Further to our recent article entitled ‘Coronavirus, UK tax and immigration’, HMRC has published new guidance on its interpretation of the Statutory Residence Test in light of the widening impact and spread of Covid-19.
Exceptional circumstances
Across the world, as governments and health organisations are advising individuals not to travel, to self-isolate or quarantine for health purposes, non UK residents and ex-pats are finding themselves unable to return home and forced to remain in the UK due to travel restrictions and border controls or because they are struck down with the virus.
Specifically addressing Covid-19, this week, HMRC clarified its rules on what will qualify as 'exceptional circumstances' under the Statutory Residence Test. If days spent in the UK are due to exceptional circumstances they can be ignored when counting days of presence in the UK up to a maximum of 60 days.
HMRC have clarified that the reasons below will be regarded as being exceptional circumstances:
- being quarantined or advised by a health professional or public health guidance to isolate in the UK due to Covid-19;
- being advised by official government advice to not travel from the UK due to Covid-19;
- being unable to leave the UK due to the closure of international borders; or
- being asked by your employer to return temporarily to the UK due to Covid-19.
The new guidance from HMRC will therefore give some welcome reassurance to non residents who have found themselves stranded in the UK for reasons outside of their control.
General guidance
The number of additional days under the allowance remains limited to 60 days per tax year, and there is currently no mention of this being increased. A change to the number of days would require a change to legislation rather than HMRC discretion, but that is not to say it will not be reviewed as the events surrounding Covid-19 continue to evolve.
Agreeing exceptional circumstances with HMRC is not always a straightforward process, and therefore record keeping remains a vital exercise. Given that, in most cases, the exemption will not be claimed and assessed by HMRC until the January 2021 UK tax return filing deadline for the current 2019/2020 tax year, it will be essential for those wishing to rely on it to gather and retain evidence to show that they were unable to travel and that this clearly fits within the new guidance. This would include for example evidence of arrival and departure dates, doctors' notes, evidence of government issued guidelines, and information provided to travellers by their airline or other travel provider.
Individuals must also ensure that they leave the UK as soon as they are able to.
If you have any questions in relation to your tax residency status in the UK, please get in touch with our team of specialist lawyers based in the UAE and the UK.
To view the insight ‘Coronavirus, UK tax and immigration’ please click here.