Private hospitals in the UK provide world class medical treatment and attract patients from across the globe. Medical treatment is often a reason why British expats or indeed non-UK domiciled individuals who have previously been UK tax resident but have since left the UK, keep coming back to the UK. Others find themselves unexpectedly needing medical care whilst visiting the UK.
But before travelling to the UK to receive planned treatment, or if you find yourself unexpectedly in hospital in the UK, it is important to consider the potential tax implications of an extended stay in the UK.
UK tax residency is assessed under the UK’s Statutory Residence Test which was introduced in 2013. Under the test, each individual is assigned a maximum number of days that can be spent in the UK during a given tax year before being treated as UK tax resident. The UK tax year runs from 6 April to the following 5 April (for example, 6 April 2024 to 5 April 2025).
The day count allowance usually depends on the number of other connections the individual has to the UK. In circumstances where the individual has not been UK tax resident in any of the previous three UK tax years, those connections are likely to be limited and the allowance will most likely be somewhere between 90 and 183 days in the relevant tax year.
If the patient exceeds their number of permitted days, they will automatically be treated as UK tax resident for all of the tax year in question. The consequence of this will be a liability to UK tax on worldwide income and gains for that tax year (subject to any relief available under relevant double tax treaties). With income tax rates in the UK as high as 45% for additional rate taxpayers, the fall out can be significant.
In “exceptional circumstances”, days spent in the UK can be discounted. However, “exceptional circumstances” is very strictly defined and applies to situations which are indeed “exceptional”: outside of the individual’s control and which prevent them from leaving the UK. A maximum of 60 days can be discounted.
An example would be, if a visitor to the UK was in an accident in the UK and was taken to hospital. Up to 60 days of their time receiving medical treatment as an inpatient could be discounted but any excess days in hospital would need to be counted, and once discharged, they would need to leave the UK to avoid further adverse impact on their UK tax residency status.
Earlier this year, the Upper Tribunal overturned a First-Tier Tribunal decision and held that a taxpayer’s circumstances were not “exceptional” on the facts. The taxpayer in question had spent an excess number of days in the UK caring for her sister and for her sister’s minor children at a time of crisis caused by the sister’s alcoholism. Perhaps not a surprising result but a good reminder that days can only be discounted in very limited circumstances.
A cautious approach should therefore be taken when seeking medical treatment in the UK if tax residency is an issue.
On a more positive note, where an individual inadvertently becomes tax resident in the UK after 5 April 2025 and has not been UK tax resident in any of the previous ten tax years, it is proposed that a new four-year exemption regime will be available from 6 April 2025, which will ensure that the individual’s foreign income and gains arising during the eligibility period are not taxed in the UK. In those cases, convalescing in the UK after medical treatment may be possible with the added bonus of a tax holiday. Further information on these proposals can be found on the non-dom hub on the Wedlake Bell website.
We would be pleased to assist you should you need guidance on the application of the UK’s residency rules and what they mean for you.