COVID-19 HMRC Statutory Residence Test “Exceptional Circumstances”

BLOG29th Oct 2020

Tax Residence in the UK, and therefore by definition, UK tax exposure on worldwide income and gains, is largely determined by days of presence in the UK. The impact of the COVID-19 pandemic on worldwide travel has been significant, leading to many being unable to travel to or from the UK, which inevitably affects their day count when applying HMRC’s Statutory Residence Tests (SRT).

The Story pre COVID-19

The SRT legislation has historically always allowed for days to be excluded from the UK day count where there are “Exceptional Circumstances”, i.e. a situation, which is completely unexpected, that prevents departure from the UK, but this is only up to a maximum of 60 days in any one tax year and will always depend on the facts and circumstances of each individual case.

“Exceptional circumstances will normally apply where an individual has no choice concerning the time they spend in the UK, or in coming to the UK. Their presence in the UK must be beyond their control and they must be prevented from leaving the UK.”


The types of events which HMRC accept are not prescriptive, however local or national emergencies such as civil unrest, natural disasters, the outbreak of war or sudden serious or life threatening illness or injury are included.

HMRC go on to acknowledge that there may also be limited situations where an individual either needs to come back to the UK, or stay here longer than expected, to deal with sudden or life threatening illness to partner or dependent children.

COVID-19 Impact

HMRC were quick to acknowledge that the COVID-19 pandemic may impact on the ability to move freely to and from the UK or, require an individual to remain here unexpectedly. On 19 March 2020, and immediately following travel advice issued by the Foreign and Commonwealth Office “FCO”, confirming against all but essential international travel, HMRC issued additional notes to the existing exceptional circumstances guidance, specifying scenarios where they would consider UK days could be disregarded due to COVID-19, i.e.:

  • You are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus.

  • Find yourself advised by official Government advice not to travel from the UK as a result of the virus.

  • You are unable to leave the UK as a result of the closure of international borders, (but note that you must be able to demonstrate that you have made every effort to leave once those restrictions have been lifted).

  • You are asked by your employer to return to the UK temporarily as a result of the virus.

  • You are an individual who is required to come to the U.K. to support a vulnerable family member who has been asked to ‘shield’ or ‘self-isolate’

Interpretation is Key

The guidance seems straight forward, however HMRC could apply this advice very differently to what might be assumed, e.g.:

“Sudden, serious or life threatening” – given the impact of COVID-19 can be very different across the population, at what point is the infection regarded as serious/life threatening. Is this when someone is tested positive, or when they are admitted to hospital?

“Completely unexpected” – there was worldwide awareness of the COVID-19 virus from January 2020, and so if an individual made a conscious decision to travel back to the UK at the beginning of March 2020, thereafter finding themselves trapped in the UK, would HMRC accept this position as completely unexpected?

“Unable to leave the UK” – the FCO guidance remains the same now as it did on 17 March 2020, which is basically don’t travel if you don’t need to. An important point, however, is that the UK border has remained open throughout this time. If an individual couldn’t, for example return to their Italian home because the Italian border was closed, it wouldn’t necessarily have stopped that individual from travelling to another overseas country to ensure their UK days were limited. We would hope that HMRC will take a considerate view in these cases, but the guidance should perhaps be applied literally until there are specific HMRC examples which demonstrate otherwise.

Applying Exceptional Circumstances – Can 60 days be removed from the UK day count?

There are various SRT tests to choose from when determining if an individual can be classed as non UK resident. It is important to note that the 60 day Exceptional Circumstance days will not be taken into account for them all, e.g.:

Working full time overseas (3rd Automatic Overseas Test)

To meet this test you must have spent less than 90 days in the UK in a tax year, and HMRC will accept a valid claim for exceptional circumstances days to be disregarded from this. However, another condition is that no more than 30 days must be spent working in the UK. If you are unable to travel from the UK, and start working from the UK, then its likely the 30 day limit will be exceeded and you will fail this test.

UK connections / sufficient ties

When checking to see if there is a UK tie, days spent in the UK may not be disregarded relative to the Accommodation, Family, Work and Country Ties. More ties mean less UK days can be spent in the UK before becoming UK tax resident.

UK home (2nd Automatic UK Test)

This test applies where time spent in any UK home is significant and a minimum 30 day presence cannot be achieved in an overseas home in any tax year. Any additional UK days spent in the UK home due to COVID-19 will not be disregarded when applying this test.


Reporting Aspects

Consideration of all background circumstances must be applied, and any evidence of illness, employer communications or International border closures should be retained in the event HMRC choose to ask more questions. It is unlikely that we will be able to gauge how HMRC will approach aspects of this relief until they are tested via HMRC enquiries relative to 2021 UK Tax Returns. Until then, we would recommend that available HMRC guidance is strictly followed.

(NB – Individuals present in the UK to work on COVID-19 related activities – time spent by individuals in the UK between 1 March 2020 and 1 June 2020 working on COVID-19 related activities will not count towards the residence test)

If you require any further information, or have any questions, please contact Lynn Gracie or Carol Edwards