Residence Status and Exceptional Circumstances

Individuals living outside of the UK and finding they need to return due to the uncertainties faced around the conflict in the Middle East and other disturbing global events will have many concerns, personal and financial. One of these is likely to be the potential impact on their tax position.

Becoming and remaining non-UK resident depends on limiting the number of days an individual spends in the UK each tax year, and these limits may be breached for anyone who has to remain in the UK beyond their planned stays here.

There are limited provisions to assist in situations where an individual needs to remain in the UK due to circumstances beyond their control.  Specifically, such an individual may benefit from the exceptional circumstances provisions under the Statutory Residence Test (SRT). Where Foreign, Commonwealth & Development Office (FCDO) advice is against all travel to a region due to civil unrest or war, days spent in the UK following return can be disregarded for residence counting purposes, subject to a maximum of 60 days per tax year  RDRM13200 Annex B: The statutory residence test concept of exceptional circumstances. This applies in addition to the normal day-count thresholds (ranging from 16 to 183 days) before UK residence is triggered  RDRM13200 Annex B: The statutory residence test concept of exceptional circumstances.

HMRC guidance confirms that where an individual returns to the UK because of FCDO advice in response to war, exceptional circumstances will apply. The current FCDO advice against all travel to certain Middle Eastern territories means individuals returning from these regions would qualify for days to be disregarded, though HMRC will examine the wider facts and circumstances to ensure the situation was genuinely beyond the individual’s control  RDRM13200 Annex B: The statutory residence test concept of exceptional circumstances. Critically, the individual must intend to leave the UK as soon as circumstances permit; if they subsequently decide to remain (for example, accepting an invitation to stay with UK relatives), only days up to that decision point qualify for disregard  RDRM13200 Annex B: The statutory residence test concept of exceptional circumstances.

The 60-day limit means that extended stays will eventually count toward UK residence. For example, an individual present for 202 days would have 142 days counted after applying the 60-day exceptional circumstances relief  RDRM13200 Annex B: The statutory residence test concept of exceptional circumstances. Whether this triggers UK residence depends on their individual circumstances under the SRT’s automatic and sufficient ties tests.

Filing Requirements and Compliance

Individuals who ceased filing UK self-assessment returns during their absence must reconsider their obligations immediately upon return. HMRC requires notification when residence status changes, even if the return is considered temporary or for a very short period  4. Tax when leaving the UK. This applies regardless of whether the individual plans to go abroad again.

For those who become UK resident (after applying any exceptional circumstances relief), worldwide income becomes taxable on an arising basis unless they qualify for the foreign income and gains (FIG) regime  UK tax liability on arrival in the UK. The FIG regime applies from 2025/26 onwards for “qualifying new residents”—broadly, those who have not been UK resident in any of the previous ten tax years  Foreign income and gains regime ― overview. Qualifying new residents benefit from exemption on foreign income and gains arising in their first four years of UK residence, though amounts must still be quantified in sterling and reported on the tax return  UK tax liability on arrival in the UK.

Individuals who were previously taxed on the remittance basis (prior to 6 April 2025) and who remitted foreign income or gains during their period of non-residence face taxation on those remittances upon return under the temporary non-residence rules  Temporary repatriation facility (2025/26 to 2027/28). However, where the period of return begins on or after 6 April 2025, such amounts can be designated under the temporary repatriation facility (TRF), which offers a flat rate of UK tax for 2025/26 to 2027/28  Temporary repatriation facility (2025/26 to 2027/28), UK income tax liability of temporary non-residents. This provides a planning opportunity to regularise historic unremitted amounts at reduced rates.

Split-year treatment may apply if the individual meets one of the relevant cases, potentially limiting UK tax exposure to the UK-resident portion of the year. However, earlier UK presence affects eligibility, and advisers must consider whether any absence was a period of temporary non-residence  1. Impact of residence and domicile.

Long-Term IHT Implications

For inheritance tax (IHT) purposes, the residence-based regime introduced from 6 April 2025 replaces the previous domicile-based rules. Individuals become “long-term UK residents” for IHT once they have been UK resident for ten out of the previous 20 tax years, at which point their worldwide estate falls within the IHT net  [6A “Long-term UK resident”: individuals.

Under the new regime, for individuals who have left the UK, the IHT tail can extend up to 10 consecutive tax years depending on prior UK residence: 13 years or less of UK residency requires three years of non-residence; 14 years requires four years; This scales up proportionately to 20 years which requires 10 years’ non-residence to lose the IHT tail Long-term UK residence for IHT (6 April 2025 onwards).

Crucially, a transitional rule protects certain individuals: those who were not UK domiciled on 30 October 2024 and who are not UK resident for 2025/26 or any later year will not be treated as long-term UK residents under the new test, provided they do not meet the old 15-year deemed domicile test (being UK resident for 15 out of 20 tax years) [6A “Long-term UK resident”: individuals, [267ZA Election to be treated as domiciled in United Kingdom.

Long-Term CGT Implications

The temporary non-residence rules prevent individuals from realising capital gains during a short period of non-residence to avoid UK tax. Gains realised during temporary non-residence are taxed on return to the UK  Temporary repatriation facility (2025/26 to 2027/28). For those who were planning permanent emigration but are forced back due to conflict, the key question is whether their absence will be treated as temporary non-residence, which applies where the individual is non-UK resident for fewer than five complete tax years and then returns UK income tax liability of temporary non-residents.

Former remittance basis users benefit from rebasing rules on disposal of chargeable foreign assets, which may reduce CGT exposure on assets held during the remittance basis period  Foreign income and gains regime ― overview. However, these reliefs are complex and require careful analysis of the individual’s residence history and the timing of any disposals.

Individuals who qualify for the FIG regime as qualifying new residents receive exemption from UK CGT on foreign gains arising in their first four years of UK residence, providing a window for tax-efficient restructuring  Foreign income and gains regime ― overview. Those who do not qualify face immediate worldwide CGT exposure on an arising basis.

Practical Steps

Individuals affected should:

1. Document the FCDO advice and dates of return to support exceptional circumstances claims
2. Notify HMRC of their return and changed residence status immediately
3. Assess whether they qualify as qualifying new residents for the FIG regime or can benefit from the TRF for historic unremitted amounts
4. Review their IHT exposure under the new long-term residence test and consider whether the transitional rule applies
5. Model their residence position for future years, including any tail periods if they subsequently leave the UK
6. Ensure all UK filing obligations are met, including quantifying foreign income and gains even where exempt under the FIG regime. Professional advice is essential given the interaction of multiple regimes and the potential for significant long-term tax exposure where planning opportunities are missed.