|
How can I lose a UK domicile? |
|
Written by Administrator
|
|
In most cases this will apply when someone was born in the UK (ie they've got a UK domicile of origin) but they subsequently leave the UK and want to establish a new domicile of choice overseas. Just moving overseas won't be enough to establish that you've got a new domicile of choice. Essentially you need to show that you've severed your UK ties and that you want to live permanently overseas. There's a pretty strict burden of proof and is not something that is easily attained. If you're to stand any chance of achieving this you'll need to clearly - establish a home overseas,
- sell up in the UK,
- make minimal visits back to the UK
- Join clubs etc overseas
- Prepare an overseas will
- Buy an overseas burial plot
- Cancel any UK subscriptions
- Ideally hold investments overseas
Provided you can show that your personal, financial and social connections are overseas you'll have a good chance of non domicile status being accepted
Look at this article for a detailed review of the position: Non UK domicile in 2007 |
|
If I'm non UK resident what does this mean for tax purposes? |
|
Written by Administrator
|
|
Good question! There are lots of UK tax implications but generally it means that your overseas income will be outside the scope of UK tax. So if you have overseas bank interest, trading income, employment income etc this would be outside the scope of UK income tax. In addition any capital gains that you realise from assets located overseas will then be exempt from UK capital gains tax. Any UK source income or gains will still be in theory within the scope of UK tax, however in practice there are a number of exemptions. For example, Uk dividends and bank interest can generally be received free of UK tax for non residents. You may find these articles of interest: Non residence in 2007 How your pension is taxed when you go overseas |
|
What is domicile and how is this determined? |
|
Written by Administrator
|
|
There are two main categories of domicile (there is a third but this is not of key importance: An individual acquires a domicile of origin when he is born. Normally this would be the fathers domicile at the date of birth, however, as if parents were unmarried, it is your mothers domicile that you will take.
Your domicile of origin has a degree of permamence, and the burden of proof would be on the Revenue to show that you have changed your domicile, by making a domicile of choice. The acquisition of a domicile of choice is regarded as a serious matter.
In order to acquire a UK domicile of choice two aspects must be fulfilled. - Firstly, you would need to make the UK your sole/primary residence
- Secondly,you must intend to remain here generally for the rest of your days, or until something occurs to make you change your mind.
Check out these articles which looks at domicile status in detail: Non UK domicile in 2007 Planning for the end of the non domicile rules When is domicile relevant in determining your tax liability How the CGT charge is calculated for non domiciliaries selling overseas assets |
|
When I leave the UK will I be classed as non UK tax resident? |
|
Written by Administrator
|
|
You will be regarded as resident in the UK during a tax year if :
· You spend 183 days or more in the UK during the tax year, or
· Although here for less than 183 days, you have spent more than 90 days per year in the country over the past four years (taken as an average). You will then be classed as UK resident from the fifth year.
When looking at the residence position for a tax year an you are not normally resident for part of a tax year.
However, where a person leaves the UK to take up a “permanent” residence elsewhere he is regarded as resident in the UK from 6 April to the date of departure and non resident for the period that he is overseas. So providing you can show that you've left the UK permanently or for at least three years you will be non UK resident from the date of departure. Look at this article on residence: Non UK residence in 2007 |
|
What is ordinary residence? |
|
Written by Administrator
|
|
There is no statutory test of ordinary residence. A Person is regarded as ordinarily resident in the UK if this is his normal place of residence. The Revenue take the view that a person who usually lives in the UK and goes abroad for a long holiday, not setting foot during a tax year will nevertheless still be ordinarily resident in the UK unless he has gone abroad to take up 'permanent' residence elsewhere. 'Permanent' in this context does not mean forever; it means for a period that the Revenue will normally regard as exceeding three years. The Revenue will also take into account the existance and continued use of UK property. A house or flat owned by you or your spouse would be regarded as available for use by you and would strengthen the Revenues arguments that you were UK ordinarily resident. Look at this article on what impact your UK ordinary residence status will have: How to take advantage of your non UK ordinary residence status |
|
Written by Administrator
|
|
There is no definition of residence in the tax legislation. The general rule is that you're classed as UK resident if you're in the UK for more than 183 days in a tax year or if you're here for more than 90 days on average over four or more tax years. However in practice there's much, much more to it than this.
It should be borne in mind that these rules have no statutory force and should be regarded as guidance only. It is, for example, dangerous to assume that if you regularly returned to this country for 88 days each year that you would not be resident in the UK. On the other hand the Revenue state that 'there are no exceptions' to the 183 day rule and it is likely that a person who spends 184 days here in a tax year would be regarded as UK resident. This has been confirmed in recent Commissioners decisions where even though a taxpayer was here for less than 90 days in a tax year, they were still treated as UK resident. Look at this article for more details on Losing UK Residence status in 2007
|
|