The current situation in the Middle East has prompted many internationally mobile families, particularly those with UAE-UK connections to reconsider their residence. Although many have had no choice but to leave and return to the UK for their own safety, even a temporary return could inadvertently create UK tax exposure for those who find themselves UK resident.
While the UAE is exploring various concessions to support those who are displaced by the conflict (for example, relaxed residency‑day requirements and more flexible visa rules), there are currently limited reliefs for those who have returned to the UK and become resident due to the number of days they are in the UK under the UK’s statutory residence test (SRT). While it is possible to disregard up to 60 UK days due to “exceptional circumstances” including war, civil unrest, or life‑threatening emergencies, the relief is restricted to 60 days no matter how prolonged the situation becomes. This relief is not automatic and individuals must show that they had no choice but to be in the UK, and that they intended to leave as soon as circumstances permitted. Some may therefore find that the full 60 days cannot be claimed. Although HMRC has indicated that it may explore some further concessions, there is currently no relaxation of this rule, so it will be important to keep a close eye and clear records of the days spent in the UK.
For those who left the UK and realised gains while non-resident, they should be particularly aware of the Temporary Non‑Residence rules (TNR) if they become UK resident again within five complete tax years. Emergency repatriation could inadvertently revive historic offshore gains under this regime and drag individuals back within the UK tax net.
UK‑resident settlors or beneficiaries will also face additional reporting obligations where offshore trusts are involved. A sudden return to the UK could re‑characterise trust income or gains as taxable on the settlor, trigger UK reporting obligations for the trustees, or compromise non‑resident trust protections. While some might find that their worldwide income becomes taxable once they become UK resident, there may be some benefits under the new foreign income and gains (FIG) regime for those who have been non-resident for at least ten tax years before returning to the UK. This new regime offers relief on foreign income and gains during the first four years of UK tax residence. This means that for some UK residents, foreign income and capital gains will be exempt from UK tax.
With the new tax year approaching on 6 April, if you have had an unexpected return to the UK it is worth reviewing the number of days you can spend in the UK under the SRT. Although the 60 day exemption under the SRT may be helpful, it can be limited in its use and there is inherent uncertainty as to the number of days that will qualify. It is therefore worthwhile carefully considering your possible exposure to UK tax and any structuring you might want to carry out now if you do become UK resident in the future.
