Residence & Domicile

Residence and Domicile

Liability to UK tax depends on an individual’s residence and domicile in the UK. This is an extremely complex area and it is important to understand the basic principles and differences of each.

Domicile

Generally, a domicile of origin is acquired at birth and remains until displaced by a domicile of choice. In the majority of cases, unless an individual’s father was UK domiciled when they were born, where they are a foreign national moving to the UK for the first time and do not intend to remain here permanently, it is likely they will be foreign domiciled.

Domicile is not the same as residence or nationality, although both may be important in determining domicile. Under UK law, an individual cannot have more than one current domicile.

An exception applies for UK Inheritance Tax that deems an individual to be domiciled in the UK if they have been resident here in 17 of the 20 tax years ending with the current year.

Residence

In contrast to only having one domicile an individual can be resident in more than one jurisdiction..

From 6 April 2013 the UK introduced a new Statutory Residence Test (“SRT”) to determine residence in the UK. This replaced the vague and often contradictory guidance previously available. The clarity was much welcomed.

The SRT consists of a series of tests that need to be considered in sequence. All the tests include a reference to the number of days spent in the UK, while also including some reference to connecting factors or “ties”.

We can advise on all matters, including:-

  • Clarification of residence and domicile status;
  • Managing arrival into the UK;
  • Managing departure from the UK;
  • The remittance basis; and
  • The use of offshore structures.