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The impact of the COVID-19 pandemic on worldwide travel has been significant, leading to many being unable to travel to or from the UK, which will of course impact the UK day count when applying HMRC’s Statutory Residence Tests (SRT). Will you be UK resident for the current 2020/21 tax year by virtue of your days in the UK? Andy Wood and Rachel Wagstaff have previously set out their thoughts on this subject in the two blog posts found here. Coronavirus & Self-Isolation – impact for Statutory Residence Test and Residency, Remote Working & Tax.
The legislation already allows for days to be excluded from the UK day count where there are “exceptional circumstances”, i.e. a situation which is completely out of the ordinary, that prevents departure from the UK. This allowance permits up to a maximum of 60 days in any one tax year and will depend on the facts each individual case. HMRC acknowledge that the COVID-19 pandemic prevents some individuals from travelling to and from the UK and so back in March announced that in some scenarios, up to 60 UK days may be disregarded due to COVID-19. However, the facts of each case will need to be considered to determine if exceptional circumstances will apply. Note that the number of days that can be disregarded has remained at 60, despite the scale of the pandemic.
Example: John, a UK national, has worked overseas in Portugal for many years and has no UK income and so as a non-resident he does not have any UK tax liabilities or filing requirements. In March 2020 he returned to the UK as his employer allowed him to work at home. His employer didn’t ask him to return to the UK it was a personal choice to return to his family. He finally return to Portugal in October 2020. The question is whether John will be allowed to claim exceptional circumstances of up to 60 days, for this time in the UK. It appears that John had a choice to return to Portugal before October 2020 however his personal circumstances dictated that it was not safe to do so. HMRC may consider that these circumstances will not qualify for exceptional circumstances. The situation may be different if John was prevented from leaving the UK for example if the border with Portugal was closed to all travellers. The number of days spent in the UK could trigger UK residency for the 2020/21 tax year.
Remember, if you are UK resident then your worldwide income and gains will be within the scope of UK taxation (subject to the availability of the remittance basis).
Get in touch with us today if you would like to discuss your UK residence position in further detail.