The COVID-19 pandemic significantly impacted the ability to travel. Internationally mobile taxpayers have been particularly affected by travel restrictions. HMRC responded by introducing legislation (s109, Finance Act 2020) and publishing guidance to help affected taxpayers.

The legislation allowed certain individuals present in the UK for work related to COVID-19, to disregard certain elements of the statutory residence test (SRT). Examples of this include working as a medical or healthcare professional or in relation to the development or production of medical products related to COVID-19. The legislation applied for the period from 1 March 2020 to 1 June 2020 and made sure that days spent in the UK and UK ties were disregarded for all SRT tests.

Agent Update 90 provides a list of the guidance:

• In HMRC’s Residence, Domicile and Remittance Basis Manual (this includes guidance on the application of s109, Finance Act 2020): Annex D: International tax clarifications due to coronavirus (COVID-19) – questions and answers
• In HMRC’s Employment Income Manual: Appendix 5: COVID-19 considerations for non-residents and non-domiciled employees
• In HMRC’s guidance: New employee coming to work from abroad and RDR4 overseas workday relief
• In the self assessment tax return (in particular the guidance notes): Residence, remittance basis etc (Self-Assessment SA109)
• In the generic guidance on gov.uk: Tax on your UK income if you live abroad

Relatively few tax concessions were granted despite the restrictions on movement imposed by governments at home and abroad to help contain the worst effects of the pandemic. The update highlights in particular:

• the 60-day upper limit to exclude days spent in the UK due to exceptional circumstances has not been increased
• any days on which an individual works in the UK for more than three hours will not be covered by exceptional circumstances and will be counted as a UK workday
• an individual can claim exceptional circumstances for days they were unable to leave the UK due to COVID-19 travel restrictions (if their individual circumstances dictate this) up to the maximum of 60 days allowed by the SRT, when determining their UK residence position – these days are for the purposes of the SRT only
• the 183-day test when considering the Income from employment article of a Double Taxation Agreement (DTA) is a separate test to the SRT – therefore, any days discounted for exceptional circumstances under the SRT due to COVID-19 travel restrictions should be counted as UK days for the 183-day test under the relevant DTA

The exception to this is ‘sickness’ days that prevent the individual leaving the UK. HMRC accepts that days spent self-isolating or in quarantine due to COVID-19 may also be disregarded from the day count.

Days where an individual was unable to leave the UK due to COVID-19 travel restrictions will continue to count as UK days for the purpose of the 183-day test.

ICAEW’s Tax Faculty has also published TAXguide 08/21: COVID-19: stranded expatriate employees: statutory residence test and social security contributions. This comprises the text of correspondence with the Financial Secretary to the Treasury and HMRC in which:

• the faculty requested amelioration of the impact of the strict application of the statutory residence test on the remuneration of employees who were unable to leave the UK owing to COVID-19 and made recommendations as to how this might be achieved and drew attention to the limitations of HMRC’s Annex D guidance, and suggested further and improved guidance, and 
• HMRC explains how it is applying income tax and NIC/social security law in such cases. 

Read in full:

• HMRC’s Agent Update of 17 November 2021
• ICAEW Tax Faculty’s TAXguide 08/21