What is Domicile? Does it have tax advantages? What is the Remittance Basis. When does it apply for Non-Domiciled individuals?

This is a freeview 'At a glance' guide to Domicile and the Remittance basis

Subscribers see Non-domicile status, deemed domicile & tax and Remittance basis (overseas income).

What it means to be non-UK domiciled (non-dom)

What determines a person’s domicile?

Your domicile is initially determined according to the domicile of your father, but other factors may change your domicile status. See Non-domicile status, deemed domicile & tax for what factors are considered here.

As of 6 April 2017 there are effectively four types of domicile:

Domicile of origin

Domicile of dependence

Domicile of choice

You can acquire a domicile of choice after the age of 16 if you decide to settle in or move permanently to a different country other than that of your domicile of origin.

What if I am non-dom but I was born in the UK?

How do the new deemed domicile rules work?

Prior to 6 April 2017, you could only become deemed UK domiciled for IHT. From 6 April 2017, you can be deemed domiciled for Income Tax and CGT. 

 For the purposes of establishing deemed domicile:

What if I am deemed UK domiciled and I leave the UK?

If you are deemed domiciled under the 15 out of 20 years rule:

I am a returning non-dom, how am I affected?

If you had a UK domicile of origin at birth, left the UK and acquired a domicile of choice elsewhere and then you return to the UK:

For IHT there is a grace period from 6 April 2017, UK domiciled status is reacquired for a particular tax year if:

See Non-domicile status, deemed domicile & tax for the IHT implications of reacquiring UK domiciled status.

What if I then leave again?

If you are a returning non-dom and then leave the UK again, exactly when you lose your deemed domicile status depends on how long you were UK resident for. See Non-domicile status, deemed domicile & tax

Changing your domicile

Rebasing for CGT

The offshore assets of individuals who became deemed domiciled on 6 April 2017 are subject to optional rebasing to market value on 5 April 2017; only gains after April 2017 are subject to CGT.

How do the recent changes affect UK residential property held by offshore structures?

From 6 April 2017:

See Offshore Company holding UK Residential Property: tax issues.

What is the remittance basis?

The RBC:

If you use the remittance basis you lose your entitlement to a UK personal allowance and CGT annual exemption.

What is cleansing relief?

Cleansing relief applies if you acquired deemed domicile on 6 April 2017 under the 15 out of 20 years rule and had been claiming the remittance basis.

HMRC examples of cleansing can be found here.

Comparison of rules pre and post-April 2017

See Subscriber guide: Non-domicile status & tax

Useful guides on this topic:

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

Remittance basis (overseas income).
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?

Offshore Company holding UK Residential Property: tax issues
Is it still worth holding UK property via an offshore company? How are these properties taxed? Should I bring my offshore company into UK corporation tax? What are the tax issues of repatriation?

SRT: Statutory Residence Test
What is the statutory residency test? Why is it important and how does it work?


Oak ad
Are you enjoying our content? 

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter.