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Statutory Residence Test ("SRT")

Statutory Residence Test ("SRT")

Are you thinking about the rules that make individuals UK resident for tax purposes, whether as an individual or as an employer?


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Since 6 April 2013 a Statutory Residence Test (SRT) has applied to determine an individual’s residence status for UK tax purposes, including income tax, capital gains tax, inheritance tax and corporation tax.

The SRT consists of:

  • Automatic tests for non residence
  • Automatic tests for residence
  • UK ties and day counting, known as the Sufficient Ties test, for individuals who are not automatically non resident or resident.

To apply the rules you consider each tax year separately and apply the above tests to it in order. Once you meet an automatic test you do not consider any later tests.

There are up to five potential ties to consider for the Sufficient Ties test. These are the family tie, the accommodation tie, the work tie, the 90 days tie and, in some cases, the country tie. The Sufficient Ties test makes a distinction between “arrivers” (defined as individuals who were not resident for all of the previous three tax years) and “leavers” (defined as individuals who were resident in one or more of the previous three tax years). This reflects the Government’s view that residence has an “adhesive nature”.

Resident or non resident?

Although the SRT is a prescriptive test in many cases it is not straightforward to determine residence status. The legislation is lengthy and complicated and contains several pitfalls. There are various definitions which need to be carefully understood and applied.

KPMG in the UK publish a summary of the SRT in the form of a Statutory Residence Test Decision Tree (PDF 93 KB). The definitions behind each of the tests and UK ties, together with individual circumstances, need to be carefully considered before concluding on whether an individual is resident or non resident for UK tax purposes.

An interactive version of the SRT decision tree can be found at:

Other tax status to consider

In addition to residence in the UK under the SRT, an individual should consider where he or she stands with respect to other tax rules which are based on an individual’s time spent in, or relationships with, the UK and other countries, including:

  • Special rules which apply in the tax years of arrival in the UK, departure from the UK and death
  • Eligibility for overseas workday relief for non-UK domiciled individuals
  • The separate test of residence which applies for national insurance
  • Residence in other countries, under their tax rules
  • Domicile status

Employer issues

Residence and tax status are particularly important issues for people leaving the UK to work abroad or coming to work in the UK and for employers of globally mobile employees.

Please see KPMG in the UK’s interactive SRT decision tree and KPMG in the US’s flash International Executive Alerts on the Statutory Residence Test (PDF 71 KB) and the Overseas Workday Relief (PDF 53 KB) for further information on how the new legislation impacts employers.

Further information

Although the SRT can provide certainty on residence status it is important to take appropriate professional advice to ensure a full understanding of the rules and the impact on tax liabilities.

To find out more, please call your usual KPMG contact or any of the individuals listed in the attached publications.

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