Expats get a coronavirus tax break

HMRC says expats and non-doms stuck in the UK due to COVID-19 can claim ‘exceptional circumstances’ exemptions and will not have to pay tax on their global incomes.

David Sapsted

25 March 2020

The UK's tax authority, HMRC, has moved to assure expatriates and non-doms that they will not face unexpected tax bills if they find themselves stuck in Britain because of the COVID-19 outbreak.There had been fears that British expats visiting the UK – some to avoid the COVID-19 outbreak in their host nations – and other non-residents would have to prolong their stays beyond the permitted tax-free period because of border closures.

HMRC extends 183-day tax limit

Under the statutory residence test (SRT), non-residents and expats pay UK income tax only on UK earnings and none on their overseas earnings as long as they have been resident abroad for one complete tax year.However, depending on their circumstances and ties to the UK, they can spend between 16-183 days in the country before they have to start paying tax in Britain on both their overseas and UK earnings.Now HMRC has said expats and non-doms who find themselves forced to stay in the UK beyond the 183 days will be able to claim ‘exceptional circumstances’ exemptions because of the virus outbreak and will not have to pay tax on their global incomes.

Find out more in The Relocate Global Coronavirus (COVID-19) resource centre

Cases for exemption

In an update to the rules regarding the SRT, HMRC says overstaying expats will now be able to claim tax exemption in a variety of instances, including where someone is quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus.Additionally, the update covers anyone who is advised by official government advice not to travel from the UK as a result of the virus; those who are unable to leave the UK as a result of the closure of international borders; and those who are asked by their employer to return to the UK temporarily as a result of the virus.However, the tax authority warns that "whether days spent in the UK can be disregarded due to exceptional circumstances will always depend on the facts and circumstances of each individual case."

Prepare for changes in guidance, says HMRC

HMRC also notes that events resulting from the impact of the coronavirus are changing rapidly and that the guidance might change at short notice as the outbreak unfolds.Under the 'exceptional circumstances' rule, expats and other non-residents can remain for 60 days beyond the 183-day maximum.

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Guidance from HMRC states: “The type of events that may give rise to exceptional circumstances will be, by their nature, out of the ordinary and it is difficult to be prescriptive about what characteristics such an event would exhibit."However, local or national emergencies, such as civil unrest, natural disasters, the outbreak of war or a sudden serious or life-threatening illness or injury to an individual are examples of circumstances that are likely to be exceptional.”