Category: TaxationCoronavirus

COVID 19: Impact on UK tax residency

By Sonal Shah

25 Mar 2020

One of the key impacts of the COVID-19 pandemic has been the disruption to travel, which has stranded individuals, preventing them from moving freely between countries and, in many cases, unable to return home to their loved ones. The significant travel restrictions together with stringent advice on self-isolation have already imposed a significant financial burden on individuals.

Although the United Kingdom has not closed its international borders as yet, the Government has recently advised against all non-essential travel and has implemented strict measures on social distancing. When putting all of this into perspective, tax is the last thing on everyone’s minds. 

The irony is that a significant number of those individuals who have committed to maintain the prescribed number of days to avoid becoming a UK tax resident will now find themselves exceeding their limit and faced with a potential unexpected change in residency status and/or tax bill. 

Since 2013, the UK residency rules have become a lot simpler and much easier to follow. The Statutory Residence Test (SRT) has been used to determine whether an individual is resident in the UK for tax purposes in any given tax year.  A tax year in the UK runs from 6th April to 5th April of the following year. The SRT is based on three definitive tests and, although each of the tests is based on distinct criteria, the key component in each is the counting of the number of days during which an individual is present in the UK. 

Day counting for SRT purposes
The basic rule is that individuals are treated as being present in the UK on any day in which they are in the UK at midnight, known as the “midnight rule”. However, there are two exceptions to the midnight rule being:

  • Transit days
  • Exceptional circumstances which are beyond the individual’s control

COVID 19 – Exceptional circumstances
The SRT provides statutory relief which may be used to exclude from an individual’s day count any day which relates to exceptional circumstances, provided there is an intention to leave the UK as soon as the circumstances permit. The number of days one can disregard due to exceptional circumstances is restricted to 60 days in any tax year.

In the light of international and national emergencies due to COVID-19, HMRC has recently updated their guidelines on exceptional circumstances. As such, the following will be considered exceptional and the relevant days will be disregarded for SRT purposes:

  • you are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
  • you find yourself advised by official Government advice not to travel from the UK as a result of the virus
  • you are unable to leave the UK as a result of the closure of international borders, or
  • you are asked by your employer to return to the UK temporarily as a result of the virus.

HMRC guidance and the unknowns
There are still several areas of concern for individuals and each case should be looked at separately.

  • What if an individual cannot continue with their current travel plans but the alternatives are available at sky high prices, would this qualify as an exceptional circumstance? 
  • What if an individual is able to freely leave the UK, but cannot be admitted to the country they are travelling to due to that country’s COVID-19 measures?
  • Public health guidance is currently to self-isolate for 14 days if a person with whom you’ve had contact with has been infected. Would this mean that the individual would be able to obtain relief for this 14-day period, but then would be expected to leave the country immediately after this period is over?

The overriding concern here is whether the 60-day limit on disregarded days is sufficient should things continue for the foreseeable future.

If the crisis goes beyond 60 days and given it is certain to go into the new tax year, how will this affect individuals?  

Remittance basis users
It is likely that remittance basis users who rely on UK source income and gains to fund their lifestyle in the UK will be hit by this crisis. It is expected that UK rental income and dividends from UK source investments is likely to fall and income from employment may also be affected. Careful planning and thought should be given to those seeking to remit funds to the UK from abroad where additional funds are required.

I hope you find this useful. If you require any further advice on this matter or wish to discuss your personal case, please contact Sonal Shah at

Stay well and keep safe!

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