The UK can be a tax-efficient jurisdiction to live, work and invest in and it remains an attractive destination for individuals, families and businesses. Your UK residence and domicile status determines the basis on which you are entitled to tax allowances and exemptions, and liable for Income Tax, Capital Gains Tax and Inheritance Tax – so it is important to get it right.
If you are a UK resident, your worldwide income and gains are normally taxable in the UK, even if your foreign income and gains have already been taxed in another country, although in many cases you will receive tax relief for foreign tax paid.
Domicile
Non-UK residents
HMRC enquiries and exchange of information
Domicile
Domicile is distinct from nationality or residence and is something you generally inherit from your parent at birth and usually retain unless you adopt a permanent intention to reside indefinitely in another jurisdiction.
If you are a UK resident but not domiciled in the UK there are special rules which can apply to the taxation of your foreign income and gains and these determine when and how you pay UK tax on your income and capital gains. Domicile is also relevant to your Inheritance Tax liability. Individuals not domiciled (or deemed domiciled) anywhere in the UK are generally not subject to Inheritance Tax on property situated outside the UK.
Non-UK residents
The UK Statutory Residence Test (SRT) determines an individual’s residence status. The SRT is precise and does allow individuals to plan their time in the UK, but the legislation can be complex to apply in practice. Non-UK residents are generally subject to UK tax on UK income and capital gains from the disposal of UK land and property.
HMRC enquiries and exchange of information
The rules regarding residence and domicile can be complicated and have been subject to much change in recent years. There is also anti-avoidance legislation to consider. This is an area of taxation HMRC pays close attention to and HMRC receives a significant amount of information from other jurisdictions under information exchange agreements.
Our experienced specialists can advise on taxation matters impacted by individuals’ residence and domicile status and we will work closely with you and HMRC in this regard.
How we can help?
If you are moving to the UK or already live here – and need to navigate the complexities of the UK rules regarding residence and domicile – our team will help.
Our specialists will review your residence position under the Statutory Residence Test and the application of the ‘split year’ basis when you commence or cease UK residence. We will review your domicile position and advise you on the subsequent implications, including the possibility of limiting your UK tax exposure to income and gains arising in the UK.
Before becoming a UK resident, we will advise you on structuring your bank accounts to allow for efficient remittances to the UK. We can also advise on tax rules applying to non-UK residents and how to achieve or retain this status.
Further services we offer include registering you for Self-Assessment with HMRC and preparing your UK tax returns. If you are an internationally mobile employee, we will advise you on the taxation of your employment income and the reliefs available. If you are dually resident in the UK and another country we will review Double Taxation Agreements and determine where your tax liabilities arise.
The UK has special but complex rules for individuals not resident or domiciled in the UK. However, there are opportunities and reliefs for individuals who live, work or invest in the UK and our team of experts will advise you on how to mitigate the impact of UK taxation on your foreign income, gains and assets – and let you know what claims and elections are relevant for UK tax purposes.
