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Domicile Reviews

If you live or work overseas, or have significant worldwide assets, one of the most important factors to consider when tax planning is your domicile.

Domicile is a legal concept that tends to apply to your ‘homeland’. It’s a fairly adhesive concept and generally applies to the country where you consider your roots to be. Domicile is acquired at birth and is generally determined by your father’s domicile or homeland. It’s a separate tax consideration than your nationality, residence or citizenship and is not automatically reflective of the country you are currently living in.

Your domicile matters because it determines your exposure to UK tax, most notably Inheritance Tax (IHT). It is important to understand your domicile status as it can have a significant effect on your tax position. For example, if you are living overseas, and have done for many years, you will still have to pay IHT on your worldwide assets if you have a UK domicile.

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For enquiries or more information:

T: T + 971 (0)4 389 4900
E: info@thefrygroup.ae

KEY FACTORS IN DOMICILE REVIEWS

A domicile review can help you understand what your exposure to UK tax is. There are typically four types of domicile:

DOMICILE OF ORIGIN

This is awarded at birth based on the domicile of your father. If you or your family have never actively changed domicile, it is likely that you will retain your domicile of origin throughout your life.

DOMICILE OF DEPENDENCE

This domicile is awarded when your father’s domicile changes before you reach 16 years of age. Before 1974, women who married automatically acquired the domicile of their husband.

DOMICILE OF CHOICE

It’s possible to select a domicile of choice in a certain jurisdiction. If you own a home overseas and want to move there permanently, you can apply to change your domicile. Changing domicile is a very significant step and you will need to show you have removed a number of ties with your home country. For tax purposes, the onus is on you and your family to prove you have elected to move wholly and totally to another country.

DEEMED DOMICILE

A person who has been resident in the UK for 15 out of the most recent 20 years is deemed to have acquired a UK domicile for all tax purposes.

UNDERTAKING A DOMICILE REVIEW

Domicile reviews are a highly involved process and expert advice is vital. Establishing your domicile is critical to ensure that you are only paying the taxes that you need to. Undertaking a domicile review, particularly if you have complex personal and financial circumstances, can be very important for estate planning purposes.

It’s worth noting that domicile is a very ‘sticky’ status and just moving overseas or settling there may not be enough to guarantee you move outside of the UK tax net. If you have a large estate, worldwide assets and have been living overseas for some time it’s vital that you consult an expert to navigate this specialist area of tax planning.

To discuss your domicile and tax planning needs please get in touch with your nearest office.

+44 (0)1903 231545

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If you have a minimum £250,000 to invest and would like to speak to someone about your Tax, Estates or Financial Planning, we’d love to hear from you. Complete the form below to arrange an initial 15-minute introductory call with a member of the team.

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All you need to know about Domicile reviews

What is a domicile statement?

A domicile statement is essentially how you define your domicile. This statement will provide evidence and justify your domicile status.

What should be included in a domicile statement?

Professional help should be sought to determine your UK domicile status and with the drafting of a domicile status. Amongst other things, a domicile statement should include the following:

Personal details of the individual, such as place of birth, and periods of residence in other countries
Connections to their country of domicile – such as family, financial and social ties
Details of their assets
Commencement date of UK residency/residency in an overseas country
Circumstances in which the individual is likely to leave their country of residence and/or return to their home country

How do you prove your domicile?

You generally acquire a domicile of origin in a country when you are born and that usually follows your father’s domicile status. If you have changed your domicile of origin you must clearly demonstrate the following:

You are permanently settled in your new country of domicile
You intend to stay there for the remainder of your life
You have no clear remaining ties with your domiciled country of origin and cannot envisage any circumstances where you would ever live in that country again