Domicile and residence
15. Does the UK have concepts of residence and domicile? In what context(s) are they relevant and how do they impact on a taxpayer?
The UK has concepts of residence and domicile, which are relevant in many tax and other contexts. Both are vague and difficult to determine, although they are explained in guidance published by HM Revenue & Customs (HMRC).
Residence
An individual becomes resident if he is present in the UK for at least 183 days in the tax year. An individual who spends less than 183 days in the UK in a tax year may still be treated as UK resident if, for example, he visits the UK at least 91 days (on average) per year over a four-year period.
An individual is ordinarily resident in the UK if he is habitually resident there.
Domicile
There are two types of domicile:
- Domicile of origin. This is generally where an individual's father was domiciled when the individual was born.
- Domicile of choice. This is where an individual settles and intends to stay permanently or indefinitely.
An individual who is UK resident but foreign domiciled can benefit from the remittance basis in relation to his foreign gains and income (see Questions 2 and 3).
For IHT purposes, an individual who is domiciled outside the UK is treated as UK domiciled if he has lived in the UK for at least 17 of the previous 20 tax years (see Question 5). An individual who is neither domiciled nor deemed domiciled in the UK is subject to IHT only on his UK assets (see Questions 5 and 18).
16. Does the UK impose any tax when a person leaves (for example, an exit tax)? Are there any other consequences of leaving (particularly with regard to individuals domiciled in the UK)?
The UK does not impose an exit tax when an individual leaves.
Long-term residents who become non-resident for less than five years can be taxed on their return to the UK on gains realised or, in the case of a foreign-domiciled individual, foreign income remitted to the UK, during the period of non-residence (see Questions 4 and 5).
A UK-domiciled individual who leaves the UK permanently is still treated as UK domiciled for IHT purposes for a further three years. This does not apply to individuals who were merely deemed domiciled when they left (see Question 5).
If the trustees of a settlement become non-resident, this triggers a disposal for CGT purposes (see Question 21).
17. Does the UK have any particular rules affecting temporary residents?
A temporary resident (an individual who is in the UK for a temporary purpose, with no view to establishing his residence in the UK and who has not spent 183 days in the UK in the relevant tax year) is treated as non-resident for certain ICT purposes.