax residency in the UK is crucial for relocating individuals to avoid unexpected tax liabilities and comply with tax regulations.

Key facts

• Residents are generally taxed on all income including foreign income; non-residents are taxed only on UK income.
• You are UK resident only if you meet at least one automatic UK test or the sufficient ties test, and none of the automatic overseas tests.
• Automatic UK tests: 183 or more days in the UK in the tax year; a UK home for 91 or more days in a row with at least 30 days of visits or stays in the year; or full-time work in the UK over a 365-day period that includes a day in the tax year.
• Automatic overseas tests: fewer than 16 days in the UK, or fewer than 46 days if not UK resident in the previous 3 tax years; or full-time work abroad averaging 35 hours a week with fewer than 91 days in the UK, no more than 30 of them working.
• Split-year treatment can divide the tax year into resident and non-resident parts when you move in or out.
• Non-residents usually pay UK Capital Gains Tax only on UK property or on gains made after returning to the UK.

Steps

1. Determine the length and frequency of visits to the UK — Relocating individuals should keep a record of their visits to the UK, including dates of arrival and departure, to help determine their tax residency status.
2. Assess connections to the UK — Individuals should consider their connections to the UK, such as family ties, business interests, or property ownership, to help determine their tax residency status.
3. Consult a tax professional — Relocating individuals should consult a tax professional or accountant who is familiar with the UK tax system to determine their tax residency status and ensure compliance with tax regulations.