What is Residential Status?
Residence and domicile are two words we hear a lot of working with expats. Understanding the difference between the two can often be confusing for people who approach us looking for international health insurance. We can understand why, both have significant importance when it comes to declaring where you live, where you work and how you are taxed on your earnings.
Putting it simply, residential status refers to the place where someone is physically living at a particular time during a single tax year and affects whether you need to pay tax on your foreign income. Domicile, on the other hand, considers a wider-ranging time frame including what may even happen in the future.
Current laws in the UK state that an individual can hold multiple residential status’ but only ever have one domicile at any one time. Therefore, you could be a French or Canadian resident, yet only be domiciled in the UK.
In this blog, we dive a little deeper into residential status so you can assess how much it impacts you should you spend time living or working abroad.
How do I work out my residential status?
Your residential status is worked out on a tax year by tax year basis. In the UK, the completion of the statutory residence test determines your status. This test, also known as the SRT, has been in place since April 2013 and comprises three separate elements that determine your residential status.
Automatic overseas test
The automatic overseas test is the first of three tests that determine your residence status. Based on the current tax year (2024/25) you would not be classed as a UK resident if any of the following criteria are met:
- You were a UK resident in one or more of the previous three tax years and are present in the UK for fewer than 16 days in the tax year.
- You were not a UK resident in any of the three previous tax years and are present in the UK for fewer than 46 days in the tax year.
- You meet the work abroad conditions and spend fewer than 91 days in the UK or have fewer than 31 workdays in the UK.
If any of the above criteria apply, you will not have residential status in the UK and not be required to satisfy any of the other parts of the SRT.
Automatic UK tests
Should any of the criteria in this part of the SRT be satisfied you’ll be a UK resident for tax purposes:
- You are in the UK for 183 days or more during a tax year
- You have a UK home in the tax year and have either no home overseas or where you do have one, you spend fewer than thirty days living in it.
- You work full-time with an average of 35 hours per week in the UK with no significant breaks between work.
You only need to satisfy one of the above to have residential status in the UK. Should none of these apply, there is one final test within the SRT that may grant you residential status.
Sufficient ties test
The sufficient ties test to determine residential status is the final part of the SRT that could see you declared as a resident for tax purposes. This particular test takes into account how often you are in the UK and how you are connected to the country.
This can get a little complicated as there are five possible ties you can have to the UK, but the strength of these ties will also depend on how long you spend in the country in one tax year. A little further down, we’ll break down how the ties apply to the length of time you spend in the country.
The five ties taken into consideration are:
- Family – If you have a UK resident partner or minor child
- Accommodation – if you have a place to live in the UK which is available to you for 91 continuous days in the tax year and you spend at least one night there in that period (16 nights if the home is that of a close relative)
- Work – if you work at least 40 days in the UK within the tax year
- 90-day – If you have spent more than 90 days in the UK in either or both of the previous two tax years
- Country – If the UK is the country in which you are present at midnight for the greatest number of days in the tax year
Before the ties that may bind you to the UK can be applied, you’ll need to be put into one of two groups. These groups are known as leavers and arrivers. A leaver is someone who has been certified as a UK resident in any one of the last three tax years. You’ll be an arriver if you have not been a UK resident in any of the last three tax years.
You’ll need a specific number of ties to apply to be considered a UK resident in either category dependent on the number of days spent in the country.
Leaver’s criteria
| Days Spent in UK during tax year | Number of UK ties required to be granted resident status |
| 16-45 | At least four |
| 46-90 | At least three |
| 91-120 | At least two |
| 120+ | At least one |
Arrivers’ criteria
| Days spent in UK during tax year | Number of ties required to be resident status |
| 46-90 | All four |
| 91-120 | At least three |
| 120+ | At least two |
You’ll notice that there are only three categories in the arriver’s criteria. This is because the country criteria cannot apply.
Why does residential status matter?
Your residential status determines how you are taxed on income and capital gains. If, for example, you are classed as a UK resident for tax purposes, but are domiciled in another country, you’ll have to pay tax in the UK on worldwide income and capital gains. If you are not classified as a UK resident, you’ll only pay tax in the UK on UK income and gains from UK property or land.
How does residential status apply overseas?
Each country may have different rules for residency status and whilst the SRT applies in the UK, other tests may apply elsewhere. In many cases, if you spend six months or more in any country, you’ll be classed as a resident and therefore be required to pay tax there. This does not mean you won’t be required to pay tax elsewhere, and that is why it would be advisable to speak to a tax expert in the country where you spend the majority of your time to see how tax rules apply there.
Can you hold dual residential status?
Yes. You can be a tax resident in both the UK and another country at the same time. Occasionally, there is a double tax agreement between the two countries. Where this is the case, the agreement will include what is known as “tie-breaker” provisions. These enable you to determine which one of the two countries should class you as a treaty resident and how tax payments will apply.
How does residential status apply if I move abroad?
If you move out of the UK, the tax year will be split in two. A non-resident part and a resident part. This means you will only pay UK tax on any foreign income gained during the time you lived in the UK. This is known as split-year treatment.
If you live abroad for less than a full tax year before you return to the UK, split-year treatment will not apply. The gov.uk website has guidance relating to split-years that may be beneficial to you.
Can your residential status change from year to year?
Yes. Each tax year you can find your residence status changing. Your status will change if:
- You spend more or less time in a country
- You buy or sell a home in the UK
- You change job
- Your family moves in or out of the country or you get married, separate or have children
Residential status can vastly impact your plans, and how much tax you pay. If you plan to move abroad or return to the UK, you’ll need to know how your residential status affects the tax you pay on any income. Whilst we don’t provide tax guidance, we can help with all aspects of expat insurance, ensuring that any time you spend living abroad is covered against all eventualities. Contact our team today for help with health insurance, international life insurance and travel insurance when working abroad.
