Whether you have a UK domicile or non-UK domicile can have a significant impact on your basis of UK taxation. So what is domicile?
Domicile is a concept of private international law. The rules are set down in common law, but then modified by statute. The general law rules apply for tax purposes except where they are specifically modified by tax statute.
Every individual has one, and only one, domicile albeit that their domicile may change during their lifetime.
Domicile of Origin – every person receives at birth a domicile of origin – generally the domicile of their father.
Domicile of Dependence – a child under the age of 16 may acquire a domicile of dependence, should the domicile of their father change during the period of their minority.
Domicile of Choice – one may acquire a domicile of choice in a particular jurisdiction via a combination of both physical residence in that jurisdiction and an intention of permanent or indefinite residence.
Therefore, in establishing one’s current domicile, the following questions should normally be asked:
- What is your domicile of origin?
- Did you acquire a domicile of dependence and, if so, have you abandoned or retained that domicile of dependence?
- Have you acquired a domicile of choice?
There are two main circumstances in which your domicile status will be crucial:
- Overseas individuals moving to the UK and becoming resident in the UK for tax purposes but being non-UK domiciled and having significant wealth overseas.
- An individual born in the UK who has left the UK to reside permanently or indefinitely overseas. Have they retained their UK domicile or acquired a domicile of choice outside the UK?
Enterprise Tax have extensive experience in undertaking domicile reviews. We will work closely with you to understand your family history and personal situation. We will then provide an analysis and detailed report together with an opinion as to your domicile.
Once a determination of your domicile under general law has been made, that may be the end of the story. However there are circumstances in which the general law is overridden for tax purposes. For example in relation to individuals who are non-UK domiciled but have been resident in the UK for a considerable period of time then they may be treated as deemed domiciled in the UK for tax purposes. Conversely an individual who has left the UK may remain to be treated as deemed domiciled here for tax purposes for a period after leaving.
We can also advise on the tax implications and any opportunities to structure your affairs in a tax-efficient manner as part of our full service offering to non-domiciled individuals and UK expats.