Residence & Domicile Rules

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Residence Rules

In a global economy many people are choosing to work overseas, whether leaving the UK for employment in another country, or coming from overseas to work in the UK. This can expose individuals to changes in their residency status and can have a tax implication.

Am I a UK or non-UK Tax Resident?

The tax treatment of income can be a complex area and it is advisable to seek specialist advice as the rules regarding residence in and out of the UK can be complex. HMRC’s guidance note RDR3 – statutory residence test, sets out to help define whether an individual is resident or non-resident in the UK. This must be considered in tandem with relevant Double Tax Agreements.

Our experts can guide you through the rules to establish your position and help you plan to keep your tax bills to the minimum.

UK Residents Going Abroad

There are many things to consider when planning such a move, such as:

• Reviewing contracts of employment/self-employment
• The changing impact of Income Tax on your earnings and investment income
• The changing impact of Capital Gains Tax on your assets
• Planning dates of departure from and re-entry into the UK
• Calculating allowable days in the UK including working days

If you are leaving the UK to become non-resident our tax specialists can help you make sure everything is organised to minimise tax and to avoid pitfalls and advise on any required paperwork.

Overseas Nationals Coming to the UK

It is no surprise that the UK tax authorities will be interested in your financial affairs.

Areas to consider are:

• Establishing your UK tax status
• The taxation of income and capital gains while you are here
• Whether to use an offshore company to hold UK assets
• Inheritance tax rules on UK and overseas assets
• Help with will writing and related tax planning

Our experts are familiar with all these issues and are happy to welcome you and help you plan for a new tax regime.

“This is a notoriously difficult area, especially since the rules are not clearly defined in tax legislation. This makes it all the more important that you consult us before you act”

Domicile Rules

It’s important to note that this is an area that is subject to revision following the Spring Budget 2024 announcements. Please contact our specialist personal tax team for advice on how you may be affected.

The tax rules on domicile are complicated, whether you are a UK resident but also non-UK domiciled, or if you currently have a UK domicile but are looking to change it and become ‘non-UK domiciled’.

In certain circumstances a change of domicile can bring tax benefits. However careful consideration needs to be given to the tax treatment resulting from such a change.

Our specialists have the expertise to be able to guide you through domicile related matters.

Overseas Nationals Coming to the UK

If you are non-UK Domiciled but residing in the UK you need to consider the following areas

• The ‘Remittance basis of assessment ‘
• When the ‘Remittance basis’ charges apply and to whom
• Capital Gains tax on both UK and non UK assets
• The ‘Worldwide basis of assessment’ and when it can be beneficial
• When the rules on deemed domiciled for income tax came into effect
• Inheritance tax planning including the effect of the UK ‘deemed domiciled’ rules for IHT
• Income tax planning including investment opportunities.

UK Nationals Leaving the UK

If you have a UK Domicile and wish to become non-UK Domiciled you need to consider the following areas:

• How to persuade the tax authorities that you are ‘non-domiciled,’ even after you have permanently left the UK
• How to permanently remove yourself from ‘UK domicile’ status
• Inheritance tax on UK assets and non-UK assets
• Trusts
• IHT and estate planning

Our experts can provide advice to help you to mitigate your tax liability; establish domicile status; and avoid potential tax related pitfalls when arriving in, or departing the UK.