UK Tax Residency Tests: Automatic, Sufficient Ties and Overseas Conditions Explained

1. Automatic UK Residency Tests:

You are considered a UK tax resident if any of the following conditions are met:

• 183 Days in the UK: You spent 183 or more days in the UK during the tax year.
• Only Home in the UK: Your only home was in the UK for a period of 91 consecutive days or more. During this time, you must have spent at least 30 days living or visiting the home in the tax year.
• Full-Time Work in the UK: You worked full-time in the UK for a full year (365 days), with at least one of those days falling within the tax year being assessed. "Full-time work" typically means averaging 35 or more hours per week over that period.

This is important for Indian expats in the UK tax rules for Indian residents to understand their UK tax obligations.

2. Sufficient Ties Test:

If you do not qualify as a resident under the automatic tests, your UK residency can still be established through the Sufficient Ties Test, depending on:

• The number of days you spent in the UK during the tax year.
• Your ties to the UK, such as:
  • Family Tie: Close family (e.g., spouse, civil partner, or minor children) are UK residents.
  • Accommodation Tie: You have a place to live in the UK that is available to you for 91 days or more, and you use it for at least 1 night during the tax year.
  • Work Tie: You do paid work in the UK for 40 days or more in the tax year.
  • 90-Day Tie: You spent more than 90 days in the UK in either of the previous two tax years.
  • Country Tie: You spent more days in the UK than in any other country during the tax year.

The more ties you have, the fewer days you can spend in the UK before becoming resident. For instance:

• If you have 1 tie, you can spend up to 182 days.
• With 2 ties, you can spend 120 days.
• With 3 ties, you can spend 90 days.
• With 4 or more ties, you can only spend up to 45 days before being considered a resident.

This is essential for UK tax implications for Indian residents to assess their residency status under the India-UK Double Taxation Avoidance Agreement (DTAA).

3. Overseas Tests:

You are typically classified as non-resident if any of the following conditions apply:

• Fewer than 16 Days in the UK: You spent fewer than 16 days in the UK during the tax year (or 46 days if you were not a UK resident for any of the previous 3 tax years).
• You worked full-time overseas for an average of 35 hours per week.
• During the tax year, you spent fewer than 91 days in the UK.
• Of the 91 days, you worked in the UK for no more than 30 days.

For Indian expats, understanding these DTAA benefits for NRIs in the UK from India is important to ensure you don’t face double taxation on your global income.

Additional Considerations for NRIs:

When you’re an NRI or an Indian expat in the UK, you may have additional reporting obligations, such as filing a UK self-assessment tax return for NRIs if you meet certain income thresholds. This return may involve reporting foreign income, which could be subject to both Indian and UK tax laws. If you're earning income from India, you may need to refer to form 16A, schedule FA, and form 15 CA CB for specific financial transactions and remittances, especially for foreign income.

If you are claiming tax relief under the Double Taxation Avoidance Agreement India UK, ensure you provide the necessary documents, such as form 10F and form 10BA, to avoid any issues with your tax filings.

Also Read: How can NRI file Taxes for Income earned in UK & India in both countries with help of India for NRI?