I’m trapped in the UK – are there any tax implications?

Published by Stephen Metcalf on 23 March 2020

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With the severe travel restrictions around the world, individuals who would normally not be spending time in the UK may well find themselves effectively trapped in the UK due to the impact that Coronavirus has had on many countries.

As reported recently, the UK foreign office has released advice to not travel to the Hubei province in China and some areas in South Korea along with a warning against all but essential travel to anywhere else in the world. Given the fast moving developments, it is not unrealistic to expect increasingly more border closures around the world.

If individuals are trapped in the UK for too long, they may find themselves having to consider whether they are then classed as a tax resident in the UK. This has a potential to bring their overseas earnings, income and gains into HMRC’s tax net, potentially causing significant double tax issues, which would be most unwelcome and distressing at a time of such financial and general uncertainty.

Under the Statutory Residence rules in the UK, various factors will need to be considered as to how many days you can spend in the UK without becoming a tax resident. Ties such as work, home and family have to be considered.

However, it is recognised that there can be circumstances outside of someone’s control which may lead them to spend more time in the UK than intended. Therefore the rules allow for up to 60 extra days to be spent in a tax year in exceptional circumstances.

The bar is set very high when it comes to the definition of an exceptional circumstance and whilst there is huge concern and an immense impact that COVID-19 is having around the world, it may not in all cases allow you to claim extra days spent in the UK as exceptional. HMRC have issued some new guidance regarding this which at least gives some certainty. In the following circumstances, the extra days spent in the UK can be treated as exceptional:

  • You have been quarantined or advised to self-isolate by a health professional or public health guidance .
  • The Government have advised not to travel from the UK.
  • You are unable to leave the UK as a result of border closures in other countries.
  • You were asked by your employer to return to the UK temporarily.

Other scenarios would need to be considered on a case by case basis to ensure the correct treatment.

With the end of the tax year a few weeks away, anyone who is inadvertently trapped in the UK should consider their position and take advice on the UK tax residence rules to see what they can do.

If you are a UK resident, trapped overseas, you may also be subject to similar tax rules in that country. We are a member of Kreston International, a worldwide network of accountancy firms in over 125 countries so if you are trapped overseas and would like us to find out if you would be affected, please don’t hesitate to get in touch.

We are happy to talk to individuals to assess their residence status. Talk to Stephen Metcalf or another member of the Private client tax team if you have any queries about this.

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