UK returns from conflict zones: Why individuals and employers must seek tax advice

As regional conflicts flare up, organisations are increasingly confronted with urgent mobility challenges affecting their people. For expat individuals working and living in regions experiencing unrest, the decision to return to the UK raises a host of immediate practical and human considerations. Later, these individuals will also need to address any tax issues. Employers have a significant responsibility to support their people but must also understand and manage their own legal and tax obligations.
 

People first

When employees are affected by conflict, the initial priority is unquestionably their safety and wellbeing. Many employees or expats will be living in high‑risk areas and may have family in danger. Employers often find themselves offering guidance to staff considering departure from their current location, exploring available options, and helping them navigate the implications of those choices. This is a moment when clear communication and duty of care matter immensely.

Once the safety and wellbeing of the individual employees are resolved, there are three key tax issues to consider.
 

Tax residence becomes a key concern

For individuals who return to the UK unexpectedly, concerns about triggering UK tax residency should be addressed immediately. UK tax residence is determined under the Statutory Residence Test that includes various tests that require the tracking of days of presence in the UK based on physical location at midnight.

Read our guide to the basic Statutory Residency Test rules.

The rules are straightforward in principle but include additional deeming provisions, transit days, and the possibility of disregarding up to 60 days due to exceptional circumstances. These special rules apply narrowly and typically when the individual was already in the UK and prevented from leaving due to events beyond their control.

This distinction becomes especially important where travel advisories differ between jurisdictions. For example, individuals returning from countries where the UK advises avoiding all travel may qualify for exceptional‑circumstance relief, while those returning from regions subject only to ‘all but essential travel’ warnings may not. The exceptional circumstances rule has rarely been tested in the UK courts and HMRC has yet to make specific comments about it in the context of the current Middle East conflict, so taking expert advice on each individual’s circumstances is essential.
 

Employer compliance; tax and payroll obligations

Employers must consider whether returning staff create UK tax or payroll obligations. Key questions include whether the employee is performing UK duties, whether a double taxation agreement applies and whether Short‑Term Business Visitor rules can be used. In some cases, such as individuals returning from a foreign branch of a UK entity, payroll obligations may arise immediately. In this case, making timely applications for schemes such as Appendix 8 or activating shadow payroll mechanisms vital to managing compliance obligations.
 

Permanent establishment risk for non-UK businesses

Many individuals who work overseas will have an overseas employer, or belong to a partnership, operating outside the UK. If these UK nationals return to the UK, there is a risk that the overseas entity will accidentally create a UK “permanent establishment” bringing with it tax obligations as well as payroll responsibilities.

Seconding individuals to UK entities could be considered to mitigate the risks along with setting clear guidelines for the displaced individuals on what they are permitted to do in the UK and where from. The OECD update to the Model Tax Convention released at the end of 2025 provides a helpful framework for partners and employees working from home offices looking to mitigate the risk of creating a permanent establishment. See Corporate tax residence and remote working.