COVID-19: Changes to the statutory residence test

14 April 2020: Chancellor relaxes tax residence test for skilled workers coming to the UK to help tackle the coronavirus pandemic.

In a letter to the head of the Treasury Select Committee on 9 April, Rishi Sunak confirmed that the statutory residence test (SRT) will be temporarily amended to ensure that any time spent in the UK by individuals working on COVID-19 related activities between 1 March and 1 June 2020 will not count towards the residence tests.

The Chancellor said the measure will allow ‘highly skilled’ individuals from across the world to come to the UK and help the response to the current health emergency. Under normal circumstances, working in the UK could affect these individuals’ tax residence status and result in their global earnings being taxable in the UK.

The letter confirmed that changes to the SRT will be time limited, although may be extended beyond the initial three-month period if needed, and will support only those people whose skillsets are currently required, such as anaesthetists and engineers working on ventilator design and production.

The Chancellor acknowledged the risk of potential tax avoidance from the change, confirming: “The qualifying criteria will therefore be designed so that the relaxation of the rules is tightly targeted to minimise the risk of abuse.”

The government has promised further details on the eligibility and scope of the change to the SRT, to be legislated in Finance Bill 2020, which is currently before Parliament.