Choosing your Domicile
Domicile is a general legal concept – it 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. You normally have a domicile of origin that may be where your father was domiciled or perhaps the country in which you were born. Your actions may, however, determine your origin which is a domicile of choice. We act for clients who were born overseas but have chosen the UK as their place of permanent residence.
How we helped our client
Our clients, who were born in USA, came to the UK to work and have now chosen to retire here. This action led us to discuss their domicile status and how becoming UK domiciled would affect their tax position. Inheritance tax (IHT) is particularly affected by domicile and we discussed how being UK domiciled would bring all their overseas assets into their estates for IHT. The remittance basis for taxing overseas income and capital gains would no longer be an option and the nature of the underlying investments was reviewed to ensure that the reliefs and allowances being utilised were still tax efficient given their changing tax status. The status quo may have looked favourable but we advised that HMRC can challenge the status of non-UK domicile if circumstances appear to suggest otherwise and noted that there are new ‘Deemed Domicile’ rules to consider after 15 years of UK residence. Our clients were happy to choose UK domicile and arrange their affairs accordingly.
For more information or to discuss further, please contact the International Tax – For Individuals Taxperts.