Non Domicile Tax in the UK

The Oxford English Dictionary defines domicile as, “The country that a person treats as their permanent home, or lives in and has a substantial connection with. eg: his wife has a domicile of origin in Germany.” When this term becomes part of tax and residency regulations, everything becomes a bit less clear.

Our guide to non domicile tax and UK non residency gives you the information you need to make decisions about your own situation.

What does non domicile mean?

Basically, domicile means the country or area you refer to as your home. A domicile of origin is the place in which your father comes from, whilst a ‘domicile of choice’ is the place in which you live. If your ‘domicile of choice’ is a permanent arrangement, this can supersede your ‘domicile of origin’ for the purposes of tax.

Non dom tax residents are usually foreign nationals living in the UK. For tax purposes your domicile of origin is important in determining your UK resident status for tax purposes.

UK non domicile example

If you are an adult who has chosen to live in the UK, where you were born, but to Swiss parents, your domicile of origin would be Switzerland but your domicile of choice would be the UK.

UK non domicile tax changes

In the past, for many people it was thought to be beneficial to have the UK as domicile of choice because any income they earned abroad was not taxable in the UK, unless it was sent to the UK.

From 6th April 2013 new rules were brought in meaning that the benefit is normally only available to those with minimal overseas income, or a short term visitor.

Your non resident status can be considered for the last four tax years, so all tax years before the 2013/2014 tax year still come under the old domicile rules.

Non dom tax planning

Having a non dom tax status in the UK means you have the choice of being taxed in two different ways, either on the arising or the remittance basis. You can use our free guide on the remittance arising basis of taxation to help you understand the two options available to you.

Making best use of the options open to you can ensure that you pay the correct amount of tax in the UK and avoid any HMRC penalties for declaring your income incorrectly. Things to consider include capital gains tax and inheritance tax in the UK.

Non dom tax returns

In most cases a non domicile individual will need to complete a self assessment tax return which will declare all of your income and non domicile information relating to that particular UK tax year.


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