Determining whether you are UK tax resident is a vital first step in understanding your tax obligations. The Statutory Residence Test (SRT) is the legal framework used to decide whether a person is UK resident for tax purposes in a particular tax year.
Your UK tax residence status affects how much income tax, capital gains tax and inheritance tax you pay in the UK.
If you are UK resident, you are generally liable to tax on your worldwide income and gains. Non-residents may only be taxed on UK-source income and gains.
Getting your residence status right can help you:
Avoid unexpected tax liabilities
Take advantage of reliefs and allowances
Plan cross-border income and gains correctly
The SRT uses a series of tests based on days spent in the UK and your pattern of connections here.
It is divided into three broad parts:
You are automatically a non-UK resident if you meet one of these conditions:
You were resident in the UK for fewer than three of the previous tax years and spend fewer than a minimum number of days in the UK in the current year
You work full-time overseas and spend limited time in the UK
Other specific conditions showing a clear connection to another country
If you meet any automatic overseas test, you are non-resident for the tax year.
You are automatically UK resident if you meet any of these conditions:
You spend 183 days or more in the UK in the tax year
You have a home in the UK available to you and you spend a sufficient number of nights in it
You work full-time in the UK for a set period
Meeting any automatic UK test confirms UK residency without further analysis.
If you do not qualify under the automatic tests, your residence status is determined by how many UK ties you have and how many days you spend in the UK.
Common ties include:
Family ties – having a spouse, civil partner, or minor children living in the UK
Accommodation ties – having a place available to live in the UK
Work ties – working in the UK for a defined number of days
90-day tie – spending more than 90 days in the UK in either of the two previous tax years
Country tie – the UK is the country where you spend the most days
The greater the number of ties, the fewer days you can spend in the UK before becoming UK resident.
Residence is heavily influenced by the number of days you spend in the UK. Careful tracking of your presence in the UK (arrival and departure dates) is essential for accurate status determination. Gap days and travel patterns can affect your position.
In some years, your residence status may change part-way through the year. The SRT rules allow for split-year treatment, where the tax year is divided into a UK resident period and a non-resident period. Specific conditions must be met for split-year treatment to apply.
Residence status interacts with many areas of tax planning, including:
Taxation of foreign income and gains
Double tax treaties
Pensions and savings
Property ownership abroad
Inheritance tax implications
Small changes in days spent or personal circumstances can change your residence status and affect your tax liabilities.
Determining residence status can be complicated — and mistakes can be costly.
Applegrow Financial Advisors can help you:
Calculate days and ties accurately under the SRT
Document and support your residence position
Plan for cross-border income and gains
Understand how residence affects your overall tax strategy
Whether you are newly arrived in the UK, splitting your time internationally, or reviewing your status as part of retirement or relocation planning, Applegrow can provide clear, tailored advice.
A capital gain arises when a chargeable asset is sold for more than its original cost. The gain is calculated as:
Sale proceeds (less selling costs)
minus
Purchase price (including acquisition costs)
CGT applies to assets such as shares, business assets, investment property, and certain personal possessions.
For the 2025/26 tax year, CGT rates depend on your total taxable income and gains:
18% on gains that fall within the basic rate income tax band
24% on gains above the basic rate band
These rates apply to most assets, subject to specific exceptions and reliefs.
Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can significantly reduce CGT on qualifying business disposals.
For 2025/26:
Qualifying gains are taxed at an effective rate of 14%
The lifetime limit for BADR is £1 million
The rate will increase to 18% from 2026/27
BADR may apply to:
The sale of a sole trade or partnership business
Shares in a personal trading company
Assets used in a business that has ceased within the last three years
Associated disposals (such as personally owned property used in a business) may also qualify, although restrictions can apply, particularly where rent has been charged.
To qualify for BADR on company shares:
You must have been an employee or director
You must hold at least 5% of ordinary share capital
You must hold at least 5% of voting rights
Additional distribution or proceeds tests must be met
The qualifying ownership period is two years leading up to the date of disposal.
Where a shareholder’s holding falls below 5% due to fundraising through new share issues, BADR may still be protected. An election can be made to crystallise the gain before dilution, with the option to defer tax until the shares are actually sold.
This area requires careful planning.
Investors’ Relief is designed for external investors in unlisted trading companies.
Key conditions include:
Shares must be newly issued for cash
The company must be unlisted and trading
Shares must be held for at least three years
The CGT rate under Investors’ Relief is:
14% for 2025/26
Increasing to 18% from 2026/27
The lifetime limit for IR is £1 million.
Each individual can realise gains up to the £3,000 annual exemption (2025/26) without paying CGT. Couples should consider planning disposals jointly to maximise the use of both exemptions.
Shares of the same class in the same company are treated as one pooled asset. However:
Same-day transactions are matched first
Purchases within 30 days after disposal are matched next
Remaining shares are matched from the pooled holding
These rules are designed to prevent short-term tax planning.
Additional reliefs may include:
Private Residence Relief
Business Asset Rollover Relief
Gift Holdover Relief
Offset of carried-forward capital losses
Some disposals, such as those involving EIS, VCTs, or share exchanges, can be complex and should be reviewed in advance.
Capital gains tax planning should always be done before an asset is sold. Early advice can significantly reduce tax exposure and avoid unexpected liabilities.
Applegrow can help you:
Identify available CGT reliefs
Plan business or investment disposals
Structure transactions tax-efficiently
Ensure compliance with current legislation
Speak to Applegrow Financial Advisors for clarity and personalised guidance.
