Residence and domicile
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Tax residence is a short-term concept and is determined for each tax year separately, reflecting where you reside.
Domicile is more long-term and refers to where you consider you have your permanent home over the course of your life.
The two are usually considered independently, though in some cases if you are long-term resident in the UK then you can be deemed UK domiciled.
The following table summarises the income tax and capital gains tax impact of your residence and domicile status:
|Taxable on worldwide income and gains (known as the arising basis)
|Taxable on UK-sourced income and gains on certain UK assets.
|Taxable on worldwide income and gains unless the remittance basis applies, in which case unremitted foreign income and gains are excluded from UK tax.
This is the position under UK domestic law. There may be different treatment for particular types of income and gains under the terms of a relevant double taxation agreement.
Your domicile status is also relevant for inheritance tax purposes.
Note that regardless of your residence or domicile status, income which arises in the UK is generally taxable in the UK. For example, migrant workers are subject to UK tax on their UK earnings, whether or not they are resident in the UK. So, if you are in the UK temporarily and you only have UK income while you are here, it may not matter much whether or not you are tax resident: all of your income will be subject to UK tax in any case.
Your residence and domicile statuses are therefore important for determining the extent to which any foreign (that is, non-UK) income, and certain gains, are taxed in the UK.
Note that your domicile status is normally only relevant if you are resident here; if you are non-resident then your foreign income and gains are out of scope of UK tax.
Most people who were born in the UK and have lived in the UK most or all their lives will be resident and domiciled in the UK.
However, most people who come to the UK to live here for at least six months but do not intend to remain here permanently, or otherwise retain ties to their home country, will usually become resident here but retain a non-UK domicile. Alternatively, if you only come to the UK for a short period, or do not spend very much time in the UK, then you may not become resident here at all.
Your residence status may also affect your entitlement to certain UK income tax allowances, including the personal allowance. This can therefore affect the amount of UK tax you owe.
If you are entitled to the UK personal allowance, note that this is not reduced where you are only in the UK for part of the tax year. Therefore, for the tax year of arrival and the tax year of departure, where you are generally only taxable in the UK for part of the year, you may be entitled to a tax refund. This may be the case if you have not received the benefit of the full personal allowance through your pay as you earn (PAYE) tax code applied to your employment income.
You can find more information on residence and domicile in HMRC’s Residence, Domicile and Remittance basis guidance (RDR1).