The UK Statutory Residence Test (SRT) is a set of rules used to determine an individual’s residency status for tax purposes in the UK, and thus any requirement to file a tax return and pay UK taxes on worldwide assets and income.

While the SRT has been around for years, with the new rules on domicile, residence, Inheritance Tax and the non-dom regime, which came into effect on April 6, 2025, it has undergone significant changes, some of which could catch out unsuspecting expats.

Whether you’re planning to return home permanently or just thinking about splitting your time between the US and the UK, it’s important to be aware of the changes and how they could affect you.

Given the importance of the issue, we recently devoted one of our “Ask An Expert” podcasts to talking about the SRT with cross-border tax advisor, Aidan Grant. Aidan is a partner in the tax and trust estate team at Collyer Bristow, a leading law firm based in the City of London.

In this article, you can read about some of the key issues we discussed with Aidan that you need to be aware of when it comes to moving back to the UK from the US.

Residency has replaced domicile as the key test of your tax liability

Given how long the previous domicile rules were in place, it’s understandable that the new changes have created an element of uncertainty and upheaval.

There are three potential scenarios where you should be aware of the new rules:

  1. You are returning to live in the UK full-time.
  2. You will be splitting time between the UK and the US.
  3. You are currently living in the UK but will be leaving to return later.

It’s fair to say that the new rules are not straightforward, but are clearer than those that were previously in place.

However, you should also bear in mind that we are not even six months into the new regime, and it’s possible that there may be legal challenges that could create precedents in certain scenarios.

Even with the new clarity, we would still recommend that if you are intending to return to the UK in the future, you make pre-arrival tax planning and getting expert tax advice two of your top priorities.

The Statutory Residency Test criteria establish your ties with the UK

To determine if you are a UK resident for tax purposes, there is an automatic test of residency, based on your actual presence in the UK in a tax year. There are three main criteria which will determine whether you are automatically considered to be a UK resident in a tax year:

  1. You spend 183 days or more in the UK in the relevant tax year
  2. You have a home in the UK for a period of more than 90 days, and you live it in for at least 30 days in the year in question
  3. You work full-time in the UK for 365 days or more with no “significant break” during that period, which will affect the two tax years it is likely to straddle.

If you do not meet any of those criteria, HMRC will then look to determine your residency status based on four “sufficient ties” as part of this test:

  1. Your UK accommodation, including property you or your family own, and rental property.
  2. Family ties you have in the UK, relating specifically to your spouse or civil partner and minor children.
  3. The amount of time you have physically worked in the UK in the tax year in question.
  4. If you have been resident in the UK for 90 days in either of the two previous tax years prior to the year under consideration.

All of these potential ties have different specific criteria that will determine your residency status.

There are also split-year considerations that you need to take into account.

As you will appreciate, your residency status is very much based on your personal circumstances. This underlines the importance of keeping detailed records of your arrangements and movements under all of the four test headings.

You must report it if you accidentally trigger your tax residency

Because the old remittance regime was in force for so long, it’s possible that you could unwittingly trigger your UK tax residency. That could be either inadvertently or through  misunderstanding the  SRT rules.

In these circumstances, the most important thing to bear in mind is that you have an obligation to report what you have done. You may be tempted to ignore the issue and assume that it won’t get picked up. However, doing this is liable to accentuate the problem rather than solve it.

Instead, it’s safer to assume that HMRC will find out – even if it may take some time – so it’s in your own interests to get ahead of the game by recording it on your self-assessment tax return.

The other point to bear in mind is that your circumstances may mean you are eligible to apply for split-year relief, meaning a tax year can be split into a resident period and a non-resident period.

The key point is to get expert advice with regard to the steps you need to take as soon as possible.

The new foreign income and gains regime will affect your tax planning on your return to the UK

The other key tax change made on 6 April 2025 was the introduction of a new “foreign income and gains” (FIG) regime, which replaced the previous remittance basis for earnings outside the UK.

While separate from the SRT, it will clearly affect your tax and income planning if you are moving back to the UK from the US.

Effectively, it means that if you have resided outside the UK for 10 years or more, when you return, you can designate offshore earnings for four years as FIG, and not be liable for any tax in the UK.

Clearly, this creates some valuable certainty and flexibility, such as if you are divesting assets in the US after your return to the UK.

Our previous Ask An Expert podcast with Aidan Grant looked at this issue in some detail, and we would strongly recommend that you have a listen.

It’s imperative that you plan ahead before moving back to the UK

A common theme in many of the blogs we publish, and the ongoing series of podcasts with tax and finance experts, is the importance of planning ahead.

Neither HMRC nor the IRS are known for their leniency and willingness to forgive oversight, so it’s hard to retrospectively unwind your tax arrangements from previous years.

Even when it is possible to do so, or to take steps to at least mitigate the effect, this can be costly, time-consuming, and throw your tax status and long-term financial plans off course.

So, if you’re a Brit in America considering a return home, or even just thinking of spending part of the year working in the UK, we would strongly recommend that you:

  • Listen to the Ask An Expert podcast
  • Include tax planning as a key factor in your moving arrangements
  • Get expert advice.

Even if your plans are at a very early and tentative stage, it’s worth seeking expert guidance to ensure you maximise tax opportunities and avoid any costly errors.

Get in touch

You should note that this is just a high-level overview of the changes, and their implications. We would strongly recommend that you get expert tax and financial planning advice if you are returning to the UK from the US.

If you are an expat living in the US and would like to talk about your own financial plans, please get in touch to arrange an exploratory Zoom call to talk through your options.

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