Extraordinary Circumstances and UK Tax Residency Rules During Times of Crisis

Introduction

Ongoing geopolitical conflicts, public health emergencies and international travel disruptions may create unexpected UK tax residency issues for individuals moving internationally.

Non-UK residents may spend more time in the UK than expected due to circumstances beyond their control, raising concerns about whether they could inadvertently become UK tax residents.

To explore this, we look at how residency is determined in the UK and the exceptional circumstances support available at this time of crisis.

Residence in the UK is determined based on the Statutory Residence Test (SRT) and click here for HMRC’s internal manual. In practice, when applying this test, you consider the time spent in the UK and the extent to which a person is continuously connected to the country (sufficient ties test) in a tax year. The results of this test then determine whether a person is UK resident or non-UK resident for that tax year.

Extenuating circumstances may sometimes affect the calculation of days spent in the UK, especially during periods of crisis such as war, pandemic, natural disaster or sudden travel restrictions.

These rules have become particularly relevant during the COVID-19 pandemic, but can also be applied in other emergencies where someone is unexpectedly prevented from leaving the UK or required to return to the UK because conditions in the country where they live are unsafe.

Understanding how HMRC applies these provisions is important for individuals, business owners, expats and non-UK residents moving around internationally who need to monitor their daily accounting closely to ensure they are not UK residents.

Under the SRT, some days spent in the UK can be waived if caused by “extraordinary circumstances”. This includes certain situations involving war, civil unrest, or serious illness. HMRC says the rules are highly dependent on the facts of each case.

How the Mandatory Residence Test Works

UK tax residence is determined under the SRT, and the test considers:

• Amount of time spent in the UK.
• Work is carried out in the UK, and
• A person’s connection or “bond” to England.

The SRT includes an automatic overseas test, an automatic UK test, and a sufficient ties test, with residence determined based on the individual’s overall circumstances for the relevant tax year.

For many individuals moving internationally, counting the days is very important. Exceeding certain thresholds may result in the unexpected incurrence of UK residence tax.

Therefore, the exceptional circumstances provisions may provide limited relief if a person is forced to remain in the UK due to an unforeseen event.

What Are Extraordinary Circumstances?

Under the SRT, certain days spent in the UK can be waived if a person is unable to leave the UK due to circumstances beyond their control.

The maximum number of days that may be ignored in the SRT is 60 days per tax year. Any days exceeding this limit will count towards UK days.

HMRC considers exceptional circumstances to include situations where:

• A person is prohibited from leaving the UK because of war, civil unrest or political instability.
• International borders closed unexpectedly.
• Government advice limits travel.
• Serious illness or public health emergency prevents departure.
• Natural disasters or other major disruptions affect travel arrangements.

This legislation applies narrowly and generally only if the circumstances are:

• Beyond individual control.
• Unexpected or unpredictable, and
• The reason the individual cannot leave the UK.

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HMRC also emphasizes that the application of these rules depends largely on the facts of each case and will not accept claims relating to disruption of ordinary travel, elective or routine medical treatment, foreseeable events, personal preferences to remain in the UK, or situations where a person could reasonably leave the UK. Click here for rfig22270 guide

HMRC generally expects individuals to leave the UK as soon as circumstances permit.

When Days Spent in England May Be Ignored

National Emergency and War

War, military conflict or political unrest may cause sudden travel disruptions preventing individuals from safely or lawfully leaving the UK and returning to their country of residence.

For example, recent airspace closures and travel restrictions impacting the Middle East region have temporarily prevented some people from returning to their countries of residence. Therefore, they must stay in the UK until restrictions are lifted and it is safe to return home.

In such circumstances, HMRC may accept that the additional days spent in the UK arise due to extraordinary circumstances beyond the individual’s control.

HMRC guidance specifically refers to situations like the above where Foreign, Commonwealth & Development Office (FCDO) advice recommends against travel.

Following the outbreak of the conflict involving Ukraine, HMRC confirmed that individuals returning to the UK from affected areas such as Ukraine, Russia and Belarus are potentially eligible for treatment in exceptional circumstances, subject to normal legal provisions and the 60 day limit.

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Pandemics and Public Health Restrictions

The COVID-19 pandemic highlights how extraordinary circumstances regulations can be applied during a global health emergency.

During the COVID-19 pandemic, the following causes many people to stay in the UK longer than expected:

• Travel bans and international border closures.
• Flight cancelled.
• Quarantine restrictions.
• Official public health advice and restrictions; And
• Self-isolation requirements.

HMRC issued specific guidance during this period confirming that COVID-related restrictions could potentially be considered exceptional circumstances in some situations and accepted that some individuals would be unable to leave the UK due to the above circumstances.

However, HMRC also explained that not all pandemic-related delays will automatically qualify. Each case relies on specific facts and evidence.

Additionally, HMRC emphasizes that choosing to remain in the UK during the pandemic is not automatically considered exceptional circumstances.

Natural Disasters and Civil Unrest

Events such as earthquakes, volcanic eruptions, hurricanes, or widespread civil unrest can also create circumstances beyond a person’s control.

If the journey is unexpectedly interrupted and departure from the UK becomes impractical or unsafe, HMRC may consider whether the exceptional circumstances provisions apply.

Serious illness or injury

HMRC states there are “limited circumstances” where days spent in the UK can be waived due to sudden illness or life-threatening injury affecting:

• Individual.
• Their spouse or partner, or
• their dependent children.

The circumstances must generally be unforeseen or unforeseeable and completely outside the individual’s control to prevent them from leaving the UK.

Routine medical treatment, elective treatment, ordinary travel interruptions and foreseeable events are examples of circumstances that HMRC would not accept as exceptional in this case.

Acceptable examples given include:

• traveling to the UK because a child has a serious injury, or
• remains in the UK because someone was hospitalized after an accident.

HMRC states that the person must intend to leave the UK as soon as possible if circumstances permit.

The 60 Day Rule Explained

Exceptional circumstances provisions are limited.

In most cases, a maximum of 60 days can be waived for stay purposes, even if the disruption lasts longer.

This means individuals who spend a significant amount of time in the UK during the ongoing crisis may still be tax resident in the UK despite the relief provisions.

Careful analysis of UK relations and overall population status remains important.

Importantly, exceptional circumstances relief does not apply universally across all parts of the SRT. Whether these days can be waived depends on the particular residence test being considered.

Evidence and Records Retention

Individuals who wish to rely on extraordinary circumstances should keep detailed records to support their position and any claims they make.

Relevant evidence may include flight cancellations and correspondence with airlines or embassies, government travel announcements, medical documentation, border closure notices, and quarantine requirements.

HMRC may request evidence showing that the individual intends to leave the UK and is strictly prohibited from doing so. Choosing to remain in the UK during the crisis is not enough.

Therefore, residency cases involving extraordinary circumstances often require careful factual analysis, especially for individuals who have complex international agreements or have many connections in the UK.

Therefore, good record keeping is very important.

Conclusion

The exceptional circumstances provisions in the UK SRT can provide valuable relief when someone is unexpectedly prevented from leaving the UK during a period of crisis. However, this rule is applied narrowly, subject to strict evidentiary requirements and limited to a maximum of 60 days of disregard per tax year.

Careful monitoring of the number of days in the UK, detailed record keeping and professional advice are often essential to effectively manage the risk of residence in the UK.

Frequently Asked Questions

What is considered exceptional circumstances for the purposes of living in the UK?

Extenuating circumstances generally involve an event outside a person’s control that prevents them from leaving the UK, such as war, pandemic, natural disaster or government travel restrictions.

How many days can be waived under the extraordinary circumstances rules?

Typically, a period of up to 60 days may be waived under the provisions of the Mandatory Residency Test.

Is COVID-19 considered an extraordinary circumstance?

In some situations, yes. HMRC issued guidance confirming that certain COVID-related travel restrictions and quarantine measures may qualify.

Does HMRC automatically accept exceptional circumstances claims?

No. HMRC considers each case based on the facts and supporting evidence.

Can I become a UK tax resident despite relief in exceptional circumstances?

Yes. Despite these omitted days, a person can still be a UK tax resident depending on their overall circumstances and ties to the UK.

What evidence should I keep?

You should keep travel records, cancellation notices, government guidance, medical evidence and any documentation showing why departure from the UK is not possible.

The next step

If you have questions about anything covered in this article, please contact us at ETC Tax. Our team will be happy to help you understand how UK residence rules may apply to your circumstances.

Further Reading about the latest cases relating to extraordinary circumstances click here