Expanding on the article ‘Are you resident in the UK?’, the sufficient ties test forms part of the Statutory Resident Test. The sufficient ties test is considered when determining UK tax residence status for a tax year (if you do not meet any of the Automatic Overseas tests or Automatic UK tests). In brief, the test essentially looks at whether you have ties which deem you to be a UK resident.
We recommend you read ‘Days spent in the UK’ before considering each tie, as the number of days you spend in the UK in a tax year dictates the number of UK ties that make you a UK resident.
This article addresses one test of connection – the country tie.
Do you have a Country Tie?
You have a country tie if you spend more days in the UK than any other country in the tax year. This is determined by the ‘midnight test’.
The ‘midnight test’ is met if you are present in the UK at the end of the day. Therefore, you are deemed to have a country tie if the UK is the country in which you are present at midnight for the greatest number of days in that tax year.
What if the number of days I was present in a country at midnight is the same for two or more countries in a tax year?
Provided one of those countries is the UK, then you will have a country tie for that tax year.
The deeming rule
In order to prevent manipulation of the midnight rule, there is a deeming rule which overrides the basic provision. The deeming rule applies if you meet all of the following conditions:
- You have at least 3 UK ties in the UK tax year
- You were UK resident in at least one of the three preceding tax years (i.e. a leaver)
- You are present in the UK for more than 30 days without being present at the end of the day (called ‘qualifying days’) in the tax year.
The rule’s effect is that once the threshold of 30 ‘qualifying days’ is met in a UK tax year, all subsequent qualifying days within the tax year are treated as days spent in the UK, irrespective of where the person is at midnight.
A transit day is a day when you are travelling from one country outside the UK to another country outside the UK, and whilst on route:
- You arrive in the UK as a passenger, and
- Leave the UK the next day
Transit days do not count towards the total day count for the Statutory Resident Test provided that, between your arrival and departure, you do not engage in any activities that are substantially unrelated to your journey through the UK.
Your day of arrival when in transit does not count as a day spent in the UK for SRT purposes. However, the following day when you leave the UK, may be a qualifying day under the deeming rule.
Although not defined, these circumstances are likely to include situations such as serious illness of the individual, their spouse or dependent children. In exceptional circumstances, an individual may stay for up to 60 additional days beyond the normal day count set out in the SRT.
We recommend you seek professional advice for an accurate assessment of your UK tax residency status for a particular tax year.