What is my domicile and why is it important for tax?
Domicile is a legal concept. It describes the country that you consider to be your home and where you ultimately belong. It is distinct from nationality, citizenship and residence. It is only possible to have one country of domicile at any given time.
Where am I domiciled?
Working out which country you are domiciled in can be complicated, and there are many factors which need to be considered. There are three types of domicile:
- Domicile of origin – based on the domicile of your parents (usually your father) when you were born.
- Domicile of dependence – if the person whom you are legally dependent upon changes their domicile when you under 16 years of age.
- Domicile of choice – when you settle permanently in another country and break all ties with the country of your existing domicile.
How does domicile affect my tax position?
You may be able to benefit from a number of UK tax advantages if you are resident but not domiciled in the UK including:
- Only paying UK tax on your foreign investment income and capital gains when remitted to the UK.
- Claiming tax relief on overseas workdays for the first three years you are resident in the UK.
Your domicile status also affects the tax payable on your Estate when you die.
What is deemed domicile?
From 6 April 2017 new deemed domicile rules came into force. These rules apply for all tax purposes where either:
- you were born in the UK, have a UK domicile of origin and are resident in the UK for 2017/2018, or later years, or
- you have been UK resident for at least 15 of the 20 tax years immediately before the relevant tax year.
It is important to understand your domicile status and how it affects your tax position. Please contact Emma at CLKG for further details.