Tax Residence & Domicile

Global mobility is seeing many more people leave the UK to work abroad and non-UK nationals coming to work in the UK. We advise on how this affects your tax position, staying compliant and minimising your tax bill. 

Lynn

Lynn Gracie

Private Client International Tax Partner

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Who we can help

  • ENTREPRENEURS
  • HIGH NET WORTH INDIVIDUALS
  • INTERNATIONAL PRIVATE CLIENTS

How we can help

  • PERSONAL TAX
  • TAX COMPLIANCE
  • TAX PLANNING
  • CHARITABLE GIVING
  • PROPERTY TAX
  • SCOTTISH TAXPAYERS
  • PARTNERSHIPS
  • TRUST PLANNING AND FAMILY INVESTMENT COMPANIES
  • INTERNATIONAL PRIVATE CLIENT TAX

AN INVALUABLE LEVEL OF EXPERTISE

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Residence or domicile? Understanding the differences and knowing your resulting obligations is vital for tax purposes, both in the UK and your country of residence. Making an assumption about either status can have serious financial consequences. Fortunately, our specialist tax advisors will help ensure you are tax compliant, not just in the UK but across the world, assisted by our global network of affiliates. 

With years of experience in global industries such as Oil and Gas, we are experts in providing high level, cross-border advice for individuals coming to or leaving the UK. We specialise in holistic tax planning advice on the UK or overseas tax implications associated with moving between countries and will recommend strategies to save tax on your earnings and investments. 

SO, WHAT IS THE DIFFERENCE?

In tax terms, residence is the country where you spend the most time, whilst domicile is the country you’d describe as your permanent home, even if you don’t live there. Domicile is mostly determined by your family background (particularly your father), although the definition is complex. 

UK resident and domiciled 

If you’re resident and domiciled in the UK, you’ll pay UK tax on all your income, wherever you earn it, and on your gains. However, different tax rules will apply to your UK income and foreign income and gains. UK Inheritance tax will be due on all your worldwide estate. 

Non-UK resident but domiciled in the UK 

You’ll be taxed on your UK income and some UK gains, but not on your foreign income or gains. UK Inheritance tax will be due on all your worldwide estate. 

Non-UK domicile but resident in the UK

You’ll be taxed on your UK income and gains, and on foreign income and gains if they’re remitted to the UK. But you can claim not to pay UK tax on your foreign income and gains if they’re remitted elsewhere. Inheritance tax will only be due on your UK estate. 

Non-UK resident and not domiciled in the UK 

You’ll be taxed on your UK income and some UK gains, but not on your foreign income or gains. UK Inheritance Tax will only be due on your UK estate. 

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  • I have been a personal tax client of AAB for a number of years and in that time they have guided me through the tax return process and provided me with specialist advice relating to my non-resident tax position.

    Peter Williams

CUTTING THROUGH THE COMPLEXITY

In the UK, tax residence is determined by the Statutory Residence Test, but outside the UK, every country has its own rules. You can now see why we say the residence and domicile tax situation is complex! However, our experience of advising individuals from the UK and worldwide, who work in the UK and/or worldwide, means we regularly deal with this situation and can clarify your position and its tax implications. 

Often, we work with people who are about to go and work in a different country, and we appreciate they have much more to think than just their tax. Nevertheless, it can make a significant difference to their earnings, so we explain the situations and their options clearly and concisely.  

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ADVICE FOR RESIDENCY

Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year). We will:

  • understand your plans and tell you how they will affect your UK tax residence situation and reporting obligations 
  • give you practical advice on how to minimise your UK tax payments 
  • assess your assets and explain how we can minimise the tax on certain transactions, such as receiving a dividend, depositing offshore funds in the UK or selling a property 
  • remind you of your UK tax reporting and payment deadlines, and help you with completing and filing your tax statements.  
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THE REMITTANCE BASIS OF TAXATION

The remittance basis is an alternative tax treatment available to individuals who are resident but not domiciled in the UK and have foreign income and gains. Remittance basis is not available if you are deemed domicile in the UK.  

Using the remittance basis means you pay UK tax on UK income and gains for the relevant tax year, but you’re only liable to pay UK tax on foreign income and foreign gains that you bring or remit to the UK. Again, the rules are complicated, but the remittance basis is useful as it can help you avoid paying tax twice on the same income and gains. 

We can advise on how this affects you, and suggest other ways to mitigate tax, such as gaining tax relief by using remittances to invest in a UK business. 

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THE REMITTANCE BASIS OF TAXATION

ADVICE FOR DOMICILE AND NON-DOMICILE

It’s critical for individuals to understand how domicile is determined and, importantly, how it impacts their personal tax position. We will:

  • check and confirm your domicile status, and advise on how to demonstrate non-UK domicile status to HMRC 
  • tell you of any potential tax impact  if you and your spouse are not domiciled in the same country 
  • assess your income and assets and advise on the best choices to minimise your UK tax liabilities 
  • advise on the best approach for your UK and offshore banking and liaise with those to assist with arrangements to achieve your tax aims 
  • tell you about any tax reliefs  
  • check for potential double tax in different jurisdictions and advise on how to minimise this 
  • remind you of your UK tax reporting and payment deadlines, and help you with completing and filing your tax statements.  
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A SEAMLESS GLOBAL SERVICE

Despite all this complexity, you can relax and have confidence in our advice. We’ll support you with the combined knowledge and skills of our expert tax specialists here in the UK, but also our counterparts across the world. 

We are members of Accelerate, a Business Associate of Crowe Global and of The International Accounting Group. As part of these powerful networks, we have strong and dependable contacts with numerous trusted partners, so we can offer you access to further global specialists with international expertise, in hundreds of countries. 

Whilst this wealth of global knowledge is invaluable, we understand you won’t want to contact several different people to get advice. At AAB, we’ll project manage your international tax affairs, collaborating with our worldwide colleagues to deliver seamless tax efficiency and compliance advice. You can trust us to be your single, reassuring and responsive point of contact. 

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