Transit Days Explained: How Stopovers Affect UK Tax Residence Under the Statutory Residence Test

A Transit Day is a day when an individual is travelling from one country outside of the UK to another country outside of the UK and whilst en route they arrive in the UK as a passenger and leave the UK the next day – therefore spending a midnight in the UK. Such Transit Days do not count towards the day count for the Statutory Residence Test (SRT) provided that between arrival and departure the individual does not engage in any activities that are to a ‘substantial extent’ unrelated to their passage through the UK.

The UK’s Statutory Residence Test (SRT) determines whether an individual is a UK resident or not for tax purposes. Amongst other criteria, the test looks at the number of days an individual stays in the UK and the ties that they have to the UK, when deciding if they should pay UK tax or not. Therefore, if individuals need to be careful about what they do if they pass through the UK.

While in most cases an individual’s connecting flight is within a few hours of their arrival into the UK and therefore they don’t have a midnight in the UK, there are some cases when the connecting flight can be on the following day or later after arrival into the UK. In these cases, an individual may leave the airport until their onward flight. It is in these circumstances when attention needs to be paid to the number of days that an individual remains in the UK, especially if that individual is already close to the limits of their permitted SRT day allowance.

As well as paying attention to the number of days an individual transits through the UK, HMRC may also look at activities undertaken by that individual to determine whether these days should count towards their SRT allowance or not. If HMRC decide that activities undertaken are unrelated to transit, then they could be added to the SRT day count. For example, if any work-related activities are undertaken such as meeting with colleagues and discussing work, sending emails or using social media for work related purposes, they could be counted towards the SRT day allowance. Additionally, if plans are made to meet up with friends, or if other activities unrelated to travel are undertaken such as going to the cinema or theatre, then the days on which these activities take place could also count towards the SRT day count.

If an individual is contacted by HMRC to provide information about their transit days, then they may need to demonstrate that they have not worked or undertaken any activities unrelated to transiting through the UK if they want to avoid paying tax.

If you are not a resident of the UK and therefore do not pay UK tax but still travel to and through the UK on a regular basis, as UK tax experts we can clarify the rules around transit days and advise you on how to avoid incurring tax penalties. We will work with you to understand your particular circumstances and help you to plan ahead to make the most of your finances.

Contact LSR Partners today to speak with our expert team and pay the right tax, in the right place, at the right time.