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Coronavirus (COVID-19) and the Statutory Residence Test

The Coronavirus (COVID-19) pandemic could have significant ramifications on the UK tax residence status for people forced to stay in the UK under travel and health restrictions. This article explains what you need to understand and how you can avoid any tax UK complications

Written by Jamie Favell on 30 April 2020

The UK tax residency status of people who have been unexpectedly stuck in (or away from) the UK, due to the direct impact of government policies relating to the Coronavirus (COVID-19) pandemic. Governments are either shutting borders, or forcing people into quarantine, which will have an impact on where they are legally required to pay tax.

For British expats who have returned home, and for foreign nationals visiting the UK during the Coronavirus pandemic, this disruption is causing significant concern, as they are required to spend a limited amount of time in the UK in order to maintain their UK non-resident tax status.

In the UK, the Statutory Resident Test (SRT) has been used since 2013 to provide an outline of the amount of time someone can spend in the UK, without becoming a UK tax resident.  While the SRT can be a complicated set of rules, it is possible to avoid becoming a UK tax resident if followed carefully.

Unfortunately, when travel restrictions, lock-downs and border closures are enforced by the authorities (as has happened in most countries due to the Coronavirus pandemic – especially combined with the health concerns), it’s highly likely that more time will be spent in the UK which could ultimately mean more people automatically become UK tax residents.

How exceptions are defined for the Statutory Residence Test

While the Statutory Residence Test is a rigid set of rules under normal circumstances, it does also provide a set of exemptions that can be applied under exceptional circumstances. This permits certain amounts of time in the UK to be ignored. Under the standard exemptions, the maximum number of days which can be ignored under exceptional circumstances is 60 (sixty).

The HMRC has created clear definitions of what they declare as “exceptional circumstances”:

“Days spent in the UK may be ignored if the individual’s presence in the UK is due to exceptional circumstances beyond their control. This will usually only apply to events that occur while an individual is in the UK and which prevent them from leaving the UK.”

“Exceptional circumstances will normally apply where an individual has no choice concerning the time they spend in the UK or in coming back to the UK. The situation must be beyond the individual’s control.”

Here’s what HMRC consider what an exceptional circumstance might be:

“The type of events which may give rise to exceptional circumstances will be, by their nature, out of the ordinary and it is difficult to be prescriptive about what characteristics such an event would exhibit. However local or national emergencies, such as civil unrest, natural disasters, the outbreak of war or a sudden serious or life-threatening illness or injury to an individual are examples of circumstances that are likely to be exceptional.”


Considering these definitions, the Coronavirus and its wider impact is beyond the individual’s control and the HMRC have confirmed that it will be considered an “exceptional circumstance”.

Potential conflicts with the exceptional circumstances and the Coronavirus pandemic

While it is clear that this pandemic would most certainly be considered as “exceptional circumstances”, there are still concerns that arise regarding current strict limits that apply when disregarding time in the UK due to Coronavirus.

Firstly, the 60 day limit itself is looking like it potentially might not be enough. Initial suggestions from global health experts and other governments, say that some of the restrictions being put in place are likely to have an impact for far longer than the 60 days limit. Unless the HMRC change their rules, or create an exception to the exceptional circumstances, only 60 of those days in the UK could be ignored as it stands.

It is also possible that the “circumstances beyond their control” could be challenged by the HMRC, on the basis that the current rules state that “exceptional circumstances” will only apply when someone has no choice when concerning the time they spend in the UK (or coming back to the UK). However, that may not be the case, as people could still potentially travel, but their personal circumstances could dictate that it is either safer not to do so, or they have other commitments which would not permit them to. HMRC may consider these to be exempt from the exceptional circumstances. 

How SRT exceptions could be applied for people in the UK or abroad

Despite HMRC eventually defining the coronavirus outbreak as an “exceptional circumstance” as per the conflicts and exceptions to the rule, there is a risk that some decisions made by individuals might not be considered beyond their control. An example of this; there may not be a travel ban to a particular country, but you may actively choose to stay in the UK, rather than travel. It is currently unclear whether a decision based on that information would count as an “exceptional circumstance”, especially if you consider HMRC’s guidance as it is currently written.

Under the rules, it should also be highlighted that HMRC’s current guidance does not consider travel delays/cancellations as “exceptional circumstances”. Therefore, if a travel issue could have been foreseen (i.e. potentially logical that borders will be shut in other countries) this would not be considered an “exceptional circumstance”. 

If you took the guidance somewhat literally, it is certainly possible to see how – even with the restrictions and pandemic being a clear “exceptional circumstance” – the HMRC could rule that certain amounts of time spent in the UK due to the coronavirus as not being exceptional.

To try and help clarify whether a particular situation could lead to the “exceptional circumstance” rules being applied, we have created the case of Simon:

Simon works and lives full time overseas but has a UK resident family.

Simon works and lives in Dubai in the legal industry. As Simon works in the UAE full time, while also maintaining his UK non-resident status (using the ‘full-time work overseas’ test), his family continue to live in the UK.

To meet the requirements of this test Simon would essentially need to work full-time overseas (with no significant gap from his overseas work exceeding 31 days). He would also need to spend fewer than 90 nights in the UK, and fewer than 30 workdays in the UK.

Using an accountant, he carefully manages his residency position on a year by year basis and is considered a non-resident of the UK, which ultimately means he has no UK tax liability.

Unfortunately, Simon has already spent 55 nights in the UK in the tax year, as his wife falls ill and is hospitalised due to Coronavirus. Thankfully, his wife makes a full recovery after 55 days, however during the time Simon is in the UK, travel restrictions have been imposed which has meant he spends a further 90 nights in the UK, meaning that Simon will have spent a total of 145 nights in the UK in the tax year.

Overall, Simon’s return to the UK to care for his wife and family will automatically be accepted as “exceptional circumstances”, as well as his remaining in the UK due to the travel restrictions in place. Simon can therefore ignore up to 60 nights in the UK as per the maximum permitted under the “exceptional circumstances” rule.

Normally, with the removal of the 60 days under “exceptional circumstances”, Simon would have actually only spent 85 days in the UK, meaning that he would still be classed as a non-resident. However, the current law is that the exceptional days test does not apply to the 31 day/significant break test for working full time overseas.

This ultimately means Simon would have failed the test and therefore likely to have triggered UK tax residency, despite the clear exceptional circumstances which brought him to the UK and forced him to stay.

If that were to be the case, under the current tax laws, Simon might therefore have additional UK tax liabilities on his employment income which he would otherwise have avoided.

Is the Coronavirus pandemic an exception to the exceptional rules?

That the “exceptional circumstances” rules were not created with a pandemic of this scale in mind.

Given the truly exceptional circumstances surrounding Coronavirus, HMRC have confirmed that the “exceptional circumstances” rules will apply to people stuck in the UK as a direct result of the current pandemic. 

In addition, a specific Coronavirus exception could eventually be introduced, which makes it clear that any disruption during a certain period will be looked at more leniently. While we are relatively confident that this is likely, our partners have fully committed to lobby for such an exemption on behalf of any introductions made through our network.

One thing that should be factored into any time in the UK is that if you work in the UK, any days worked might not be considered for the "exceptional circumstances" exemption. Therefore, if you work during your time in the UK you should seek advice about whether you could become a tax resident of the UK and make the necessary plans with both your employer and a tax expert who can assist with your situation.

Seeking advice around tax planning and double tax treaties

Regardless of any potential changes, you must always consider speaking to a UK and international tax specialist to help you plan your situation, to try to mitigate your tax liability.

If you are a dual resident and live in a country which has a Double Tax Agreement in place with the UK, then you could claim that you are a treaty resident outside of the UK, restricting the UK’s taxing rights over your income. 

If there isn’t a Double Tax Agreement in place, then it would be possible to claim a foreign tax credit in the UK to reduce your tax exposure.

Given the extremely complexities, special cases and constantly changing landscape, you should not attempt to resolve your tax situation without specialist help.

If you are concerned about your tax status in light of the Coronavirus pandemic, we can introduce you to a tax specialist who will be able to evaluate your current situation, run through the Statutory Residence test with you and assist with your UK tax planning. This will confirm your UK tax residency status and any other related help to ensure you are not paying unnecessary tax.

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