UK residency - HMRC guidance on exceptional circumstances - PKF Francis Clark
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UK residency – HMRC guidance on exceptional circumstances

HMRC has published guidance on what will be considered an exceptional circumstance during the ongoing Covid-19 pandemic.

Many employees and individuals have found that they are unable to enter or leave the UK from Tuesday 24 March 2020. For those who are worried about breaching their UK days limit, the following measures have been put in place.

Key workers in the fight against Coronavirus

On 9 April 2020 Chancellor Rishi Sunak wrote to the Treasury to request that the rules on the Statutory Residence Test were relaxed for those individuals coming to the UK to assist with the response to this unprecedented health emergency1.

The list of who will be designated a key worker under the relaxation has not yet been confirmed. However the letter indicates this could include trained medical staff such as anaesthetists to engineers who assist with the production or design of equipment such as ventilators.

Time spent in the UK by those individuals between 1 March and 1 June 2020 will not be counted towards the residency tests. It is not clear specifically which tests will be relaxed, however the spirit of the letter would assume that this is intended to cover all aspects of the residency test. Note this is different to how the exceptional circumstances rules apply, see below.

The measure will be reviewed as the pandemic progresses and may be extended. This blog will be updated when further guidance is received.

Exceptional circumstances

The Statutory Residency Test (SRT) is the legislation by which an individual’s UK tax resident status is established. There are a number of automatic tests which would deem you either non-resident or UK resident, or if none of the conditions have been met, a day test will apply based on the number ‘ties’ you have with the UK.

In some exceptional circumstances, a day (where the individual is at midnight) can be disregarded for some of the residency tests, where matters have fallen outside of your control. The number of days which can be disregarded under exceptional circumstances is capped at 60 per tax year.

HMRC has confirmed that the following scenarios should be 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

Clearly not all travel disruption is covered here, and arguably, until the Government advised against all travel outside of the UK from 17 March 2020 for 30 days2, travel interruption prior to this date will not be considered an exceptional circumstance.

Where non-UK residents have returned to the UK for family matters, such as collecting children from boarding school following the country wide closure, this will only be covered when falling specifically within the criteria above.

Even if exceptional circumstances can be claimed to disregard UK days, the exception importantly does not apply for all tests within the SRT3.

The family tie, the accommodation tie, work tie and country ties all count days, even when they are considered exceptional.

The full time work abroad rule does not allow any relaxation for exceptional days in the following circumstances:

  • When looking at a significant break from overseas workdays. A significant break is a period of at least 31 days during which work of no more than 3 hours has been undertaken on any day outside of the UK and is not annual leave, sick leave or parental leave.
  • An increase in UK work days. If you cannot leave the UK the number of days on which you work more than 3 hours while here are likely to increase.  The criteria requires you to work no more than 30 days in the UK during a tax year of non-residence.

If there is a significant break from overseas work or insufficient working hours, the automatic full-time work overseas test conditions will not be met and the residence status would then be determined by the other SRT tests.

In addition, a requirement of the full-time working criteria is to work sufficient hours.  This is a complicated calculation but, very generally, full-time work refers to at least 35 hours on average per week throughout the tax year.  Where work falls below this level, full-time work is not undertaken thereby causing the full-time work overseas test to fail.

Important note – If you are relying on the work tests to fulfil the conditions of your residency, either in the UK or overseas, advice should be taken to consider how measures such as furloughing (or international equivalents), reduced working hours or place of work due to lockdown may affect your residence status.


No official guidance on the impact of Covid-19 on the Seafarers Earnings Deduction (SED) tests has been given to date. Firstly, for those seafarers who are currently quarantined on ship, where they are within UK waters (generally twelve nautical miles from shore) they should ask the captain to keep a log of the ship’s position at each midnight and have this stamped alongside their logbook on disembarking.

In order to claim the SED, the seafarer must be UK (or EEA) resident, and evidencing UK days will be key.

For those currently landlocked, if you are concerned about breaching the 50% test rule, we recommend keeping evidence of attempts to be booked onto vessels or, where current trips have been cancelled or delayed due to Covid-19, retaining these records for evidence purposes.

We are waiting for further updates and will update this blog when we get further clarity from HMRC.

Temporary workplaces

For employees working out of temporary workplaces and currently claiming beneficial tax treatment on travel, subsistence and accommodation within the 24 month window, HMRC has yet to publish any guidance on the impact of Covid-19 on these claims.

Where employees are working in a temporary location and the project is expected to be extended, the default position is to begin to tax these benefits at the earlier point of the end of 24 months, or when it is decided that the engagement will extend beyond 24 months. For example, those projects currently at 22 months could now reasonably be expected to be extended past an original conclusion prior to the 24 month time limit and so it is at this point, at 22 months, that the exemptions will fall away.

HMRC may give concessionary relief on temporary postings approaching the 24 month limit, but we have no confirmation of this yet. Employers and employees should plan on the basis that the expenses will become taxable, at the point they became aware the posting will exceed 24 months, and look to put measures and policies in place where possible.

Conversely, where employees are working abroad and are concerned that being recalled to the UK may affect their UK tax position on foreign earnings, they may still fall within the exceptional circumstances rules set out above. We recommend the employee and employer seek advice in this scenario.

Certificates of coverage, A1 certificates and the national insurance impact

Update: HMRC is aware that COVID-19 and measures taken by governments across Europe to tackle the pandemic have created implications around social security coordination rules.

If you have been subject to changes in any EEA area due to COVID-19, please continue to pay social security contributions or UK National Insurance as you usually do, unless expressly told otherwise. Many EU countries are taking a similar approach. However, if you are concerned about your social security position in a specific country in the EU, EEA or Switzerland, we would advise contacting the relevant authority directly.

Original post: Where employees are working overseas on secondment, it is possible that a certificate of coverage or an A1 certificate may already be in place, looking to keep the employee within the scope of their home national insurance scheme.

Certificates of coverage apply to reciprocal agreement countries such as the US4. In general, these agreements apply where a secondment to a host country is expected to last less than a specified period, which varies between agreements (but will usually provide for a period of up to 5 years), a certificate can be granted to keep the individual in their home country social security scheme.

Where the project is expected to last beyond the specified period, and this is due to Covid-19 delays, it may be possible to request an extension based on the terms within the reciprocal agreement. This would usually require mutual agreement by both countries party to the agreement.

A1 certificates are similar to a certificate of coverage, but apply to EEA countries. The standard EEA time limit is 24 months. Where the 24 month period is expected to be exceeded, by mutual agreement, representatives from the revenue of each state may agree an extension where it is within the interests of the individual. All applications are to be supported by a signed statement from the employee (not the employer) stating that they consider it in their best interests to remain in the UK scheme.

There is a further concern for EEA secondments that need to be extended past the 31 December 2020 due to Covid-19 delays, it may not be possible to extend the existing A1 certificate due to the UK’s exit from the EU. See update above

The first step for employers is to check the end date on any existing certificates of coverage and A1 certificates and assess whether an extension will be required. Our team can assist with any extensions as required. There is currently a delay in processing these requests therefore early application is encouraged. See update above

Section 690 directives

Where employers have s690 directives in place to assist tax filings when an employee is working both in the UK and overseas, we expect these to be operated as normal. The directive is only an estimate of the percentage of UK/overseas duties and any changes in the working pattern due to Covid-19 can be rectified on the individuals UK self-assessment tax return. We would recommend that the tax return is filed as soon as possible to highlight where additional liabilities may arise.

Residency is a complex area and PKF Francis Clark have specialists able to advise individuals working/living overseas and employers with employees who are globally mobile.

Reference guidance

FEATURING: Karen Bowen
Karen has extensive experience advising high net worth individuals regarding their tax planning needs including inheritance tax planning. She is also able to advise on… read more
FEATURING: Tamara Beach
Tamara is a tax consultant based in the Truro office. Tamara works with her colleagues across the South West advising on a variety of key… read more
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