Non UK Domiciliaries

Foreign domiciliaries are given favoured treatment in the UK for the purposes of income tax, capital gains tax, and inheritance tax. The rules for determining where a person is domiciled are shown below.

Under present English law, every individual has a country in which he is domiciled. There are three kinds of domicile:-

  1. Domicile of origin
  2. Domicile of choice and,
  3. Domicile of dependence.

Domicile of origin

An individual acquires a domicile of origin, when he/she is born. This would normally be his/her father’s domicile. It is important to bear in mind that an individual never loses his domicile of origin. It may temporarily be replaced by a domicile of choice or domicile of dependence. It will revive (domicile of origin, that is) if he abandons either his domicile of choice or dependence.

Domicile of choice

An individual acquires a domicile of choice when he/she becomes capable of acquiring such a domicile when he/she reaches 16 year of age. It is easier said than done and there have been many tax cases on this issue and most of those individuals have lost their case to change their domicile from one of origin to one of choice. The basic rules to acquire a domicile of choice are:

  • The individual must be both in the other country physically and,
  • Have a settled intention to reside permanently in that country.

A domicile of choice can be lost when the above two conditions no longer apply. The domicile would revert to the domicile of origin or another domicile of choice if the above two conditions are fulfilled again.

Domicile of dependence

A child has a domicile of dependency, normally his/her father’s domicile, until the child attains the age of 16; from that age onwards, he/she is capable of acquiring a domicile of choice.

Deemed domicile rules

If a non UK domiciled person has been resident in the UK in not less than seventeen of the previous twenty years of assessment, he or she will be 'deemed UK domiciled' but only for the purposes of Inheritance Tax - and not for capital gains or income tax purposes - so they can still benefit from the favoured treatment.

Married Women

The position of married women needs special consideration! Before 1 January 1974 a woman automatically acquired the domicile of her husband as a domicile of dependency on marriage. On the other hand, a woman who married after the Domicile Matrimonial Proceedings Act 1973 came into force did not automatically acquire her husband's domicile. Her domicile is determined in the same way as any other person who is capable of having an independent domicile. The Act also qualified that women married before that date, who acquired their husband’s domicile on marrying him retain that domicile as a domicile of choice, rather than dependency, as previously.

Having said all that, a woman who married a UK domiciled person before the Act came into force on 1st January 1974 could still take steps to change her domicile, although, it is not straightforward. In a particular tax case on this issue, it was claimed that a married woman's domicile of origin had revived because she intended to return to Canada on her husband's retirement or death. It was held, however, that she had retained her English domicile because she had not taken sufficient steps in terms of leaving the UK in order for her Canadian domicile to revive!


The Chancellor changed the rules on the taxation of UK residents who are non-domiciled in the UK. The measures took effect from 6 April 2008.

Individuals are normally charged on the full amount of foreign income arising abroad, whether it is brought into the UK or not. However, if an individual is resident in the UK, but not domiciled here, he/she may choose to be taxed either on the arising basis (similar to UK resident and domiciled individuals) or on the ‘remittance basis’, which taxes UK income as it arises but taxes foreign income only as it is brought into the UK. The remittance basis must be claimed. Similar rules apply to capital gains tax.

The main change is that individuals who fall within this category, who wish to continue to be taxed on a remittance basis rather than their worldwide income and gains, will have to pay an annual charge of £30,000 on unremitted income and gains. This sum is payable if you have at least £2,000 of unremitted foreign income and gains and you have been UK resident in at least seven of the previous nine tax years. The charge goes up to £50,000 if the claimant has been UK resident in at least 12 of the last previous 14 years. However, those with unremitted foreign income and gains of less than £2,000 will be exempt from this charge and do not need to claim the ‘remittance basis’.

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