When you have earnings or assets in more than one country, one of the first things you need to settle is whether you count as a UK tax resident. This single classification determines if HMRC looks only at your UK income or at everything you earn worldwide. For years, this has been worked out through the Statutory Residence Test (SRT) , a system the government created so people could understand their position without relying on guesswork or verbal interpretation. A major update arrives on 6 April 2025, when the long-used non-dom rules will be replaced. The new 4-year Foreign Income & Gains (FIG) regime will change how individuals who are newly settling in the UK are taxed on money and gains that arise outside the country.
The Statutory Residence Test is HMRC’s checklist for deciding whether someone should be treated as a UK resident for a particular tax year (6 April to 5 April). It was introduced to give clearer guidance, replacing older rules that often depended on interpretation. Instead of relying on assumptions, it walks you through a structured sequence that leads to a definite outcome.
Once your status is set, it normally stays the same for the whole tax year. The main exception is if you qualify for split-year treatment, which may apply when you arrive in the UK or leave partway through the year.
The SRT has three layers, and each is reviewed in order:
These are checked first. Meeting any of these conditions means you are classed as non-resident, so the process stops there.
If you do not fall under the overseas tests, HMRC checks whether you automatically meet the conditions for being a UK resident.
If neither automatic tests gives a clear answer, this final step is used. It looks at how many days you spent in the UK alongside personal and family connections to decide whether you meet the residency threshold.
A young professional moved from Dubai to London in 2024 to work in fintech. She wasn’t sure whether her UAE bank interest, crypto gains, and rental income from her apartment in Dubai needed to be declared to HMRC. She had no idea how the SRT worked and feared she had already made mistakes.
She avoided double taxation, declared everything correctly, and reduced her UK exposure by over 40% through legal treaty relief.
The Statutory Residence Test includes a set of rules that can place you firmly outside UK tax residency. If any of the situations below match your circumstances, HMRC will usually treat you as non-resident for that tax year.
If you’ve been a UK tax resident at any point in the last three years but hardly set foot in the country this year, you may fall outside UK residency. In practical terms, if your time in the UK is less than 16 days, you’re considered non-resident for that year.
People who haven’t been UK residents for the past three tax years have a slightly wider margin. As long as your total days spent in the UK stay below 46, HMRC will usually treat you as non-resident.
There’s also a rule for those who work abroad full time. To meet this condition, your primary employment must be overseas, and, during the tax year, you must:
The most notable element here is how your residency status from the prior three years directly affects the threshold for days in the UK without becoming resident. An individual who was a resident must be highly restrictive, staying fewer than 16 days. Conversely, someone who has been a long-term expat (non-resident for all three prior years) has a much higher allowance of up to 45 days. This higher threshold is HMRC’s mechanism for differentiating between genuine new arrivals and those who are merely trying to maintain non-residence after recent ties.
If you satisfy any of the automatic overseas tests, you are definitively a non-resident in the UK, and you do not need to consider any further tests.
A British IT consultant working full-time for a company in Singapore was worried he might accidentally become a UK resident because he visited family frequently.
Outcome:
He retained non-resident status, saving £18,000+ in potential UK tax.
If you fail to meet all the automatic overseas tests, the next stage is to check if you are automatically classified as a UK tax resident. Meeting any of these automatic UK tests instantly makes you a resident for the tax year:
The Sufficient Ties Test
If you spend more than the limits set by the automatic overseas tests but have not triggered any of the automatic UK tests, your status hangs on the sufficient ties test.
This test connects the depth of your ties, or connections, with the UK to the maximum number of days in the UK without becoming resident, you are permitted before classification as a UK tax resident.
The test considers five key ties:
A critical consideration when planning cross-border movements is the nature of the 90-day tie. This tie is determined retrospectively, based on your day count in the two tax years before the year you are checking. This means that physical presence in the past has a long-lasting impact, restricting your movement in the current year. Long-term tax planning, therefore, requires tracking day counts not just for the immediate year, but for two years prior, to ensure the number of ties remains low enough to stay beneath the corresponding maximum day threshold.
| Prior UK Residency | Number of UK Ties | Maximum Days in the UK (Without Becoming Resident) |
|---|---|---|
| Resident in 1 or more of the last 3 tax years | 3 ties | Less than 61 days |
| Resident in 1 or more of the last 3 tax years | 2 ties | Less than 91 days |
| Resident in 1 or more of the last 3 tax years | 1 tie | Less than 121 days |
| Non-resident in all of the last 3 tax years | 4 ties or more | Less than 91 days |
| Non-resident in all of the last 3 tax years | 3 ties | Less than 121 days |
A simple way to understand the UK tax system is this: once you’re treated as a UK tax resident under the Statutory Residence Test, the UK normally expects you to pay tax on all of your income, no matter where in the world it came from. It doesn’t matter whether the money was earned from a job in London, interest from a savings account overseas, or profit made by selling investments held in another country if you’re UK-resident; it all falls within the UK tax net. For someone who isn’t a UK resident, the position is very different. Non-residents are only taxed on income and gains that arise from UK sources. Anything they earn from outside the UK sits completely outside HMRC’s scope and does not attract UK tax.
A British national returned after 15 years in Canada. He had:
He feared the UK would tax everything again.
He reduced potential double taxation by more than 60%.
Lanop’s international tax knowledge is unmatched. They saved me thousands and a lot of stress.”
For those classified as UK tax residents paying tax on worldwide income, the critical concern is ensuring that income taxed abroad is not taxed again in the UK. Two primary mechanisms exist to address this potential double taxation. The first and most important mechanism is the Double Taxation Agreement (DTA). The UK has signed extensive treaties with many countries worldwide. A DTA is an international tax treaty that defines which country has the primary taxing right over specific categories of income (e.g., dividends, interest, royalties). In certain cases, the DTA may specify that a certain type of foreign income is entirely exempt from UK tax, meaning tax is paid only in the source country.
The existence of a Double Taxation Agreement (DTA) is a powerful defense. The DTA defines the right to tax; therefore, it is the initial planning document. If reliance is mistakenly placed solely on offsetting foreign tax rather than utilizing an exemption defined by the DTA, a taxpayer could potentially overpay UK tax.
The second mechanism is the Foreign Tax Credit Relief (FTCR). Where a DTA grants taxing rights to both the UK and the overseas country, or if no treaty exists, you can typically claim FTCR. This relief allows you to offset the foreign tax already paid on that income against your final UK tax liability on the same income. However, the relief is strictly capped at the amount of UK tax actually chargeable on that specific foreign income. For successful DTA claims, particularly those made to overseas tax authorities, proving your UK tax residency status often requires obtaining a formal Certificate of Residence from HMRC.
The long-standing framework relying on the concept of ‘domicile’ for UK taxation for new residents will be fundamentally replaced from 6 April 2025.
Effective from the 2025/26 tax year, the old non-domicile remittance basis is abolished. It is replaced by a new, time-limited regime based solely on residence: the 4-year Foreign Income & Gains (FIG) regime. This new residence-based system removes domicile as a relevant factor for Income Tax and Capital Gains Tax purposes.
This section is simply about who can actually use the 4-year Foreign Income & Gains (FIG) regime, and what conditions someone must meet before they’re allowed to claim it.
A banker returning from Hong Kong wasn’t sure if she met the 10-year non-residence requirement.
Saved over £30,000 on foreign dividends in her first FIG year.
The core benefit of the 4-year FIG regime is that qualifying Foreign Income & Gains (FIG) arising during these four years are exempt from UK Income Tax and UK Capital Gains Tax.
Relievable foreign income and gains cover a wide spectrum of overseas sources:
A significant shift from the old remittance basis is that under the new 4-year FIG regime, foreign income and gains arising in 2025/26 or later can be brought into the UK remitted without triggering any UK tax liability. This provides maximum certainty and flexibility.
However, planning must focus heavily on the status of wealth accumulated before April 2025. Income and gains arising during the 4-year FIG regime are tax-exempt regardless of remittance, but pre-existing wealth is subject to different transitional rules. HMRC has introduced a Temporary Repatriation Facility (TRF) designed specifically for previously untaxed foreign income and gains that arose before 6 April 2025. This facility allows these older funds to be brought into the UK at a reduced tax rate of 12% during the 2025/26 and 2026/27 tax years. Affected individuals must urgently segregate their pre-April 2025 funds from their post-April 2025 earnings to utilize the beneficial TRF rate, as failure to do so could result in these historical funds being subject to full UK tax rates upon remittance later.
A common misunderstanding about the 4-year FIG regime is that it somehow shelters all income. It doesn’t. The protection applies only to foreign income and gains. Anything earned from a UK source is still taxed as normal, no matter which year of the FIG period you’re in.
Picture someone who recently moved to the UK and qualifies for the FIG rules. During the year, they earn £50,000 from a property they rent out in France, and they also receive £10,000 interest from savings held with a UK building society.
The French rental income sits comfortably under the FIG umbrella, so it isn’t taxed in the UK at all.
The £10,000 interest is a different story. Since it comes from a UK account, it’s taxed right away because the FIG regime doesn’t extend to income generated inside the UK.
Move ahead for a few years. The individual has now completed all four FIG years and is in Year 5. Their income hasn’t changed, still £50,000 from the French rental property and £10,000 in UK interest.
Once the FIG period ends, the special treatment ends with it. The person is now taxed like any long-term UK resident, which means worldwide income is brought into UK taxation.
So, both figures the French rent, and the UK interest are taxable.
If tax has already been paid in France on the rental income, they may be able to claim Foreign Tax Credit Relief to reduce their final UK bill.
| Feature | Former Non-Dom Remittance Basis (Pre-6 April 2025) | New 4-Year Foreign Income & Gains (FIG) Regime |
|---|---|---|
| Underlying Basis | Domicile status (complex common law concept) | Statutory UK tax residency status |
| Duration of Relief | Up to 15 years (complex rules applied) | Exactly 4-year FIG regime (maximum) |
| Taxation of Foreign Income | Taxed only if remitted (brought into the UK) | Exempt from UK tax, regardless of remittance |
| Key Eligibility Requirement | Claiming non-domiciled status | 10 consecutive years of prior non-residence |
Suppose you are a UK tax resident and your foreign income is not specifically exempt (i.e., you are outside the 4-year FIG regime or similar exemptions). In that case, you are required to report foreign income to HMRC through a Self-Assessment Tax Return (SA100).
This compliance process relies on supplementary forms designed to capture international earnings.
The SA106 form, also known as the “foreign pages,” is mandatory for declaring all overseas earnings, including rental income from foreign property, overseas bank interest, dividends from foreign shares, and capital gains.
When you have already paid tax in an overseas jurisdiction on income that is also chargeable in the UK, you must formally claim Foreign Tax Credit Relief (FTCR) on the SA106 pages to avoid double taxation.
To make a formal claim for relief under a Double Taxation Agreement (DTA), particularly when interacting with an overseas tax authority, you often need to obtain an official Certificate of Residence (CoR) from HMRC.
When applying for a CoR, you must provide HMRC with essential details:
While taxpayers are not usually required to submit foreign tax receipts directly with the Self-Assessment return, robust evidence that the foreign tax was indeed paid and that the gross income amount was correctly declared must be retained. This documentation is vital in the event that HMRC opens an enquiry to verify the claim for Foreign Tax Credit Relief.
HMRC questioned a client’s foreign dividend entries because they didn’t match the declared DTA article.
HMRC closed the enquiry within 14 days, with no penalties.
Understanding the application of UK tax residency rules in specific contexts is essential for compliance.
An expat returning to the UK becomes a UK tax resident and is immediately liable to UK tax on their UK resident worldwide income, which includes any rental income generated from property still held overseas.
If the expat qualifies for split-year treatment, the income generated before their date of arrival (the “overseas part”) is protected from UK taxation. Income arising from the date they became resident onwards (the “UK part”) is fully taxable. Once fully resident, the overseas rental income is taxed in the UK, and the expat must claim Foreign Tax Credit Relief to prevent double taxation on any tax paid in the property’s country of location.
A remote worker employed by an overseas company but living in the UK must carefully track their days in the UK without becoming resident. They risk becoming a UK tax resident very quickly, often by reaching the 183-day rule under the automatic UK tests or by accumulating sufficient ties.
If the worker becomes a resident, their foreign salary is taxed as UK resident worldwide income. While the old non-dom rules allowed Overseas Workday Relief (OWR) to shield certain foreign earnings, this relief is severely restricted under the new residence-based regime post-April 2025. Furthermore, suppose the remote worker is senior and engaging in core corporate activities within the UK. In that case, their presence can inadvertently create a Permanent Establishment (PE) for the foreign employer, potentially subjecting the overseas company to UK Corporation Tax.
Split-year treatment is an indispensable relief mechanism triggered when an individual moves into or out of the UK, provided specific conditions are met under the Statutory Residence Test (SRT) rules.
If split-year treatment applies, the tax year is legally segmented into two parts: a “UK part” (taxed as a resident) and an “overseas part” (taxed as a non-resident in the UK). This division means that foreign income generated during the “overseas part” of the year is generally exempt from UK tax. For instance, if an individual earns a large bonus overseas before relocating, that bonus is protected from UK tax liability, minimizing the possibility of double taxation during the transition. Qualification requires meeting one of the eight defined “cases” detailed in the SRT guidance.
A recent Lanop client had spent over a decade working abroad before returning to the UK in 2025. They were uncertain whether their foreign income, including overseas rental earnings and bank interest, would now be taxed in the UK.
Our tax team first applied for the Statutory Residence Test (SRT) to determine the client’s UK tax residency status for 2025/26. Because they had been non-resident for more than ten years, they qualified as a new UK resident under the 4-Year Foreign Income & Gains (FIG) regime.
We then:
Through Lanop’s expert planning and compliance process, the client successfully reduced their UK tax exposure by more than half while remaining fully compliant with HMRC’s updated residency and foreign income regulations.
At Lanop Business and Tax Advisors, we specialize in assisting global professionals, entrepreneurs, and returning expatriates in understanding and managing UK tax residency and foreign income matters.
Here’s how we support our client step by step:
At Lanop, we combine regulatory expertise with practical financial insight, ensuring you achieve both compliance and optimization in your cross-border tax affairs.
Determining your UK tax residency and managing your foreign income effectively has never been more important. With the 4-Year Foreign Income & Gains (FIG) regime coming into force from April 2025, international taxpayers and returning UK residents face a changing landscape that demands careful planning.
The Statutory Residence Test (SRT), Double Taxation Agreements (DTA), and Foreign Tax Credit Relief (FTCR) all play a vital role in ensuring you remain compliant while avoiding unnecessary tax exposure.
With Lanop’s expert support, you can confidently structure your finances, optimize your tax position, and comply with HMRC’s evolving rules, whether you’re relocating, repatriating funds, or managing multiple global income streams.
The UK Statutory Residence Test (SRT) is the legal, three-part sequential set of rules used to determine your UK tax residency status for a specific tax year. It involves checking the automatic overseas tests, followed by the automatic UK tests (including the 183-day rule), and finally, the sufficient ties test. The outcome is primarily dictated by the number of days in the UK you spend and your connections (ties) to the country.
From 6 April 2025, the UK permanently abolished the non-domicile remittance basis of taxation. It has been replaced by the 4-year FIG regime. This new regime allows eligible new arrivals (those non-resident for 10 years) to claim a four-year exemption on their foreign income and gains, making the individual’s domicile irrelevant for Income Tax purposes during this initial period.
As a UK tax resident, the general rule is that you are liable for UK tax on all income, wherever it arises. However, mechanisms exist to prevent paying taxes twice. This is achieved through a Double Taxation Agreement (DTA), which may exempt certain income, or by claiming Foreign Tax Credit Relief (FTCR) to offset foreign taxes already paid. Furthermore, qualifying new arrivals can benefit from the temporary exemption offered by the 4-year FIG regime.
This limit is highly variable based on your prior status and connections. If you were previously a UK tax resident, you must spend less than 16 days to be automatically non-resident in the UK. If you were a non-resident for the past three years, you can stay up to 45 days. If you exceed these limits, your maximum allowance is determined by the sufficient ties test, which may allow up to 60, 90, or 120 days in the UK without becoming resident, depending on the number of ties you possess.
You must report foreign income using the supplementary pages of your Self-Assessment Tax Return, specifically form SA106 (Foreign). On this form, you detail the type of income and the foreign tax paid. It is also the specific location where you formally claim Foreign Tax Credit Relief to reduce your overall UK tax liability.
Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors.
With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.
Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors. With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.
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