Domicile

Most people confuse the terms residence and domicile often thinking that the two words mean the same thing. This is not the case. The distinction is very important and awareness of your domicile status can lead to significant UK taxation advantages.

The concept of domicile is quite different to that of residence. Residence is simply a question of fact, i.e. where you are physically present during a tax year in question. Whilst the UK has relatively simple rules on residence , domicile is a more nebulous concept in that you are deemed to be domiciled in the country in which you consider to be your ‘home'. The law of domicile recognises that the people are able to come and live here without necessarily considering the UK to be their ‘home'.

It is quite possible for foreigners to live in the UK for many years without becoming UK domiciled. However, it is important to seek proper advice from us so that you can be sure of your domicile status and to take steps to protect against the change in your domicile.

Non-UK domicile residents have a variety of very attractive taxation advantages available. With careful planning and expert advice the following outcomes can be achieved:

• Through the operation of the remittance basis you can enjoy freedom from taxation on foreign income and gains;
• The ability to avoid Capital Gains Tax even on the disposal of the UK situated property;
• Complete freedom from UK inheritance tax, even on UK-situated assets;
• The ability to minimise or eliminate certain types of UK source income.

Some of the above advantages can be obtained quite easily, for example by organising your offshore bank accounts in a particular way. Other advantages can be achieved only through the use of more complex planning, for example using offshore companies and offshore trusts.