Residence and domicile advice

The UK can be a tax-efficient jurisdiction to live, work and invest in and it has remained an attractive destination for individuals, families and businesses. However, the rules on those that are non-domiciled are about to change from 6 April 2025. We can help you navigate the changes, understanding what your current position is, and how that will be impacted by the new rules.

Currently, if you are a UK resident, your worldwide income and gains are normally taxable in the UK, even if your foreign income and gains have already been taxed in another country, although in many cases you will receive tax relief for foreign tax paid. If you are non-domiciled, you may be able to choose to be taxed on the remittance basis. From 6 April 2025 the Government is introducing a new Foreign Income and Gains (FIG) regime. They are also replacing the current domicile-based system for Inheritance Tax (IHT) with a residence-based system.

Foreign Income and Gains (FIG)

From 6 April 2025 taxpayers who are within their first four years of UK tax residence, and who have not been UK tax resident in the 10 tax years immediately prior to their arrival, will be eligible for 100% relief on their FIG.

Those UK resident taxpayers who have previously been claiming the Remittance Basis and who are not eligible for the 4-year FIG regime, will be liable to UK tax on any FIG arising from 6 April 2025, in the same way as any other UK resident individuals i.e. there will no longer be any preferential tax treatment. Any income and gains arising prior to 6 April 2025, on which a taxpayer has previously claimed the Remittance basis, will be taxed when those monies are remitted to the UK.

Domicile

Domicile is distinct from nationality or residence and is something you generally inherit from your parents at birth and usually retain unless you adopt a permanent intention to reside indefinitely in another jurisdiction.

There were special rules which applied to the taxation of your foreign income and gains, which determined when and how you paid UK tax. Domicile was also relevant to your Inheritance Tax liability, with individuals not domiciled (or deemed domiciled) anywhere in the UK generally not subject to Inheritance Tax on property situated outside the UK. This will all change from 6 April 2025 when the current Domicile-based system is replaced with a residence-based system.

Residence

The UK Statutory Residence Test (SRT) determines an individual’s residence status. The SRT is precise and does allow individuals to plan their time in the UK, but the legislation can be complex to apply in practice.

Non-UK residents are generally only subject to UK tax on UK income and capital gains from the disposal of UK land and property, whereas UK residents will be liable to UK tax on worldwide income and gains, unless they are eligible for relief under the FIG regime.

HMRC enquiries and exchange of information

The rules regarding residence and domicile can be complicated and have been subject to constant change in recent years. There is also anti-avoidance legislation to consider. This is an area of taxation HMRC pays close attention to and HMRC receives a significant amount of information from other jurisdictions under information exchange agreements.

Our experienced specialists can advise on taxation matters impacted by individuals’ residence and domicile status and we will work closely with you and HMRC in this regard.

How can we help?

If you are moving to the UK or already live here – and need to navigate the complexities of the UK rules regarding residence and domicile – our team will help.

Our specialists will review your residence position under the Statutory Residence Test and the application of the ‘split year’ basis when you commence or cease UK residence. For those who are already in the UK, we can help you understand the impact of the new rules and consider whether any steps could be taken to mitigate your tax exposure.

Before becoming a UK resident, we will advise you on structuring your bank accounts to allow for efficient remittances to the UK. We can also advise on tax rules applying to non-UK residents and how to achieve or retain this status.

Further services we offer include registering you for Self Assessment with HMRC and preparing your UK tax returns. If you are an internationally mobile employee, we will advise you on the taxation of your employment income and the reliefs available. If you are dually resident in the UK and another country, we will review Double Taxation Agreements and determine where your tax liabilities arise.

The UK has special but complex rules for individuals not resident or domiciled in the UK. However, there are opportunities and reliefs for individuals who live, work or invest in the UK and our team of experts will advise you on how to mitigate the impact of UK taxation on your foreign income, gains and assets – and let you know what claims and elections are relevant for UK tax purposes.

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Residence and domicile