UK Tax Residence versus UK Domicile

Published / Last Updated on 22/04/2022

Your domicile is not the property that you live in.  Domicile is a tax status that is peculiar to English common law.  Indeed, many countries that adopted the English common law system also have a ‘domicile’ status.

Think of domicile as your homeland or home nation.  This is usually the place that you plan to live permanently and indeed die in.

Why is Domicile Status Important?

In the UK, if you are tax resident, you pay income tax, capital gains tax and inheritance tax on UK derived income and assets.

If you are also UK Domicile, you pay income tax, capital gains tax and inheritance tax in the UK on your Worldwide income and assets.

Domicile of Origin

You acquire your Domicile of Origin at birth from your father or, if your parents were not married at the time, from your mother.

Domicile of Choice

Your domicile of origin can change if you leave your domicile of origin country and live permanently in another country (your Domicile of Choice). 

Claiming non-UK Domicile Status

If you can prove your plan is not to live permanently in your new resident country e.g., UK, under UK law you can claim to be non-Domicile and take advantage of not paying taxes on Worldwide income and gains but only income and gains derived in the UK.  Why do you think so many of the ‘rich and famous’ live in UK?

Tax Resident is a Fact, Tax Domicile is Open to Interpretation

Tax resident is a statement of fact, HMRC consider you tax resident based upon a Statutory Residence Test.

Being non-UK Domicile is open to interpretation on whether your plan to live in the UK is permanent of not.  The onus of proof is on you to prove non-Dom status.

Why is Domicile and Non-Domicile Important?

Watch: Tax Benefits of Non-Dom Status: Non Dom Bens

Your domicile status is clearly important regarding UK taxes on worldwide income and gains.  Hence this being in the news recently, with a certain MP’s wife being ‘hounded’ about claiming non-UK Domicile status and not paying UK taxes in full when it is perfectly legal to do so.

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