Covid-19 has proven an extraordinary challenge to the health of people globally. Governments have imposed travel restrictions, both domestic and international. In the United Kingdom country-wide restrictions on movement were announced late last night. 

For non-resident individuals currently in the UK such travel restrictions (or illness resulting from the virus itself) may force them to say in the UK. Alternatively, non-resident individuals may be forced to return to the UK, because of decisions taken by governments of the countries in which they reside. Adverse tax consequences may result from unexpected, extended stays in the UK. 

Our private client team has published a note considering new guidance from HMRC. This new guidance suggests that nights spent in the UK as a result of Covid-19 may be disregarded in computing the number of nights required to trigger residency under the statutory residency test in accordance with the “exceptional circumstances” rule. 

The new guidance from HMRC does indeed state that nights spent in the UK as a consequence of Covid-19 may constitute “exceptional circumstances”. However, the guidance does not attempt to increase the limit on the number of nights which can be disregarded under the “exceptional circumstances” rule. The limit on the number of nights which can be disregarded in any one tax year is set by statute at 60 nights.

For this tax year, this limit is of little significance.  

For the next tax year, which will start in just under two weeks, in the context of increasingly strict measures, the 60-night limit may be important. The headline that HMRC is sympathetic to individuals forced to stay in the UK due to Covid-19 should therefore be treated with caution.