COVID-19: Quarantine and its impact on UK tax residence

Introduction and COVID-19 update

HMRC recently issued new guidance for Statutory Residency Test (SRT) whether days spent in the UK because of COVID-19 can be disregarded (or counted as exception circumstances)? In this blogpost we will look at COVID-19: Quarantine and its impact on UK tax residence status.

The guidance says that generally exceptional circumstances will always depend on the facts and circumstances of each individual case. However, circumstances are considered exceptional if 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
  • are unable to leave the UK as a result of the closure of international borders, or
  • are asked by your employer to return to the UK temporarily as a result of the virus

What is considered exceptional?

As per existing HMRC guidance, days spent in the UK will not be considered exceptional where the circumstances are not beyond the individual’s control, or where they could have reasonably have been foreseen or predicted. For example, following are not routinely regarded as exceptional:

  • Life events such as birth, marriage, divorce and death
  • Choosing to come to the UK for medical treatment, or to receive elective medical services such as dentistry, cosmetic surgery or therapies
  • Travel problems, for example a delayed or missed flight due to traffic disruption, train delays or cancellations, or a car breakdown
  • delays in obtaining visas.

This new guidance needs to be read in conjunction with the current published guidance on exceptional circumstances (see RDRM13200 onwards)

Areas requiring more clarity

General clarification is welcome, however areas of uncertainty remain. For example, the government’s current statement on travel is that it is advised against all non-essential international travel for a period of 30 days i.e. it is advisory and qualified. HMRC guidance seems to make a distinction between that and avoidance of all travel to a region etc.

The key point seems to come down to whether leaving the UK for residence reasons was considered ‘essential’ travel by definition, if there were no other reason for leaving i.e. employment. An example with HMRC’s quarantine tax residence guidance seems to suggest that returning to a foreign employment is ‘essential’ travel. However, in situations where an individual has no employment outside the UK, would someone just monitoring their UK days under the SRT have to leave under the current guidance because that was considered ‘essential’ travel? If they don’t leave when they intended to, and, therefore, don’t tick the ‘essential’ travel box, one assumes the extra time spent in the UK would not qualify as ‘exceptional’ days.

For your assistance

The current position should someone remain in the UK, may therefore, not strictly fall within the guidance. We expect more clarity on these points will be given in due course. Even then, if ‘exceptional circumstances’ are conceded in most circumstances, it may still be subject to the 60 days limit – perhaps a longer period is appropriate during a crisis that is expected to last at least 12 weeks? Equally, is there not a case to extend the ‘exceptional circumstances’ relief to all the SRT day-counting tests regardless of the historic case law.

There would, of course, be different arguments if every other country, or the country where the individual habitually lived, closed their borders to arrivers, but could individuals then be forced to have to go to a third country to prevent them from breaching the UK residence test?

Clearly, this is far from the most important issue facing the government at present. Nevertheless, the position will need to be resolved in time and we understand that this is one of the many COVID-19 related tax issues that the professional institutes will be attempting to clarify with HMRC in the next few months.
123 Financials views?

Our experience suggests that when dealing with personal tax residence, no case is straightforward and, while we expect that the COVID-19 crisis will be considered ‘exceptional’ circumstances, there is currently no guarantee that individuals who spend ‘exceptional’ days in the UK will not breach the UK’s quarantine tax residence rules.

If you would like specific advice on UK personal tax residence status please contact us on 020 3900 3500 or