Domicile Definition

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Even once you become a UK resident you may retain your country of origin domicile. Domicile refers to where you belong and is a very hard aspect to alter. You are given a domicile of origin when and where you are born and it does not change unless you decide to obtain a domicile of choice. It is a very difficult decision as it requires you to cut ties with your country of origin

Your domicile affects several factors, including how you are taxed in the UK and your worldwide income.

Remittance Basis

The starting point for taxations of all UK residents is the worldwide income even in the cases when the income is already taxed in other countries. In most cases if there is a double tax treaty the credit
will be given for the tax paid abroad against the tax owed in UK. Although each treaty is unique most follow OECD protocol to ensure that income is only taxed in one country or credit is given to prevent double taxation.

However, with a non-UK domicile you can choose to pay tax only on the income and capital gains that you earn or send to UK. The income you earn abroad will not be taxed in UK.

You should anticipate that if you choose to take the remittance basis will mean that you must give up the personal tax free allowance of £11,000 per year. Additionally, when you have been resident in UK for 7 out of 9 years an annual charge of £30,000 will be taken and in 12 out of 14 years you will be subject to pay £60,000. Once you have been a resident for 15 out of 20 tax years you will be deemed to be UK domiciled for all tax purposes.

Remittance Basis Charge (RBC) is considered an advance part payment of tax on the income outside of UK and in general taxpayers should nominate a portion of income yearly to which the charge may be applied. Such nominated income must be determined and not remitted to the UK prior to any other foreign income.

You are only required to nominate £1 yearly, however the £1 must be earned in that tax year. Alternatively, you may wish to nominate a much bigger sum of income to be taxed within UK in order to be granted relief from double taxation in another country.

Deemed Domicile

From 5th of April 2017 all residents who have been in UK for 15 out of 20 tax years will be given a deemed domicile for all tax purposes. Even though in all other cases you will still be considered as a foreign domicile, you will be subject to pay all taxes within UK on worldwide income.

Our Approach to UK Visas

  • Step 1
  • Step 2
  • Step 3
  • Step 4
  • Step 5
  • Initial Consultation
  • Document Collection
  • Document review
  • Finalisation of Immigration Matter
  • Home Office Decision