Are You Still a UK Resident if You Live Abroad?

Packing up, leaving the UK and living abroad is a life-changing event, and one question that continues to arise is ‘Am I still a UK resident if I live abroad?’

Having a good understanding of the UK residency laws is key for you financially, legally, and socially. Understanding your residency status will ensure that you are complying with the UK tax laws, preventing the possibility of receiving any penalties. If you have decided to move abroad for work reasons, retirement, or other reasons, your residency status can have lasting implications on your finances and rights as a UK citizen.

In this blog, we will explore the different factors that determine your UK residency status, how residency affects tax and benefits, and what steps are needed to ensure your status as a UK resident.

Understanding UK Residency

Residency status in the UK is determined by the statutory residence test, which assesses your current status in the UK based on specific criteria. The completion of the test will determine whether you are eligible to pay UK taxes on the income you have made abroad or your income earned in the UK.

However, residency does not affect your UK citizenship. When you move abroad as a UK citizen, you will still be entitled to your British passport and associated rights but your responsibilities to paying taxes may change.

It’s a must to have a good understanding of the statutory residence test and its implications to ensure that you are always meeting specific residency requirements in the UK.

The Statutory Residence Test

Since the introduction of the statutory residence test in 2013, it has been the UK’s main tool to use when determining residency. The test takes into account various factors to help determine the residency status of an individual or business. Here are the three main factors:

• The number of days spent in the UK – If you spend 183 or more days in the UK within a tax year (6 April to 5 April the next year), you are automatically considered a UK resident for that year.
• Ties to the UK – Ties include having close family in the UK, owning property in the UK, working in the UK, or having your children enrolled in UK schools.
• Travel Patterns – The test assesses how long you stay abroad and in the UK. The more ties you have with the UK, the fewer days you can spend in the UK before being considered a resident.

If you are looking to move abroad, the statutory residency test is a must when it comes to determining your overall status. The test is split into different parts including:

• Automatic overseas tests
• Automatic UK tests
• Sufficient ties tests

If you’ve been in the UK for more than 183 days, this will ensure your status as a UK resident, meaning that there is no need to consider any other tests.

Tax Implications of Residency Status

Once your residency status has been identified, this will help determine which tax laws apply to you. It is important to always consult with a tax expert to identify your residency status, which is available to you at Haggards Crowther – especially with changes in rules for non-dom residents.

Income Tax

Your current residency status affects how your overall income is taxed. Residents are taxed differently as UK residents are taxed on global income, while non-residents are only taxed on the income they make in the UK.

The difference in the amount of tax applied can have a significant impact on your overall tax responsibilities. It is also important to understand how your residency status may impact your overall income. However, with the help of the team at Haggards Crowther, you can make sure you are paying the right amount of taxes based on your residency status.

Foreign Income

If you earn income abroad, your residency status will determine whether you pay tax in the UK. If your residency status is calculated correctly, you will be able to identify how much tax you or your business needs to pay on the income made overseas.

With the expert knowledge from our team of tax specialists here at Haggards Crowther, you will be able to determine your residency status in no time.

Double Taxation

A double taxation agreement is a collective agreement between two countries that aims to prevent individuals or businesses from being taxed twice on the same income. However, this agreement may impact how your income is taxed if you are a resident in another country.

This type of agreement can have great benefits on those who earn income in both their residence country and another country. It is important to understand that these agreements can vary from country to country.

Understanding the agreement between your country of residence and the country you earn income ensures that you are being taxed correctly. If you are unsure if this may apply to you, look no further than Haggards Crowther for expert tax advice.

Haggards Crowther is Here to Help!

Determining your residency status is so important when looking to manage your taxes and comply with the laws within the country you live in. The statutory residence test is a beneficial tool that helps determine your residency, helping you manage your finances a lot easier.

At Haggards Crowther, we are a family-owned firm of Chartered Accountants and Chartered Tax Advisers. Our experienced team is highly passionate about providing you with reliable and effective tax services.

We can help you understand the tax implications and stay up to date with legal obligations to help you manage your UK residency status whilst living abroad. If you have any queries about our services, don’t hesitate to contact a member of the team for advice.

Terry Smith

Terry started life at HM Revenue and Customs before moving to Ashdens and then on to BDO and Chantrey Vellacott, the combination of which has provided Terry with a wide breadth of experience which has proved invaluable when helping a broad range of clients with their tax affairs.

Whether it involves meticulously organising a client’s tax affairs or leveraging his expertise to mitigate their tax exposure, Terry has a passion for delivering tangible results.