Meaning of 'residence' and how it affects your tax

Your UK tax liability depends on where you are 'resident' and 'domiciled' in a tax year. This guide provides an introduction to the meaning of tax residence and links to further guidance. It also links to guidance on domicile.

It shows how the combination of residence and domicile affects tax on your UK and foreign income and gains.

Up to 5 April 2013, your tax position could be affected if you were ordinarily resident in the UK. However, from 6 April 2013, the concept of ordinary residence has largely been abolished for tax purposes.

On this page:

Tax Residence Indicator

From 6 April 2013 the rules that determine if someone is resident in the UK for tax purposes have been put on a statutory basis. These rules are known as the Statutory Residence Test (SRT). For the majority of people whether or not they are resident for tax purposes is quite straightforward under the test and their position will not change. For those with complex circumstances the SRT will provide more certainty about their residence status.

To help you understand your tax residence status HM Revenue & Customs (HMRC) have launched an on-line tax residence indicator. This residence indicator will give you an indication of your tax residence status after answering a few straightforward questions such as how many days you spent in the UK, where you have a home and if you have family ties.

Check your residence status

Find out more about the SRT and changes to Overseas Workday Relief by following the links below:

The RDR1 is a guide for residents and non-residents on the residence, domicile and remittance basis rules for tax years 2012-13 onwards. It replaces the booklet HMRC6.

RDR1

The HMRC6 booklet should be used as a guide for residents or non-residents for information on rules affecting your tax liability in the UK up to the end of tax year 2012-13 only.

HMRC6

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What counts as 'domiciled' in the UK?

Domicile is not the same as nationality or residence. Broadly you have your domicile in the country that is your 'real' or permanent home, which if you have left, you intend to return to live in at some point in your life. Find out what counts as domiciled and work out where you are domiciled by following the link below.

Meaning of domicile and how it affects your tax

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Tax if you're UK resident

If you're domiciled in the UK

If you're domiciled in the UK and are resident in the UK then you are taxed on the 'arising basis'. This means you are taxed on both your:

  • UK income and capital gains
  • foreign income and capital gains

Paying tax on the remittance basis: an introduction

Capital Gains Tax - find out more

If you're not domiciled in the UK

If you're not domiciled in the UK and are resident in the UK and have foreign income and/or gains then you are taxed on:

  • your UK income and capital gains
  • your foreign income and gains, but you can choose to pay this either using the 'remittance basis' (only when you bring it into the UK) or on all of your worldwide income

Paying tax on the remittance basis: an introduction

Capital Gains Tax - find out more

How you pay UK tax

Many of the taxes you pay in the UK will be deducted automatically, but you may also need to register for Self Assessment. Find out more about when you need to complete a Self Assessment tax return by following the link below.

Do you need to complete a tax return?

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Residence in more than one country at the same time

It is possible to be resident in the UK and another country at the same time - 'dual residence'. In this case you may need to find out whether there is a double taxation treaty between the two countries. These treaties are designed so that you generally don't pay full tax twice on the same income or capital gains.

Double taxation agreements

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What counts as 'UK resident'?

The following guidance covers periods up to and including 5 April 2013 - see the section 'Tax Residence Indicator' in this guide for periods from 6 April 2013.

It is important to understand what is meant by 'resident in the UK' because this will determine what UK tax you have to pay. There is no special definition of the word 'residence' for tax. It takes its normal, everyday meaning. It is not just about whether you have a house or flat in the UK or about how much time you spend there, but the more connections you have with the UK the more likely you are to be UK resident.

You can be resident in more than one country at the same time.

If you have always lived in the UK and no other country then you are resident in the UK.

Number of days spent in the UK

There is no minimum length of time that will make you resident - but if you are in the UK for 183 days or more in a tax year, you will be resident in the UK for that tax year. Generally the more time you spend in the UK the more likely you are to be UK resident.

Notes on counting days

  • if you are counting your days you must include those days on which you have been in the UK at the end of the day (midnight)
  • if you travel through the UK to somewhere else, you don't count the days when you are in transit - providing your activities while in the UK are substantially related to completing your travel, you do not undertake business or social activities and you leave by the following day
  • always remember that the number of days you are in the UK is only one of the things that affect whether or not you are UK resident

If you're in the UK for fewer than 183 days

Even if you're in the UK for fewer than 183 days in a tax year, you might still be UK resident.

If you come to the UK to live or work on a continuing basis you will be resident from your arrival.

Factors that affect your residence status include:

  • whether you have previously been a UK resident
  • where your family, property, business, work, and social connections are
  • the pattern and purpose of your visits to the UK

You are likely to be resident if, over a period of several years, your presence in the UK becomes part of the regular pattern of your life.

You will not become resident if your visits are for a short-term, temporary purpose only - for example, you come to the UK for a holiday or for a short business project for a foreign employer. Find out more in the section 'Visiting the UK when you are not resident' later in this guide.

For more detailed information on the term resident read parts 1 and 2 of the RDR1 - 'Residence, domicile and the remittance basis' guidance notes.

RDR1

If you're an employee working abroad

If you leave the UK to work full time abroad there are a number of things that you must consider. HMRC recommends that you read part 4 of the RDR1 - 'Residence, domicile and the remittance basis' guidance notes.

RDR1

Visiting the UK when you are not resident

You can visit the UK without becoming resident here. When visiting the UK you will not become UK resident if all of the following apply:

  • you have not been resident in the UK before
  • you are in the UK for fewer than 183 days in the tax year
  • you are in the UK for a temporary purpose such as a holiday or short business trip

But you may become resident in the UK if your visits are regular or frequent. If your visits average more than three months (91 days) in a tax year you are likely to become UK resident. For more information read the RDR1 - 'Residence, domicile and the remittance basis' guidance notes.

RDR1

If you were previously resident in the UK you may still visit the UK without becoming resident again. But if you re-establish ties or create new ties to the UK you may become resident again.

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Changes to residence status part way through a tax year

The following guidance covers periods up to and including 5 April 2013 - see the section 'Tax Residence Indicator' in this guide for periods from 6 April 2013.

If you are UK resident at any time in a tax year, you are taxed on your income and capital gains as a resident for the whole tax year. But if you arrive and become resident - or leave and become not resident - during a tax year, your tax may, in certain circumstances, be adjusted so that you are taxed only on income and capital gains for the part of the year that you are living in the UK. This is called 'split-year treatment'.

You can make a claim for split-year treatment in your tax return if you complete one. Otherwise you will need to write to HMRC using the postal address on the most recent correspondence from them and claim that you qualify for one of the following extra statutory concessions (ESCs). If you don't have recent correspondence from HMRC then write to:

HM Revenue & Customs
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX

HMRC6 - Residence, Domicile and the Remittance Basis

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