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How Changes to the Statutory Residency Test Can Affect How Much Income Tax and Inheritance Tax You Pay as a Foreign National

By The Black Bean Counter

The UK’s Statutory Residency Test (SRT) is undergoing key changes that could significantly impact foreign nationals—especially Nigerians who’ve lived in the UK and have since left without officially updating their tax status with HMRC. Whether you are a businessperson, property investor, or just a former UK resident, failing to understand these new rules could mean paying thousands more in income tax or inheritance tax than necessary.



In this blog, I’ll break down the recent updates, who they affect, and what steps you need to take today to avoid unwanted tax consequences.


🔁 What's Changed in the Statutory Residency Test?

The Statutory Residency Test (SRT) determines whether you're classified as a UK resident for tax purposes in any given tax year. Recent changes—set to come into effect in the 2025/2026 tax year—tighten up residency criteria and redefine the domicile rules, especially for those who’ve left the UK but still have financial ties here.

Key Changes:

  1. Shorter Day Allowances for Former UK ResidentsPreviously, non-residents could spend up to 90 days per tax year in the UK without being classed as UK tax residents. The new rules propose reducing this to 60 days, depending on your previous UK ties.

  2. Increased Weight on 'Ties' to the UKThe new test places heavier emphasis on personal, family, and business ties—including property ownership, dependent children, and past UK residency.

  3. Domicile Rule OverhaulPerhaps the most significant change is the shift from the current “non-domicile” tax benefits system to a new 4-year rule:

    • Foreign nationals will only benefit from “non-dom” tax treatment for four years after becoming UK tax residents.

    • After this period, worldwide income and gains will be taxable in the UK—regardless of where they are earned or located.


👥 Who Do These Changes Affect?

These changes mainly impact:

  • Foreign nationals who’ve lived in the UK and moved abroad.

  • Nigerian nationals with ongoing UK financial ties—such as property, bank accounts, or business interests.

  • Expatriates who still spend time in the UK and haven’t officially declared non-residency to HMRC.

  • High-net-worth individuals relying on the non-dom status to shield overseas income or assets from UK taxes.


🇳🇬 The Nigerian Connection: What You Need to Know

For many Nigerians who’ve returned home or moved to other countries, the assumption is simple: "I'm no longer living in the UK, so I don’t owe UK taxes." Unfortunately, HMRC doesn't see it that way unless you formally declare your non-resident status and meet the criteria under the new SRT.

Here’s how you may still be liable:

  • UK Rental Property: Rental income is still subject to UK income tax unless reported under the Non-Resident Landlord Scheme.

  • Bank Accounts: Interest earned could be liable to UK tax if you're still classed as a UK resident.

  • Worldwide Assets: If your domicile status is unclear, your global estate could fall under UK inheritance tax—especially after the 4-year non-dom limit expires.


Common Mistake:

Many former residents don’t inform HMRC after leaving the UK. As a result, HMRC continues to treat them as UK tax residents. This means:

  • Ongoing exposure to income tax on global earnings.

  • Future exposure to inheritance tax on worldwide assets (at 40%).


💡 What Should You Do Now?

If you’re a Nigerian national (or any foreign national) who’s previously lived in the UK, here's what to do:

  1. Review Your Residency StatusUse HMRC’s online Statutory Residency Test tool or speak to a tax advisor to confirm your current tax status.

  2. Declare Your Exit to HMRCIf you’ve left the UK, file a P85 form or update your status via the Self-Assessment process.

  3. Reassess Your DomicileIf you claim to be non-domiciled, assess whether the 4-year rule impacts you—and plan around it.

  4. Review Estate PlanningInheritance tax applies to worldwide assets for UK domiciliaries. Consider setting up trusts, wills, or offshore structures as appropriate.

  5. Track Your Days in the UKIf you travel back frequently, ensure you don’t cross the updated day thresholds.


✍️ Final Thoughts from The Black Bean Counter

This isn’t just about tax—it’s about legacy and protecting your wealth. These new SRT and domicile rules are a wake-up call to anyone who thinks they’ve left the UK tax system behind. If you’re Nigerian and still have property, accounts, or ties in the UK, now is the time to act.


Need help navigating the rules?Contact me, The Black Bean Counter, for a personalised tax residency review or estate planning strategy.


📩 Let’s keep your money where it belongs—with you.

 
 
 

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