A lack of understanding, or making assumptions when it comes to your tax liability can have serious financial consequences. This article provides a clear breakdown of what Domicile actually is and what it can mean to you as an individual.
Please note, from a UK tax perspective, the below is relevant only to the tax years before 6 April 2025, i.e. before the 2025/26 tax year. From 6 April 2025 onwards, the remittance basis regime will be abolished and will be replaced by the Foreign Income and Gains (FIG) regime.
As the new regime is residence-based, non-dom status will have less significance moving forward. Instead of relying on domicile status, the new rules will focus on an individual's UK tax residence status to determine tax liabilities.
Whether you are planning a move to another country or have had your domicile requested when completing financial paperwork, understanding your domicile is vital.
A lack of understanding or making assumptions when it comes to your tax liability can have serious financial consequences. This article provides a clear breakdown of what Domicile actually is and what it can mean to you as an individual.
Your Domicile is effectively determined by where your primary “roots” are – this could be where you were born, where you maintain a permanent home or potentially linked to your parents’ domicile. However, it differs from both your nationality and your country of residence but isn’t always immediately apparent or obvious.
You may sometimes be asked for your country of domicile. This will most likely either be your country of birth or the country that you permanently reside in. It was created as a type of legal construct, allowing the ability to determine where you can lawfully do certain acts such as:
When you are born, your domicile is automatically assigned as the same domicile as your parents, which then becomes your domicile of origin.
If your parents were unmarried when you were born, your domicile of origin will normally be the same as your mother, although it may be different based on your individual circumstances.
You keep your domicile of origin throughout your life, irrespective of any country you subsequently move to and live in and will normally only change if you make a significant effort to change your domicile.
Your Domicile status will help determine your tax obligations in three main areas:
Your domicile also plays an extremely important role when it comes to determining how any owned property or finances are to be distributed corrected in the event of your death.
Understanding this is crucial, especially in the event that your domicile has changed and/or you own property and assets in other locations abroad.
Residence and domicile do hold different legal definitions, which are distinguished mainly by the length of time you plan to live in the location in question.
Domicile and residency usually go together but for certain taxation purposes (e.g. income tax or inheritance tax), your particular mix of residency, ordinary residency, domicile and domicile of origin will make a difference to what tax you have to pay.
Something to note is that many organisations incorrectly ask for your domicile, when actually they mean your country of residence.
As mentioned above, your country of residence will change when you spend a significant period of time in that country, while your domicile is highly unlikely to change.
In regards to the term of nationality, this more represents the relationship the person has with the country or the specific community of that country.
Only residency and domicile will be effected by the act of permanently residing, and leaves nationality as more ‘circumstantial’.
Other countries than the UK may take other factors into consideration to determine domicile status. These will vary depending on the country in question.
Certain countries like the United States for example, not only take the previous definition (permanent residence) but other, much more intricate factors such as;
Domicile must be determined at both federal and state level in the US. This makes it important for US citizens and residents to carefully consider both their federal and state domiciles.
This will then also allow them to be aware and knowledgeable of all the specific rules that apply to the state they are in.
After the age of 16, you can change your domicile. But to be able to do this, you will need to satisfy a number of criteria and be able to provide evidence of each one.
The criteria for changing your domicile is varied and each case will be judged on merit (incorporating the evidence provided). The basic criteria for changing your domicile will typically include as an absolute minimum:
This includes action such as changing your voting registration, changing your driver’s license and car registration to where your new domicile is, and informing other officials and banks of your new home address.
Also, smaller details demonstrating commitment such as making new bank accounts with local banks, and if applicable, enrolling children into local schools, can help the process.
A complete re-established living situation will clearly demonstrate your intent on settling within the country, with no plans of moving elsewhere.
