UK Tax Residency and Coronavirus (COVID-19)

In these unprecedented times, there are many who have been stranded in the UK unable to return to their home country.  Due to this unintended stay, many non-resident tax payers are likely to fall foul of the Statutory Residence Test (SRT) and become subject to UK taxes (on certain income and capital gains) as UK residents.

In this article we will briefly look at the new HMRC guidance on ‘Exceptional Circumstances’ in relation to Covid-19.

UK Tax Residency and Coronavirus (COVID-19)

To begin with, it is important to first look at what is meant by Exceptional Circumstances.

Amongst other considerations, the number of days spent by an individual in the UK are taken into account when assessing if he/she is to be treated as a UK resident or non-resident for tax purpose.

Where the individual’s presence in the UK is due to ‘Exceptional Circumstances’ beyond their control, the days so spent in the UK can be ignored in some (not all) SRT day count rules. This will usually only apply to events that occur while an individual is in the UK and which prevent them from leaving the UK.

Each circumstance should be assessed on its own merits, however, there are some key points to remember:

  • the situation must be beyond the individual’s control;
  • the individual must intend to leave the UK as soon as those circumstances permit;
  • the maximum number of days in the tax year that can be ignored is 60.

HMRC guidance on Exceptional Circumstances in relation to Covid-19 state the following:

“Whether days spent in the UK can be disregarded due to exceptional circumstances will always depend on the facts and circumstances of each individual case.

However, if 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
  • find yourself advised by official Government advice not to travel from the UK as a result of the virus
  • are unable to leave the UK as a result of the closure of international borders, or
  • are asked by your employer to return to the UK temporarily as a result of the virus

the circumstances are considered as exceptional.”

It is to be noted that no reference has been made to the ‘maximum number of days’ limit of 60 days and will continue to apply. Furthermore, considering the risk and scepticism on resuming travel immediately after the travel restrictions are lifted, as well as advice against ‘non-essential’ travel by FCO, has not been addressed.


Other implication of Covid-19 on the SRT day count rules:

  • In addition to current year, the impact of becoming a resident in the UK in one year may have implication on SRT in the following year(s).
  • It may have an impact on corporate residency of a foreign company i.e. if the foreign company is controlled from the UK. It is to be noted that HMRC guidance states that they do not consider that a company will necessarily become resident in the UK because a few board meetings are held here or because some decisions are taken in the UK over a short period of time. However HMRC will take a holistic view of the facts and circumstances of each case.
  • It is likely that going forward, while assessing the domicile of an individual, it may be relevant to understand in which jurisdiction and under which circumstances did an individual spent his / her time during the Covid – 19 lockdown, together with other connecting ties.
  • A non UK trust may end up becoming a UK trust if any of its trustees become UK residents. Further, if the trust reverts to being a non-UK trust, exit charge will be payable.

In light of the above, it is important that clear records, evidence and reasons are maintained to support any claims made in a tax return(s).

SRT is a comprehensive piece of legislature and not all scenarios and circumstances have been considered here. If you would like to discuss any queries you can contact the Elman Wall team at 020 7600 5667 or email Lerona Waskar at

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