Question 1

What is the UK Statutory Residence Test (SRT)?

Accepted Answer

The SRT determines whether you are UK resident for tax purposes in a given tax year. It uses automatic tests (automatically resident or non-resident) and, if neither applies, a sufficient ties test considering days in the UK and connecting factors like family, work, and accommodation. The Statutory Residence Test (SRT) was introduced in April 2013 and applies to individuals. It has three parts: (1) Automatic residence tests — you are automatically UK resident if you meet any (e.g., spending 183+ days in the UK, having a UK home). (2) Automatic non-residence tests — you are automatically non-resident if you meet any (e.g., working full-time abroad, spending fewer than 16 days in the UK). (3) Sufficient ties test — if neither automatic test applies, residence is determined by counting the number of 'ties' to the UK (family, accommodation, work, 90-day presence in prior years, country presence) against the number of days spent in the UK. The more ties you have, the fewer days you can spend in the UK without becoming resident. Relevant legislation: Finance Act 2013, Schedule 45 (Statutory Residence Test). Example: An individual who spends 120 days in the UK, has a UK home, and works part-time in the UK would likely be UK resident under the sufficient ties test. By contrast, an individual who spends 60 days in the UK, has no UK home, and works full-time abroad would likely be non-resident. Common mistake: Counting only days in the UK without considering the sufficient ties. Even with fewer than 183 days, you can be UK resident if you have enough connecting ties (family, accommodation, work).

Question 2

What happened to the non-domicile tax regime in 2025?

Accepted Answer

The remittance basis for non-domiciliaries was abolished from 6 April 2025. Former non-doms are now subject to UK tax on worldwide income and gains. A new Foreign Income and Gains (FIG) regime provides a 4-year exemption for newly arriving individuals, and transitional rules apply for existing non-doms. From 6 April 2025, the concept of domicile for tax purposes has been replaced by a residence-based system. The remittance basis (which allowed non-doms to pay UK tax only on UK income and foreign income remitted to the UK) has been abolished. Former non-doms who have been UK resident for fewer than 4 years may benefit from the new FIG regime, which provides a 100% exemption on foreign income and gains for the first 4 years of UK residence. For longer-term residents who were previously on the remittance basis, transitional rules apply: the Temporary Repatriation Facility (TRF) allows qualifying individuals to remit qualifying income and gains at a reduced rate (12% for 2025/26 and 2026/27). Offshore trusts established before 6 April 2025 may retain some protection under transitional trust protections, but these are complex and require specialist advice. Relevant legislation: Finance Act 2025 (as announced in the Autumn 2024 Budget); Income Tax (Trading and Other Income) Act 2005 (as amended). Example: A US citizen who moved to the UK in January 2023 was previously on the remittance basis. From April 2025, they will be subject to UK tax on worldwide income and gains. However, as they have been UK resident for fewer than 4 years, they may qualify for the FIG regime exemption on foreign income and gains. A non-dom who has been in the UK for 10 years would not qualify for the FIG exemption and would be fully taxed on worldwide income and gains. Common mistake: Assuming that the abolition of the remittance basis only affects new arrivals. Existing non-doms need to review their position urgently, as the transition to the new regime requires careful planning.

Question 3

What is Overseas Workday Relief (OWR) and how does it work?

Accepted Answer

OWR allows qualifying UK residents to claim relief from UK tax on employment income relating to workdays performed outside the UK. It is available for the first 3 tax years of UK residence for individuals who were not previously UK resident. Overseas Workday Relief (OWR) is available to individuals who become UK resident after a period of non-residence. Under the new FIG regime (from April 2025), OWR is available for the first 3 tax years of UK residence. To qualify, the individual must: (1) have been non-UK resident in the preceding 3 tax years; (2) become UK resident; and (3) have qualifying employment income from workdays performed outside the UK. The relief allows the foreign portion of employment income (income relating to overseas workdays) to be exempt from UK tax, provided it is not brought into the UK. The relief requires careful tracking of workdays and apportionment of employment income. With the abolition of the remittance basis, the interaction between OWR and the new FIG regime requires specialist advice. Relevant legislation: Income Tax (Earnings and Pensions) Act 2003, Section 336 (Overseas Workday Relief); Finance Act 2025 (FIG regime amendments). Example: A senior executive moves to the UK from the US in June 2025. They spend 40% of their workdays outside the UK. For the first 3 tax years (2025/26, 2026/27, 2027/28), they can claim OWR on the 40% of employment income relating to overseas workdays, reducing their UK tax liability by approximately 40%. Common mistake: Not maintaining accurate records of overseas workdays. HMRC requires detailed workday calendars and apportionment calculations. Without proper documentation, OWR claims can be challenged.

Question 4

How does split-year treatment work for arriving or leaving the UK?

Accepted Answer

Split-year treatment divides a tax year into a UK-resident part and a non-resident part, so you are only taxed as UK resident for the portion of the year you are actually in the UK. It applies in specific circumstances on arrival, departure, or when starting/ceasing full-time work abroad. Split-year treatment applies when you arrive in or leave the UK part-way through a tax year. Instead of being treated as UK resident (or non-resident) for the entire year, the year is split into a resident part and a non-resident part. There are specific cases under the SRT that qualify for split-year: Case 1 (starting full-time work abroad), Case 2 (ceasing full-time work abroad), Case 3 (partner of someone in Case 1 or 2), Case 4 (starting to have a home in the UK), Case 5 (ceasing to have a home in the UK), Case 6 (starting full-time work in the UK), Case 7 (ceasing to have a home in the UK). Each case has specific conditions. Split-year treatment can significantly reduce UK tax liability for the year of arrival or departure, as foreign income earned before the split date is not subject to UK tax. Relevant legislation: Finance Act 2013, Schedule 45 (SRT split-year cases). Example: An individual moves to the UK on 1 October 2025. Without split-year, they would be UK resident for the entire 2025/26 tax year and taxed on worldwide income from 6 April 2025. With split-year (Case 4 or 6), the year is split into a non-resident part (6 April - 30 September 2025) and a resident part (1 October 2025 - 5 April 2026). Foreign income earned before 1 October is not subject to UK tax. Common mistake: Assuming split-year applies automatically. You must meet the specific conditions of one of the split-year cases, and the split date is determined by the rules, not by the individual.

Question 5

What is a double taxation treaty and how does it help?

Accepted Answer

A double taxation treaty (DTT) is an agreement between two countries that prevents the same income from being taxed twice. It allocates taxing rights between the countries and provides relief (through exemption or credit) to avoid double taxation. The UK has double taxation treaties with over 130 countries. These treaties allocate taxing rights for different types of income (employment, business profits, dividends, interest, royalties, capital gains). The most common form of relief is the credit method: the country of residence gives a credit for tax paid in the source country. Some treaties use the exemption method: the country of residence exempts the income (but may still take it into account for rate purposes). DTTs also contain 'tie-breaker' rules for individuals who are resident in both countries: they look at permanent home, centre of vital interests, habitual abode, and nationality in sequence. DTTs are essential for internationally mobile individuals and businesses to avoid paying tax twice on the same income. Relevant legislation: Taxation (International and Other Provisions) Act 2010 (TIOPA 2010), Part 2 (double taxation relief); various bilateral DTTs. Example: A UK resident receives US dividends of £10,000. The US withholds 15% (£1,500) under the UK-US DTT. The UK taxes the dividends, but gives a credit of £1,500 for the US tax paid. Without the treaty, the US would withhold 30% (£3,000) and the UK may not give full credit, resulting in double taxation. Common mistake: Assuming that foreign tax can always be credited against UK tax. The credit is limited to the lower of the foreign tax paid or the UK tax due on the same income. If the UK tax rate is lower, the excess foreign tax is lost.

Question 6

Do I need to pay UK tax if I work overseas but live in the UK?

Accepted Answer

If you are UK resident, you are generally taxed on worldwide income, including earnings from overseas work. However, Overseas Workday Relief (OWR) may exempt the portion relating to overseas workdays for qualifying individuals in their first 3 years of UK residence. UK residents are generally subject to UK tax on their worldwide income and gains. This means that if you live in the UK but work overseas, your overseas earnings are subject to UK tax. However, there are reliefs available: Overseas Workday Relief (OWR) can exempt the portion of employment income relating to overseas workdays for qualifying individuals (first 3 years of UK residence after a period of non-residence). Double taxation treaties may also provide relief by allowing the other country to tax the employment income, with the UK giving a credit. The specific treatment depends on your residence status, the nature of your work, the countries involved, and any applicable treaties. Specialist advice is strongly recommended for internationally mobile workers. Relevant legislation: ITEPA 2003, Section 336 (OWR); TIOPA 2010 (double taxation relief); Finance Act 2025 (FIG regime). Example: A UK resident who works 30% of the time in France may be able to claim OWR (if within the first 3 years of residence) on the 30% of income relating to French workdays, or claim a foreign tax credit if French tax is paid on the French workdays. Without any relief, the full income (including the French portion) would be subject to UK tax. Common mistake: Assuming that working overseas automatically avoids UK tax. If you are UK resident, worldwide income is subject to UK tax unless a specific relief or treaty applies.

Cross-Border Tax Advice for Individuals and Businesses

Advice for Internationally Mobile Individuals

Advice for UK and International Businesses

Recent Experience

Who We Work With

International Tax Knowledge Hub

International Tax Frequently Asked Questions

Related Services

Latest Articles & Analysis

Moving to the UK in 2026: The FIG Regime, Statutory Residence Test and Cross-Border Tax Planning

International Tax Questions?