Service: International Tax Taxation 

Topic: Coronavirus 

COVID 19: Impact on UK tax residency

By Sonal Shah

09 Nov 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.

Updated 9 November 2020

Although the United Kingdom has not closed its international borders, the Government has recently advised against all non-essential travel and has implemented strict measures on social distancing for a second time. 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 maintaining 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 6 April to 5 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 updated its guidelines on exceptional circumstances. As such, the following are 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.

The above has been the case since March 2020 and despite the scale of the pandemic and the UK entering a second lockdown, the maximum number of days which can be disregarded remains at 60.

Recently, HMRC also confirmed that the rules surrounding a ‘significant break’ from overseas work, will not be relaxed.

Days worked in the UK

HMRC has confirmed it will not tax any days worked in the UK by a non-resident because of coronavirus restrictions. 

This means employment income relating to the period the non-resident intended to leave the UK and the date they left, will not be taxable if:

  • the income is taxable in the individual's home country, and
  • the individual left the UK as soon as they possibly could.

However, any days spent in the UK where the individual worked more than three hours, whilst maybe not taxable, will still count towards the 30 UK workdays allowed as part of the SRT.

Days working on COVID-19 related activities

It has been confirmed that non-resident individuals in the UK between 1 March 2020 and 1 June 2020 working on COVID-19 related activities will not have these activities count towards the residence test.

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 traveling 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 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?

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 one of our resident international tax specialists. You can reach me at

Stay well and keep safe!

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