When you have a portfolio of valuable assets across different countries, grappling with the UK tax system to work out what you owe can be both complicated and frustrating. Without help from a residence and domicile tax planning expert, you could be paying more tax than you need to. 

Our residence & domicile tax services

Our Tax team has special expertise in residence and domicile planning for individuals. We can help you understand your current position and show you how to improve it – ensuring you take full advantage to legally reduce your tax burden and remain compliant with UK tax laws. We can support you with the following services:  

  • Reviewing your residence and domicile position on coming to or leaving the UK – so you understand the risks and opportunities. 
  • Helping you understand how to keep your non-UK residence status. 
  • Explaining the tax implications of becoming a UK resident. 
  • Registering you for self-assessment and completing UK self-assessment forms on your behalf. 

What is my residence status?

An individual is considered a UK resident if they meet certain criteria outlined in the Statutory Residence Test (SRT), which considers factors such as the number of days spent in the UK, ties to the UK (like family, accommodation and work), and the purpose and frequency of visits. 

Typically, someone will either be UK resident or non-resident for the complete tax year. However, the split year treatment can apply for example, if someone arrives or leaves the UK permanently during the tax year. 

UK residence is used to determine whether income and capital gains are subject to UK tax. The statutory residence test (SRT) for individuals will determine whether you are considered UK resident for a particular tax year. 

An individual will always be UK resident if they spend 183 days or more in the UK in the relevant tax year. 

If you are unsure of your residence status, there is a calculator to assist with this on gov.uk.  

What is domicile?

Domicile describes the country that you consider to be your home or the country where you have your permanent home. It is not the same as nationality, citizenship or residence. So, your domicile could be a country you have links to, but don’t live in – i.e. a country you travel back to regularly, even if you live in the UK for part of each year. 

Your domicile is important, as it determines whether tax is applied to your worldwide assets, or just your UK income and assets. 

Type of domicile

  • You can acquire a domicile of origin at birth. This is normally the domicile of your father and not necessarily the country of your own birth. You will maintain this domicile you are entitled to a domicile of choice, which cannot be before age 16. 
  • If, however, your father changes his domicile in the meantime,  you automatically acquire the same domicile (known as a domicile of dependency) in place of your domicile of origin. 
  • You can change your UK domicile status and adopt a domicile of choice. To do so, you must leave the UK and settle in another country. Sometimes living in another country for a long time, although an important factor, is not enough in itself to prove a new domicile. 
  • Deemed domicile – you will be deemed domiciled in the UK for all taxes once you have been resident in the UK for at least 15 of the 20 tax years immediately before the relevant tax year. 

Income and Capital Gains Tax

UK residents, people who are UK-domiciled, and those who are ‘deemed UK-domiciled’ are taxed on the arising basis. Individuals who are UK-resident, but not UK-domiciled, may have a choice between being taxed on the arising basis or on the remittance basis.  

Your residence and domicile position affects how tax in the UK is applied. The table below summarises the UK tax position: 

UK Domicile Status  UK Residence Status  UK Income  UK Gains  Foreign Income  Foreign Gains 
UK domicile  Resident  Arising basis  Arising basis  Arising basis  Arising basis 
Non-UK domicile  Resident  Arising basis  Arising basis  Arising basis and remittance basis  Arising basis and remittance basis  
UK domicile  Non-resident  Arising basis  Limited to residential property  N/A  N/A 

Arising Basis

The arising basis is where all worldwide income and capital gains received are taxed at the UK rate during the tax year in which they ‘arise’ – whether or not they were brought to, or used in, the UK. If you are taxed on the arising basis, you are still entitled to your personal income tax allowance and your annual capital gains exemption. 

Remittance Basis

If you are a UK resident, but not UK-domiciled, you can choose how you are taxed on your overseas income and capital gains. 

  • You can choose the ‘arising basis’ described above, or 
  • You can choose the ‘remittance basis’, where – if you are not UK-domiciled – you can elect to pay tax only on UK income and capital gains. 

 

On the remittance basis, all overseas income and gains won’t incur tax charges in the UK, provided they are not brought back to the UK.  

This does come at a cost: from 6 April 2017, the remittance basis charge is: 

  • No charge for periods of UK residence up to seven years. 
  • £30,000 for non-domiciled individuals who have been resident in the UK for at least seven of the previous nine tax years immediately before the relevant tax year. 
  • £60,000 for non-domiciled individuals who have been resident in the UK for at least 12 of the previous 14 tax years immediately before the relevant tax year. 

For those that choose the remittance basis, they will lose their UK personal allowance and will not be able to claim the capital gains tax annual exemption. 

If you need help understanding which remittance charge you are likely to receive, our Tax team can advise you. 

Removal of the Remittance Basis

It has been confirmed that from 6 April 2025 the remittance basis of taxation for non-UK domiciled individuals will be abolished. This is to be replaced with a new Foreign Income and Gains (FIG) regime which is determined by UK residency rather than domicile. 

Individuals who become UK resident having been non-resident for more than 10 years will not pay UK tax on their overseas income and gains for the first four years of UK residence and will be free to bring these funds to the UK free of any additional tax. They will continue to pay tax on their UK income and gains in the normal way. 

How we can help

We help a variety of clients with residence and domicile issues, including those soon to be arriving in the UK and those moving from the UK while trying to remain a non-UK resident. 

Residence and domicile are complex areas of taxation and its always better to seek tax advice at an early stage before decisions are finalised as this could have a significant impact on the tax you pay.    

If you would like to speak to our team regarding any residence or domicile issues, please contact a member of our tax planning team.