United Kingdom

Statutory Residence Test 

Are you thinking about the rules that make individuals UK resident for tax purposes, whether as an individual or as an employer?


From 6 April 2013 a Statutory Residence Test (SRT) applies to determine an individual’s residence status for UK tax purposes.   Historically tax residence had been difficult to determine because there had never been a proper set of rules.  The SRT applies to individuals for income tax, capital gains tax, inheritance tax and corporation tax but not for national insurance and non tax purposes. This legislation supersedes all previous residence legislation, case law and guidance.

The SRT consists of:


  • automatic tests for non residence;
  • automatic tests for residence; and
  • UK ties and day counting, known as the Sufficient Ties test, for individuals who are not automatically non resident or resident.

To apply the rules you consider each tax year separately and apply the above tests to it in order. Once you meet an automatic test you do not consider any later tests.  The Sufficient Ties test makes a distinction between “arrivers” (defined as individuals who were not resident for all of the previous three tax years) and “leavers” (defined as individuals who were resident in one or more of the previous three tax years).  This reflects the government’s view that residence has an “adhesive nature”. 


Resident or non resident?

KPMG in the UK publish a summary of the SRT in the form of a Statutory Residence Test Decision Tree (PDF 93 KB). The definitions behind each of the tests and UK ties, together with individual circumstances, need to be carefully considered before concluding on whether an individual is resident or non resident for UK tax purposes. 
The SRT has abolished the concept of ordinary residence for tax purposes but overseas workday relief has been retained for non-UK domiciled individuals.  The calculation of overseas workday relief can be very complex.



In addition to dealing with residence status the SRT provides anti-avoidance rules for people leaving the UK for less than 5 years and those that are present in the UK on a large number of days but not in the UK at midnight.

Although the SRT potentially provides greater certainty on residence status it is as important as ever to take appropriate professional advice to ensure a full understanding of the rules.


Employer issues

Residence and tax status are particularly important issues for people leaving the UK to work abroad or coming to work in the UK and for employers of globally mobile employees. 

Please see KPMG’s flash International Executive Alerts on the Statutory Residence Test (PDF 71 KB) and the Overseas Workday Relief (PDF 53 KB) dated (28th March 2013) for further information on how the new legislation impacts employers.

To find out more about the new SRT, please call your usual KPMG contact or any of the individuals listed in the attached publications.

Contact us

Steve Wade

Steve Wade

Director, Employee Issues

KPMG in the UK


020 7311 2220

Email Steve

Daniel Crowther

Daniel Crowther

Partner, Private Client

KPMG in the UK


020 7694 5971

Email Daniel