What is Domicile? Does it have tax advantages? What is the Remittance Basis. When does it apply for Non-Domiciled individuals?
This is a freeview 'At a glance' guide to Domicile and the Remittance basis
All change: New residence regime. Abolition of Non-domicile status & the Remittance Basis
The non-domicile regime will be abolished in 2025-26 meaning individuals who are not elgible for relief under the new rules, will be taxed on their income in the same manner as any other UK tax payer.
The changes from 6 April 2025 are:
- Removal of the current remittance basis and associated tax advantages for non-doms.
- Implementation of 100% relief on foreign income and gains (FIG) for a 4 year period for new arrivals entering the UK.
- Implementation of a temporary repatriation facility (TRF) for individuals previously taxed on the remittance basis.
- Overseas workday relief reform.
- Replacement of domiciled inheritance tax (IHT) system with a residence based system.
- Income and gains arsing within settlor interested trusts will not longer be protected for non-domiciles individuals.
See: Non Domicile: Rules from 5 April 2025
Rules up to 2024/25
What it means to be non-UK domiciled (non-dom)
- Domicile can be considered a person's 'place of belonging' for tax purposes.
- It is a separate concept from a person's tax residence status.
- An individual who is non-UK domiciled may have tax advantages compared to being UK domiciled, as a person's domicile status can limit their liability to UK Income Tax (IT), Capital Gains Tax (CGT) and Inheritance Tax (IHT).
What determines a person’s domicile?
Your domicile is initially determined according to the domicile of your father, but other factors may change your domicile status.
As of 6 April 2017 there are effectively four types of domicile:
- Domicile of origin: the default domicile of an individual at birth.
- Domicile of dependency: a minor’s domicile is that of their parents.
- Domicile of choice: where you take steps to adopt a new permanent home.
- Deemed domicile: from 6 April 2017, this applies to IT and CGT as well as IHT.
See: Non-Domicile: Definitions, deemed domicile & tax for further details.
What if I am non-dom but I was born in the UK?
- If you were born in the UK and your father was non-dom (giving you a non-UK domicile of origin) you will be non-dom too unless you have always lived in the UK, or you decide to settle permanently in the UK.
How do the deemed domicile rules work?
Prior to 6 April 2017, you could only become deemed UK domiciled for IHT. From 6 April 2017, you can be deemed domiciled for Income Tax and CGT.
- If you are deemed domiciled you are liable to UK tax on all of your worldwide income and gains, and subject to IHT on all of your worldwide assets, subject to any overriding clause in a double tax treaty, particularly if the treaty was negotiated before the introduction of IHT. See Non-Domicile: Definitions, deemed domicile & tax for a list of which countries this applies to.
- Non-domiciles are treated as deemed domiciled for IHT, CGT and Income Tax once UK resident for 15 out of 20 years.
- If you were born in the UK, with a UK domicile of origin, you are treated as domiciled in the UK if you are UK resident.
See: Non-Domicile: Definitions, deemed domicile & tax for further details.
What if I am deemed UK domiciled and I leave the UK?
If you are deemed domiciled under the 15 out of 20 years rule:
- Your deemed domicile status falls away for IHT purposes once you have been non-UK resident for more than four consecutive tax years or have permanently left the UK to establish a domicile of choice elsewhere.
For other situations such as changing your domicle and leaving the UK after a period of deemed domicile see Non-Domicile: Definitions, deemed domicile & tax.
Rebasing for CGT
The offshore assets of individuals who became deemed domiciled on 6 April 2017 are subject to optional rebasing to market value on 5 April 2017; only gains after April 2017 are subject to CGT. See Non-Domicile: Definitions, deemed domicile & tax for further details.
What is the remittance basis?
- The remittance basis is an alternative basis of taxing foreign income or gains.
- It only applies to you if you are UK resident but not domiciled or not deemed domiciled in the UK and you have foreign income or gains in a tax year.
- Under the remittance basis, you can choose whether to be taxed in the UK on your income and gains worldwide as they arise (by default) or to be taxed only on the amount of foreign income and gains that you actually bring in, or remit, to the UK.
- When you choose to use the remittance basis you must pay a Remittance Basis Charge (RBC), unless you meet certain conditions. See Remittance basis (overseas income) for more details.
If you use the remittance basis you lose your entitlement to a UK personal allowance and CGT annual exemption.
Comparison of rules pre and post-April 2017
See: Non-domicile: Definitions, deemed domicile & tax
Useful guides on this topic:
Non-Domicile: Rules from 5 April 2025
What are the changes to the 'non-dom' regime? What does this mean for non-doms currently using the remittance basis? How will income tax, capital gainst tax and inheritance tax be affected by the changes?
Non-Domicile: Definitions, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?
Remittance basis (overseas income).
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?
SRT: Statutory Residence Test
What is the statutory residency test? Why is it important and how does it work?
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