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Domicile and Residence

  • The liability to UK tax for individuals is based on a person’s domicile and residence.
  • Domicile is a general law concept. Everyone has a domicile of origin which is determined by reference to the individual’s parents. An individual can only have one domicile at a given time. Once an individual has been resident in the UK for a long time, they can become deemed domiciled in the UK.
  • Residence is determined by reference to the laws of the countries concerned. Residence under UK law is determined by statute. Unlike domicile, an individual can have more than one residence. In this case, tax treaties will decide domicile.

UK taxation – the basics

Once domicile and residence have been determined, regard can then be had to relevant UK taxes with a view to planning. Common taxes to be considered are:

  • Stamp Duty land Tax – the tax you pay when you purchase property in the UK.
  • Income tax – the tax you pay on income earned, for example from employment or self-employment, interest, dividends, rental income.
  • Capital Gains Tax – the tax you pay when you sell or give away assets.
  • Inheritance Tax – the tax you can pay when you give assets away or on death.

UK taxation – the remittance basis

For individuals who are not UK domiciled who become UK resident, there is a special basis of taxation under which overseas income and gains are only subject to UK taxation if the income and/or gains are brought into the UK.

Also, overseas assets are not subject to inheritance tax whilst an individual is not UK domiciled.

Pre-arrival planning

Before moving to the UK, it is imperative that UK tax advice is taken to ensure that the individuals tax affairs are maximized. This includes:

  • Reviewing investments.
  • Reviewing business interests to ensure overseas companies do not become UK tax resident on arrival of the individual.
  • Establishing appropriate bank accounts to facilitate remittance basis planning.
  • Establishing overseas trust and corporate structures.

Post-arrival care

  • Ensuring continued non-UK domicile status.
  • Assistance with UK tax filings.

This briefing is for guidance only. It is essential that before moving to the UK, detailed advice is taken from suitably qualified UK tax advisors. The briefing is written by Simon Goldring. Simon is a UK solicitor and a Chartered Tax Advisor. He is a partner in the London office of McDermott Will & Emery, a US headquartered Law firm, recognized as the premier private client practice in the world.

McDermott Will & Emery UK LLP 
110 Bishopsgate 
Tel +44 (0)20 7570 1460   
Mobile: +44 (0)7587 637161   
Contact: Simon Goldring  

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