How to Become a Non-UK Resident for Tax Purposes

Residency needs careful considerations as it has tax implications.

Whether you are relocating overseas for a new job or pursuing a lifestyle change, understanding your UK tax residency status is crucial, as it determines the extent to which your worldwide income and gains may be subject to UK tax.

Why UK tax residency matters

Even after leaving the UK, you may still be considered a UK tax resident, which can lead to:

• Liability for UK tax on your worldwide income and gains
• Loss of valuable tax reliefs or exemptions
• Penalties and interest for incorrect or incomplete self-assessment filings

In short, misjudging your residency status can be costly, both in terms of unnecessary tax and compliance issues.

Statutory Residence Test

Many individuals assume they automatically become non-resident by spending fewer than 183 days in the UK. However, UK tax residency is not determined that simply.

The UK applies a comprehensive framework called the Statutory Residence Test (SRT), which takes into account not only the number of days spent in the UK but also various connections, including:

• Whether you have a home in the UK
• Family ties
• UK workdays
• Time spent in the UK during the previous two tax years

The outcome of the SRT can vary significantly based on individual circumstances, making tailored advice essential.

Common scenarios impacting residency

1. Individuals relocating overseas for full-time employment may qualify as non-resident under the third Automatic Overseas Test, provided they:

• Meet the criteria for full-time work abroad,
• Spend no more than 90 days in the UK during the tax year, and
• Work no more than 30 days in the UK within that same period.

2. Individuals not engaged in full-time overseas employment are more likely to be assessed under the Sufficient Ties Test. This test evaluates the number of UK connections an individual has, along with the number of days spent in the UK during the relevant tax year to determine their residency status.

How we can help

Our specialists help individuals navigate the complex rules of UK tax residency. Whether you are in the early stages of planning or already overseas, we can help ensure your tax position is both compliant and efficient.

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