Temporary Changes to Statutory Residence Test (SRT)
Temporary changes have been made to the Statutory Residence Test (SRT) for those coming to the country to work on covid-19 related activity by the Chancellor Rishi Sunak. The rules have also been relaxed for individuals whose movements are restricted because of the pandemic.
The SRT rules are used to determine if an individual is resident in the UK for tax purposes. The changes apply to both individuals and companies and were made on 9 April. The changes are specifically to the tax legislation with the aim of allowing foreign highly skilled individuals with the necessary skillset to come to the UK to help with its response to the covid-19 health emergency. The types of workers within its sights range from anaesthetists, to engineers who are working on ventilator design and production.
Under the normal rules, the chancellor pointed out that “the actions and presence of these individuals in the UK could affect their own tax residence status, potentially bringing their global earnings within the purview of UK taxation”.
There are specific pre-defined tests, but essentially, non-UK residents are permitted to be in the UK for between 16 to 183 days in any one tax year before they must start paying UK tax.
However, in the current crisis the SRT is to be amended so that any period(s) between 1 March and 1 June 2020 (subject to review) which is spent in the UK by individuals working on covid-19 related activities will not count towards the residence tests.
Unintended periods of stays
Also, the covid-19 crisis can make freedom of movement difficult, with restrictions on flights and travel, requirements to self-isolate and so on. This means someone may have to remain in the UK beyond the time period they were or are expecting to or planned to as a direct result of the pandemic.
HMRC has recognised this situation and issued revised guidance to the effect that individuals falling into any of these categories will be considered as exceptional:
· Someone has been quarantined or has been advised to self-isolate in the UK as a result of the virus.
· They have been given official government advice not to travel from the UK as a result of the virus.
They cannot leave the UK because international borders are closed. Their employer has requested the individual’s return to the UK temporarily as a result of the virus.
If someone’s circumstances are considered 'exceptional' such that they had no choice about the time they are in the UK for tax/HMRC purposes, up to 60 days spent in the UK can be disregarded.
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