Guide to the Sufficient Ties Test

The UAE is a magnet for UK influencers and entrepreneurs. If you are considering the move, you need to be aware of the tax implications of moving to Dubai. First, you must determine in which country you are considered a tax resident.

The Sufficient Ties Test is part of the UK government's Statutory Resident Test. It assesses an individual's number of ties (family, work, accommodation) and physical time spent in the UK to determine their tax status.

This short guide dives into the nitty-gritty of the Statutory Residence Test, including the automatic UK tests, automatic overseas tests, and the Sufficient Ties Tests (STT), to help you assess your residency status and avoid double taxation.

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Am I a resident of Dubai or the UK?

One of the main draws of Dubai is tax freedom, but your residence status may require you to pay tax in the UK, which is far from ideal. So, if you haven't quite cut ties with the UK, you will need to go through the Statutory Residence Test (SRT) process to determine where you have to pay tax. The SRT is the definitive set of rules employed by HM Revenue and Customs (HMRC) to determine an individual's tax residency status.

How is your tax residency status determined?

Let's delve into the components of the Statutory Residence Test, including the automatic UK tests, automatic overseas tests and the Sufficient Ties Test.

Automatic UK Tests (Aimed at working in UK)

There are four automatic UK tests that swiftly determine if you are a UK resident.

If you meet any of the following conditions, you're automatically considered a UK resident for the whole tax year:

• You spend 183 days or more in the UK in a tax year.
  
  
• Your only home is in the UK, and you spend at least 30 days there in the tax year.
  
  
• You work full-time in the UK for any part of the tax year, and most of your working days (where you work more than three hours) are in the UK during that period.
  
  
• The fourth test is only relevant if an individual dies within the tax year. The UK government website provides information on this.

There are exceptional circumstances to the 183-day rule, allowing you to deduct up to 60 days spent in the UK for circumstances outside of your control, e.g. a life-threatening illness that required you to be hospitalised.

If you don't meet the automatic UK tests, you then move on to the automatic overseas tests.

See the Automatic UK tests manual

Automatic Overseas Tests (Working Overseas)

There are three automatic overseas tests to determine your residence status. To be considered a non-resident in the UK, you'll have to prove you've spent a certain number of days in Dubai and have worked sufficient hours there.

You are considered a non-UK resident if you meet any of the following:

• You were a resident of the UK for one or more of the three previous tax years and spent fewer than 16 days in the UK in the relevant tax year.
  
  
• You are not considered a UK resident for tax purposes if you were not a resident in the UK for the previous three tax years and spent fewer than 46 days in the UK in the relevant tax year
  
  
• You work full-time overseas and do not spend more than 90 days in the UK, work less than 31 days for over three hours, and do not have significant breaks from your overseas work.

If you meet any of these, you are considered a non-UK resident for tax purposes. If you don't, you must move on to the Sufficient Ties Test.

See the automatic overseas tests manual

What is the Sufficient Ties Test?

The Sufficient Ties Test (STT) is a crucial component of the Statutory Residence Test (SRT). It comes into play when someone doesn't meet the criteria for automatic UK or automatic overseas tests and is designed to assess the strength of an individual's ties to the UK. The stronger your ties to the UK (work, family, property), the more likely you'll be considered a UK resident.

For full details, see the government's Sufficient Ties Test manual, or read on for our handy summary.

What factors are considered within the Sufficient Ties Test (STT)?

The STT considers five factors: family ties, accommodation ties, work ties, country ties, as well as the physical amount of time spent in the UK. Think of it as a way to pinpoint where you're truly rooted - the more ties you have, the fewer days you can spend in the UK without being taxed. Let's take a look at the STT in more detail.

If you were not a UK resident in the past three tax years, then you need to check if you have any of the following ties:

• 90-day tie: You have a tie if you spent more than 90 days in the UK in either of the previous two tax years.
  
  
• Accommodation tie: If you have access to a home in the UK (e.g., the home of a close relative) for at least 91 days (at least one day of which falls within the relevant tax year) and if your own/rent a property staying there one night or 16 days at a close relatives (Parents, Brother, Sister etc), it counts as an accommodation tie. (Note: 'Accommodation' is considered access to somewhere to stay, which is different from the second automatic UK test, which considers 'home' as a permanent resident with emotional ties).
  
  
• Work tie: Employment or business activities in the UK are considered work ties, regardless of whether you are full-time, part-time, or self-employed.
  
  
• Family tie: You have a family tie if your spouse, civil partner, cohabitor or minor child (under 18) is a UK resident for the tax year.