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Travelling for an English education – a taxing affair?

Posted on 17 May 2022

For many parents there is no greater priority than their children's education, which may include considering overseas options. It is often the case that ex-pat British families return to the UK for their children to be educated here as well as children of all nationalities living abroad coming to attend UK schools. Such a move is rarely without complexity. Indeed, one unintended consequence can be an unexpected (and unwanted) change in parents' tax residence status. Antonia Felix, Alex Brereton and Annie Bouch consider some of the practical, legal and tax issues that parents should be aware of.  

Step one is deciding which school is best for the child. Whilst league tables and historic reputation will always be relevant, parents are increasingly focussed on drilling-in to the finer details of what schools have to offer, in order to ensure that their children's specific needs, talents and personalities can be nurtured and supported during this key part of their development. This will include more obvious points such as what facilities/ extra-curricular offerings a school has, what curriculum it runs and whether a child with Special Educational Needs can be properly supported there. There may also be other matters for parents to consider; such as the school's experience with children from their child's specific cultural/ religious background and (for boarding schools) what boarding options are in place (full, weekly or flexi) to ensure children whose parents are abroad are not left alone on weekends if their fellow pupils tend to go home.  

Thought might also need to be given to which schools are licensed visa sponsors, so that unaccompanied children can actually stay in the UK to attend school and, if there is not an accompanying parent, whether the child will require a guardian in the UK, who would be the school's first point of contact and provide a home for the child in the country when not attending school.  

Whilst an in-person school visit is usually the best way to find out this information and to get a "feel" for the school environment, many schools (particularly fee-paying schools) send staff around the world to education fairs where they can answer parents' questions on their doorstep. Education consultants can also be engaged to meet with the child, build up a picture of them as an individual, and advise as to what school(s) would be best for them, and how to go about securing a place (including advising on deadlines, whether tutoring is required and the type of interviews and exams to expect).  

Although seeking legal advice is not likely to be on a parent's radar when arranging international travel for their child's education, there can be serious tax implications that need to be properly considered, such as whether this travel might impact a family's tax residence. UK residence is determined by the statutory residence test (SRT). Broadly, if someone is in the UK for 183 days or more in a UK tax year (6 April – 5 April), they will be UK resident. It is important to know that an individual, inadvertently, can become UK tax resident sooner if they have certain "ties" or links to the UK.  

One such tie is the "family tie". A family tie will generally arise if an individual's spouse/civil partner or minor child is tax resident in the UK themselves. When parents consider sending their child to school in the UK they should be mindful as to how the family tie can affect their own UK tax residence status and the impact this could have on their own global income and gains.  

A child under 18 living in the UK will only contribute to their parent's UK ties for the parent's own residence status if the parent visits their child in the UK on more than 60 days during the tax year.  The period is shorter if the child turns 18 during the tax year. The term "child" includes natural or adopted children but not un-adopted stepchildren. 

Helpfully there is an exception for children in full-time education. A minor child in full-time education in the UK will not count as a family tie for the parent if the child spends fewer than 21 days in the UK outside of the school's term-time. Term-time does not include public holidays or normal holidays e.g., Christmas, but does include half-term and other breaks when there is no teaching e.g., inset days. Therefore, if a child remains in the UK, for example if a child spends time with their guardian in the UK during the Easter holidays, then a parent should be aware of the potential consequences on their own residence status. This is the case even if they themselves are not visiting their child in the UK.   

The family tie alone may not bring a parent into the UK tax net, but together with other ties that can naturally form when a child goes to school in the UK – e.g., the parent acquiring a UK property, working in the UK during visits to their child, or simply increasing time spent in the UK – the necessary ties can accumulate and trigger a parent acquiring UK tax residence. In short, the more ties to the UK, the less time a parent can spend in the UK without becoming UK resident.  

Moreover, the child themselves is likely to become UK tax resident under the SRT by virtue of being in school in the UK for at least 183 days per tax year. This may or may not have immediate tax implications for the child but it could impact their UK tax exposure later in life should they continue to live in the UK and therefore it is important to be on the radar.   

Of course, the welfare of the child is always paramount to a decision for a child's education. However, if a UK school is chosen then some forward planning from the parents would help to ensure the family understands and properly manages their UK tax and residence status.     

Clearly there are many decisions that need to be made by international and ex-pat families when considering their child's education. Decisions may be more challenging where parents are separated and find it hard to agree on a joint approach. In all circumstances, parents are well-advised to seek the support of trusted and experienced advisors to guide them through the process.  

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