As countries responded to the coronavirus pandemic and imposed travel restrictions and lockdowns, some people were ‘stuck’ in a territory, unable to return home.
Updated 16 March 2021
Under usual circumstances, spending extra days in the UK and breaching UK tax residence could bring a liability to pay UK tax as well as additional reporting requirements. Residency for UK tax is determined by the UK’s Statutory Residence Test. Its criteria considers the number of days an individual spends in the country during a tax year.
The criteria does allow exemptions in certain ‘exceptional circumstances’. In March 2020, HMRC confirmed that Covid-19 was deemed an exceptional circumstance if an individual:
- Was quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
- Was advised by official government advice not to travel from the UK as a result of the virus
- Were unable to leave the UK as a result of the closure of international borders, or
- Were asked by their employer to return to the UK temporarily as a result of the virus.
The 60 days challenge
The current rules, however, only allow for 60 days to be disregarded. This is has proved a challenge to many given the scale and duration of the pandemic.
Government guidance has repeatedly encouraged people to avoid all non-essential travel and continues to add to its 'red list' travel ban countries.
In August 2020, HMRC confirmed there would be no extension to the maximim 60 days which can be disregarded. They also confirmed that rules surrounding a 'significant break' from overseas work will not be relaxed.
Working in the UK due to Covid-19 restrictions
For those individuals forced to work in the UK because of the pandemic's restrictions, the tax position has been confusing.
HMRC did confirm that any days worked in the UK by a non-resident due to COVID-19 imposed restrictions would not be taxed. They indicated employment income relating to the period starting on the date the non-resident intended to leave the UK and the date they actually left, will not be taxable if:
- the income is taxable in the individual's home country, and
- the individual left the UK as soon as they possibly could.
Note, individuals should expect to have to show evidence for these criteria.
However, there have been no further updates as to whether other examples of the exceptional circumstances we mentioned earlier fall within this guidance. Any days spent in the UK where the individual worked more than 3 hours, while may be not taxable, do still count towards the 30 UK work days allowed as part of the Statutory Residence Test.
Individuals present in the UK to work on COVID-19 related activities
On 9 April 2020 in a letter to the Chair of the Treasury Committee, the Chancellor confirmed that time spent by individuals in the UK between 1 March 2020 and 1 June 2020 working on COVID-19 related activities would not count towards the residence test. This covered those working in sectors such as healthcare, engineering or R&D. The confirmation was made into law in The Finance Act 2020.
The importance of professional advice
Given the protracted nature of the pandemic, non-uk resident individuals who remain in the UK as a result of the UK’s lockdowns are encouraged to seek professional advice. Their tax position should be examined in relation to their personal circumstances and the latest guidance.
Can we help?
If you think your residency status has been affected by the UK's lockdown, please contact one of our specialist team to discuss your individual circumstances and gain specific guidance.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.
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