Residence, Domicile and Overseas Assets

If you are coming to or leaving the UK, you need to know if you will be treated as resident in the UK for tax purposes. 

Your tax status determines whether you are liable to UK on your worldwide income and gains. The UK tax rules are far reaching and without proper advice you might fall within the UK tax net, even if your assets are situated in another country and/or are held through offshore trusts and companies. 

If you are leaving the UK, it can be difficult to lose your UK tax resident status. It can stick to you for a number of years after you have left. Without careful planning, you may still be subject to UK tax on your income and capital gains even if you are living in another country when your income is generated and your gains realised. 

There are special rules for individuals who are non-UK domiciled. 

Very broadly, an individual is domiciled in the jurisdiction which he regards as his permanent home. 

An individual has a domicile of origin which is determined at birth and is normally governed by the father's domicile. In some circumstances, it is possible to adopt a domicile of choice or dependency.

For those who are non-UK domiciled (non-Doms), there are special tax rules. 

These rules are often referred to as the remittance basis and offer a favourable method of taxation.  The remittance basis was fundamentally changed in 2008 and non-Doms need to be aware of the changes.

Non-Doms now need to consider a number of questions:

• Should I claim the remittance basis and pay the £30,000?
• If paying the £30,000, what income/gains should I nominate and how should these be held?
• Should I make an election to claim relief for overseas losses?
• Do I need to review my offshore structures (eg. trusts/companies) in the light of the new rules?
• Do I need to review my overseas bank accounts in the light of the new rules?
• What funds are being used by my offshore entities to pay for services in the UK and might this give rise to a remittance?

Trustees of offshore trusts will also be specifically affected by the changes contained in the new rules and need to consider a number of questions including:

• Whether to make the rebasing election to effectively rebase their assets (for payments to non-domiciled individuals) as at 6 April 2008.
• Whether their record keeping is sufficient to enable UK resident Beneficiaries to comply with the new rules.