As a University of St Andrews graduate, I was interested to read the Times article earlier this year that nearly one in five students at St Andrews are American. The university has always been popular with Americans as was evident from my first day at university when I met my Connecticut resident roommate. As a UK tax adviser, I read this article wondering whether any of these students are aware of their UK tax status whilst studying in the UK and their possible need to file a UK tax return. So, I have put together the below FAQs for international students studying in the UK.
Can a student become UK tax resident?
Yes! The Statutory Residence Test determines whether someone is UK resident and there is no separate carve out for university students. If you are present in the UK for more than 183 days, you will be automatically UK tax resident. If you spend less than 183 days you must consult the other parts of the test to check whether you are tax resident.
Taking St Andrews as an example, the term dates for 2024/25 span more than 183 days (assuming a student is present for ‘freshers’ week and all teaching weeks but returns home for both reading weeks). It is, therefore, likely inevitable that a UK university student will become UK tax resident.
I am UK tax resident – what does this mean?
The starting point is that as a UK resident you are liable to UK tax on your worldwide income and gains. The fact that these gains are being taxed in another country (e.g. the US) does not alter this tax treatment which is a common misconception I see quite regularly from those now needing to do a disclosure to HMRC after a number of years living here.
It is quite possible that some of these wealthier US based students at St Andrews are in receipt of family trust distributions or have a brokerage portfolio in their own name which is funding their university education. They may also have a 529 plan which is a favourable trust arrangement in the US with US tax benefits. These tax benefits are not mirrored in the UK and the usual “offshore trust” rules will apply.
Income and gains in the hands (indirectly or directly) of a UK resident student are in the scope of UK tax. If their total income exceeds the tax free personal allowance of £12,570 or their capital gains exceed the capital gains annual exempt amount of £3,000, the student could be exposed to UK tax.
Is there any tax relief available?
The good news is, yes, there is relief available. There are two reliefs in particular which are likely to be useful to students with non-UK income and gains:
1. Treaty relief
Many of the UK’s Double Tax Agreements contain a “Students” Article which provides an exemption from UK tax on payments arising outside the UK which are used for the purpose of maintenance, education, or training. Income that is used to fund course fees, accommodation, or general living costs should therefore be exempt from UK tax.
International students should check HMRC’s website (Tax treaties – GOV.UK) and determine whether they are coming from a jurisdiction which has a tax treaty with the UK (Tax treaties – GOV.UK) and whether it contains a “Students” article. The wording of this article does vary per treaty and advice should be sought if the position is unclear.
2. Utilising the FIG regime
For any payments which do not qualify for the treaty exemption the FIG regime may provide an exemption from UK tax. This regime (introduced in April 2025) exempts from tax most (but not all) non-UK income and gains arising in the first four tax years of UK residence. This provides a good back up to treaty relief but do watch out for the fact an undergraduate four-year course will span four tax years.
Tax reporting in the UK
There is a lack of clear guidance as to whether students must claim treaty relief, but the general principle is that treaty relief should be claimed rather than it applying automatically. I would therefore always recommend a tax return is filed with a treaty claim or otherwise a formal claim for relief is made by way of a letter to HMRC.
If the FIG regime is to be relied upon a tax return must be filed in the UK to claim this exemption with full details of the income and gains qualifying for the relief.
UK tax returns are due 31 January following the end of the tax year. Therefore, students who start university in September 2025 must submit their first UK tax return by 31 January 2027.
Staying in the UK?
There will likely be some students that decide to remain in the UK after completing their degree and these individuals should seek advice as their tax position will look quite different if they cannot rely upon the Students Article of the tax treaty or the FIG regime.
How we can help
Navigating the UK tax system as a student can be daunting and confusing, but we are here to help. Our team of experts can help you understand your tax position and ensure that you are compliant.
If you have any questions or are seeking support for yourself or a family member, please don’t hesitate to get in touch with Lynsey Lord or another member of our team.
