Domicile Status

Hannah Beecham, Feb 8th 2010 1500

What is Domicile?

You'll hear a lot about domicile whilst overseas. Here, we explain what it means

Put very simply, domicile describes where your roots are. The country in which you were born and raised will generally be the domicile that stays with you until you die. Expatriates who have lived abroad for decades, bought and resided in local properties, paid local taxes and never returned to the UK can still, on some obscure point or other, be classified as domiciliaries of the UK by HMRC. And they and their estate will be taxed accordingly.

An expatriate keen to shake off UK domicile status and take up another, must provide a plethora of evidence, direct and circumstantial, to that end. Life-style has to be, and seen to be, 100 per cent that of the adopted country. Implicit in this course of action is the severing of all ties with the UK, and total immersement in the new country's culture, including, where necessary, its language.

Clarifying domiciliary status can be an extraordinarily frustrating business. It is not uncommon to be told one thing by a financial adviser and quite another by HMRC. Indeed, in many cases, HMRC declares its perception of domicile status only after the applicant’s death. This is because the view is taken that between a declaration of domicile and death, circumstances may change. An individual may, after all, return to the UK following a lifetime spent overseas, or even express a wish in a last Will and Testament to be buried in the UK. Nothing could be more revealing, as far as the taxman is concerned, that such a person always carried a sense of the UK as home. The nub of the matter, from HMRC’s perspective, is in the ruling which states that such actions convincingly prove that the UK is the country of domicile because it shows that the individual has ‘connections and ties which go beyond necessity’.

The domicile rules

UK law says that a ‘domicile of origin’ normally inherited at birth from one’s father. It can usually only be displaced by choosing a new domicile in adulthood (from age 16) through a conscious, permanent decision to abandon ties with the former country and acquire corresponding ties with a new country. Remember, ‘permanent’ means for all time, with no view of a possible future change of mind. If, however, a domicile is abandoned without a new domicile being chosen, the domicile of origin automatically reverts.

If you believe you have a case to apply for non-domiciliary status, you would do well to discuss the matter in detail with a professional adviser.