An individual’s residence is key to determining how they are taxed in the UK, and so it is important to correctly identify this. Individuals who are resident in the UK are generally subject to UK tax on their worldwide income and gains. Non-residents of the UK are likely to only suffer UK tax on certain UK-sourced income and gains on the disposal of UK-situs real estate.
For US citizens/Green card holders resident in the UK who report their worldwide income in both jurisdictions, the US/UK double taxation agreement can help them eliminate or at least mitigate double taxation, where both jurisdictions would otherwise look to tax the same income or gains. Generally, this leads to the higher of the two jurisdictions’ tax applying on any particular item of income/gains.
Individuals who meet certain residence requirements from 6 April 2025 (or domicile requirements up to 5 April 2025) may be able to benefit from special rules which can shield non-UK income and gains from taxation in the UK. In instances where a US person’s foreign income and gains are not taxable in the UK, the income will generally be charged to US tax instead (albeit probably at a lower rate of tax, given the lower effective rates and higher tax brackets in the US vs the UK).
For more information on the options available to non-domiciled individuals up to 5 April 2025, please see UK Arising Vs Remittance Basis of Taxation
For those who are resident from 2025/26, who became UK resident on or after 6 April 2022 (i.e. from 2022/23), and were not UK resident for any part of the ten consecutive years before this UK residence started, see New UK tax rules as of 6th April 2025.
The UK has a Statutory Residence Test (SRT) which came into effect on 6 April 2013. The SRT is set out in UK tax law and is used to determine your UK tax residence position. The test is split into three sections, being:
1. Automatic overseas tests
2. Automatic UK tests
3. Sufficient ties tests
Each test is checked in order, if the conditions for one test are not met then the next one is checked. If the automatic overseas/UK tests are not met then the sufficient ties test should provide the final answer as to whether someone was resident at all in the tax year.
The tests contain a number of conditions that need to be analysed in detail, but generally you are likely to be UK tax resident if:
You will be automatically non-resident if you spend fewer than 16 days in the UK in the tax year (46 days if were not resident in the UK for any of the last three tax years). Additionally, if you work full-time overseas, spend fewer than 91 days in the UK in the tax year, of which fewer than 31 days were workdays.
Even if you do not meet one of these tests, you may still be UK tax resident depending on how much time you spend in the UK during a tax year (or over a number of years) and the number of connections (“ties”) that you have to the UK. This is known as the “Sufficient Ties Test”. Generally, the more days you spend in the UK, the fewer connections are needed for you to be regarded as UK tax resident (and vice versa). The ties/days are different depending on whether you were UK resident for one of the three previous years or not.
Those considered UK tax resident under the SRT are generally considered to be resident for the entire tax year, although there are various “cases” under the SRT that, if met, will split the tax year into a “residence period” and a “non-residence period.” These apply for the year of arrival to, or departure from, the UK. If you are considered a dual resident (i.e. a tax resident of the UK and another country at the same time), it may be possible to use a tax treaty to tie break your residence so you are not regarded as a UK tax resident. This might require the use of additional forms as part of your UK tax return to claim the treaty relief.
Using the SRT to determine an individual’s UK tax residence position can be complex, though the expert team at Jaffe & Co are well-versed to assist you with determining your UK and US tax residence.
With effect from 6 April 2026, an individual’s domicile is no longer relevant to how they are taxed in the UK. However, it remains relevant to prior year returns and certain transitional rules, such as the treatment of certain trusts created before 30 October 2024. The time limit for claiming the remittance basis is four years from the end of the tax year in question, and so domicile might still be relevant for any tax years prior to 2025/26 where the election window remains open.
Domicile, for UK tax purposes, was a general legal concept distinct from but related to nationality, citizenship and residence. While the determining factors were complex, domicile was generally considered to be the country where you considered your “roots” to be, or where you intended to live out your dying days.
An individual usually acquired a domicile at birth, though this may not have been the country they were born in or in which they were living. It was only possible to have one domicile at any given time; the three main types were:
With effect from 6 April 2017, an individual who was not UK domiciled became “deemed UK domiciled” and subject to UK income and inheritance tax on their worldwide income and assets if they:
If you still need to file or amend UK tax returns up to 2024/25, please refer to our page on the arising vs remittance basis.
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