Domicile status

The differences between domicile and residence can be confusing. However, the distinction between the two is very important and concentrating on your residency position but ignoring your domicile can leave you exposed.

Domicile explained
Generally, a person is domiciled in the country which is considered to be their permanent home, where they have substantial connections, or where they intend to return permanently at some point in the future.

In the UK, a 'domicile of origin' is acquired at birth. This is generally the country where your father is domiciled at that time. Your domicile of origin then stays with you, although in certain circumstances, it can be replaced with a new 'domicile of choice'. It is usually difficult to change your domicile of origin; even if you move overseas and remain resident overseas for many years, it is unlikely that your domicile of origin will change, unless you take deliberate action.

Why is domicile important?
If you are a UK resident, but are not domiciled in the UK, there is currently a tax regime which allows for the possibility of realising investment income free of tax, as long as the assets and the income remain outside of the UK.

Many other countries have their own concept of domicile which can have a considerable impact on your overall tax liability. Your domicile is particularly important when considering inheritance tax.

We can help you to assess where you are domiciled and the implications that this carries, both for income tax and inheritance tax purposes. This will help you avoid the uncertainty which accompanies this particular legal concept.