Can Foreign Nationals Become UK Tax Residents?

Foreign nationals can become UK tax residents, which determines their tax obligations in the UK. Understanding how tax residency is established and its implications is essential for immigrants planning to live in the UK long-term. This article explores how foreign nationals achieve UK tax residency, their tax responsibilities, and strategies to optimise their tax position. For personalised guidance, contact the experts at Foundry Accounting.

How Do Foreign Nationals Become UK Tax Residents?

Tax residency in the UK is determined by HM Revenue and Customs’ (HMRC) Statutory Residence Test (SRT), which applies to all individuals, including foreign nationals. The SRT evaluates your presence and connections to the UK to determine whether you are a tax resident for a given tax year (6 April to 5 April). Unlike immigration residency (the legal right to live in the UK), tax residency focuses solely on your tax obligations and does not require a specific visa.

Statutory Residence Test (SRT)

The SRT consists of several parts, and meeting any of the following conditions makes you a UK tax resident:

1.     Automatic Resident Tests:

• You spend 183 days or more in the UK during a tax year.

• You have a home in the UK (owned, rented, or otherwise available) for at least 91 days, spend at least 30 days there, and have no home overseas (or spend minimal time in an overseas home).

• You work full-time in the UK (at least 35 hours per week) for 365 days with no significant breaks (30+ days).

2.     Sufficient Ties Test:If none of the automatic resident tests apply, the SRT considers your ties to the UK combined with the number of days spent in the UK. Ties include:

• Family: A spouse, civil partner, or minor children who are UK residents.

• Accommodation: Available housing in the UK (e.g., owned or rented) for at least 91 days, with at least one night spent there.

• Work: At least 40 days of work in the UK (with a working day being 3+ hours).

• 90-Day Rule: Spending 90+ days in the UK in either of the two previous tax years.

• Country Tie: Spending more nights in the UK than any other country (applies only if you were a UK tax resident in one of the previous three tax years).

The number of days required to become a tax resident decreases as your UK ties increase. For example:

• With 4+ ties and a prior UK tax residency, just 16 days in the UK can make you a tax resident.

• With 4 ties and no prior UK tax residency, you need 46 days to become a tax resident.

3.     Automatic Non-Resident Tests:You are not a UK tax resident if:

• You spend fewer than 16 days in the UK in the current tax year and were a UK tax resident in one of the previous three tax years.

• You spend fewer than 46 days in the UK and were not a UK tax resident in the previous three tax years.

• You work full-time overseas, spend fewer than 91 days in the UK, and work fewer than 31 days in the UK (with a working day being 3+ hours).

  
  

You can complete the SRT on the Foundry Accounting website in about 10 minutes using a calendar and calculator. Knowing when you will become a tax resident is critical for planning your finances and tax obligations.

Tax Implications for Foreign Nationals

Tax Obligations for UK Tax Residents

All individuals with UK-sourced income must pay taxes, regardless of tax residency status. However, UK tax residents have additional obligations:

• They must declare and pay tax on all income (UK and worldwide) for the entire tax year (6 April to 5 April).

• Exceptions apply to employees whose UK income is taxed via PAYE (Pay As You Earn), who may not need to file a tax return if they have no other income sources (e.g., foreign income or investments).

Income tax is calculated on a progressive scale:

• For the 2025/26 tax year, the personal allowance (tax-free income) is estimated at £12,570 (subject to confirmation by HMRC).

• Income tax rates range from 20% to 45%, depending on income levels:

  • 20% on income up to £50,270 (basic rate, after personal allowance).

  • 40% on income between £50,271 and £125,140 (higher rate).

  • 45% on income above £125,140 (additional rate).

• Individuals earning over £125,140 lose the personal allowance entirely, with the allowance reduced by £1 for every £2 earned above £100,000.

Tax returns must be filed by HMRC deadlines, typically 31 January for online submissions following the tax year. Late filing incurs penalties. These rules apply UK-wide, though Scotland has slightly different income tax bands.

Tax Benefits for Non-Domiciled Tax Residents

Foreign nationals who are UK tax residents but not permanently tied to the UK for tax purposes (non-domiciled) can use the remittance basis to save on taxes. Under this regime:

• Foreign income and gains (e.g., from overseas investments, property, or bank accounts) are taxed only if remitted(brought) to the UK.

• Income and gains kept in offshore accounts remain untaxed by the UK.

However, the remittance basis has limitations:

• Long-term residents (7+ or 12+ years in the UK) may face a Remittance Basis Charge of £30,000 or £60,000 annually, depending on residency duration.

• After 15 years of UK tax residency, foreign nationals may face changes in their tax treatment, potentially losing access to the remittance basis for certain taxes.

  
  

Tax Planning Strategies

To optimise your tax position as a foreign national:

• Before becoming a UK tax resident: Convert foreign assets (e.g., property or investments) into cash to create clean capital, which is exempt from UK tax when remitted. For example, selling a foreign property and depositing the proceeds in an offshore account before moving to the UK can protect those funds from UK tax.

• Use the remittance basis: Keep foreign income and gains in offshore accounts to avoid UK tax. For instance, maintain overseas rental income or dividends in a foreign bank account rather than transferring them to the UK.

• Plan for residency transitions: Use the SRT to predict when you will become a tax resident and structure your finances accordingly. For example, delay your UK arrival to avoid triggering the 183-day rule in a given tax year.

• Leverage split-year treatment: If you move to the UK mid-tax year, you may qualify for split-year treatment, where you are taxed as a resident only from the date of arrival or when you establish a UK home. This can reduce your tax liability for that year.

  
  

Why Knowing Your Tax Residency Status Matters

Understanding whether and when you will become a UK tax resident allows you to plan proactively to minimise tax liabilities. For example:

• By managing the timing of your UK entry, you can avoid automatic residency in a tax year.

• Structuring your assets before residency (e.g., creating clean capital) can save significant taxes on foreign income and gains.

• Preparing for tax residency ensures compliance with HMRC reporting requirements, avoiding penalties for late or incorrect tax returns.

  
  

The SRT’s complexity means that personal circumstances—such as travel patterns, family ties, or work commitments—can significantly affect your status. A tax professional can help you navigate these rules and optimise your financial strategy.

For expert guidance on determining your UK tax residency status and planning your taxes, contact our team at Foundry Accounting. We specialise in helping foreign nationals understand their obligations, leverage tax-saving opportunities like the remittance basis, and meet HMRC deadlines.