With the coronavirus (COVID-19) pandemic impacting the ability to move freely to and from the UK, it is important to consider the wider tax consequences. If you remain unexpectedly in the UK it may affect your UK residence status which is generally determined by the amount of time you spend in the UK each year. Peter Webb, our International Tax Manager, provides an update following clarification from HMRC:
In the light of the COVID-19 global crisis HMRC has published guidance to clarify the position for “exceptional circumstances”, which can apply when calculating residence status. The advice is that exceptional circumstances can apply 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
This is a welcome and timely clarification of how these complex rules will be applied in these exceptional times.
An overview of non-residence rules
If you live or work overseas the number of nights you can spend in the UK to guarantee non-resident status is limited. Generally, you can spend a maximum of 90 midnights in the UK (with no more than 30 UK work days each tax year) and keep your non-residence. If you are not working overseas, but have been non UK resident for more than three years, you are allowed to spend up to 45 midnights in the UK without becoming UK resident. However, if you have been UK resident in any one of the previous three years, and you are not in full time work overseas, the limit for visiting the UK to guarantee your UK non resident status is just 15 nights.
It’s possible to spend more time in the UK without triggering a change in your status, but this is of course a grey area, and depends on a number of factors including both your overseas connections and your ongoing ties to the UK. A specialist tax adviser will be able to provide help as needed.
Exceptional circumstances – the current guidelines
Within the current rules there is provision about circumstances beyond your control. Until now this has covered a range of situations, such as you or a close family being taken ill while you are visiting the UK. HMRC has dealt with these circumstances by allowing you to deduct the number of “exceptional circumstances” nights away from the total number of days you have visited the UK in the tax year. The limit on “exceptional circumstances” is a maximum of 60 days or nights in each tax year with the proviso that you must leave the UK as soon as you are able to after any exceptional circumstance ends. It is yet to be seen how long any current restrictions may be in place for, and whether this evolving situation may force HMRC to provide additional updates.