Recent events in parts of the Middle East have, understandably, prompted a flurry of questions about the potential UK tax implications of an unplanned return home. While individual circumstances will differ, we know unexpected travel or periods spent in the UK can raise reasonable concerns around UK tax residence and how the Statutory Residence Test (SRT) may apply. 

At a time when many people are making decisions based on personal safety, family needs, or employer requirements, having clarity on the financial implications of one decision over another is really important. That’s why we want to summarise the key UK tax residence considerations for individuals living and working overseas, and explain how the “exceptional circumstances” provisions may apply when time in the UK is outside an individual’s control. 

Our aim is to help you understand the potential implications, highlight where HMRC may offer relief, and offer support navigating complex financial decisions at a time of already heightened stress. 

Why UK residence status matters 

An individual’s UK tax liability largely depends on whether they are UK tax resident in a particular tax year. Their UK tax residence is determined under the SRT, which is made up of a series of tests and considers several factors including (but not limited to):  

• The number of days spent in the UK during a tax year 
• Whether the individual works full-time overseas 
• The connections or “ties” they have in the UK, such as UK resident family, available UK accommodation or substantive work in the UK 

To maintain non-UK residence status, it is essential to carefully manage the amount of time spent in the UK. Any unplanned or extended visits may cause an individual to exceed the permitted day limits under the SRT and inadvertently trigger UK tax residence depending on their circumstances. If UK residence is established, an individual will generally be subject to UK tax on their worldwide income and gains, which can lead to significantly higher UK tax costs. This would particularly impact those living in jurisdictions where no personal income tax applies. 

Could the exceptional circumstances rules apply? 

In certain limited circumstances, HMRC may allow up to 60 days per tax year to be treated as “exceptional circumstances”. These days can be disregarded when determining an individual’s UK tax residence status. In practice this is applied very narrowly, and HMRC will only treat days as exceptional where it can be clearly demonstrated that the individual’s presence in the UK was due to circumstances beyond their control, which prevented them from leaving the UK, and that they intended to leave as soon as those circumstances permitted. 

Examples of exceptional circumstances may include situations such as war or civil unrest. For example, HMRC may allow days spent in the UK due to the current political unrest in the Middle East to be treated as exceptional, provided the individual had no practical alternative but to return to the UK and left again as soon as it was safe and reasonably possible to do so. It is important to note, however, that there is no guarantee that HMRC will accept to treat such days as exceptional. The specific facts and evidence relating to each individual’s circumstances will determine whether the days can be treated as exceptional circumstances. 

Any days beyond the 60-day limit will not be treated as exceptional and will therefore count towards the individual’s UK day limits under the SRT. As outlined above, the SRT is made up of a series of tests to determine an individual’s residence status, and the exceptional circumstances provisions do not affect all of these tests. For example, exceptional circumstances should not prevent the second and third ‘automatic UK tests’ (being the ‘only home’ test and the ‘full-time work in the UK’ test) from being met. In addition, exceptional circumstances should not impact the ‘work tie’ which is met where an individual has 40 or more days in the UK during the tax year, on which they spend three or more hours performing work activities. Whether the individual worked on the days they were in the UK due to exceptional circumstances is not relevant for the exceptional circumstances provisions.   

As a result, individuals who remain in the UK for extended periods while waiting for overseas conditions to stabilise may unintentionally trigger UK tax residence. 

Reporting UK days as exceptional circumstances is done via an individual’s Self-Assessment tax return. It is important that clear evidence is retained to support any days treated as exceptional, in the event HMRC requests further information. Examples of supporting documentation include: 

• Government travel advice or official warnings 
• Employer communications requiring relocation  
• Evidence of travel disruption, such as cancelled flights 
• Records demonstrating attempts to leave the UK 

There is currently no specific HMRC guidance regarding days spent in the UK as a result of the Middle East conflict. As such, it remains uncertain whether exceptional circumstances would apply to British nationals who have returned to the UK due to the ongoing situation. The Foreign, Commonwealth & Development Office (FCDO) is currently advising against all but essential travel to most affected regions of the Middle East. Where FCDO guidance advises against all travel to a region, we would typically expect HMRC to allow days spent in the UK to be disregarded under the exceptional circumstances provisions, subject to the 60day limit. This approach is consistent with HMRC’s current treatment of individuals returning from Ukraine, Russia and Belarus, where current FCDO advice is to avoid all travel.  

We recommend that you keep up to date with the FCDO guidance as this may be updated. FCDO updates can be monitored here.

Other considerations  

Establishing UK tax residence can create wider tax implications, including the potential application of the temporary non-residence rules, limitations on an individual’s ability to claim the Foreign Income and Gains (FIG) regime in future years, and potential increased UK inheritance tax exposure. As such, individuals returning to the UK as a result of the conflict in the Middle East should carefully assess the impact on their UK residence position and seek appropriate professional advice where necessary. 

Get in touch 

If you have any questions or would like to discuss this topic further, please do not hesitate to reach out to Nicola Horsburgh, Kimberley Day, your usual Johnston Carmichael contact, or by filling in the short form below.