5 - Residence & Domicile Flashcards
Difference between residence and domicile. What does each effect most
Residence - looks at the status of an individual in any one tax yr. effects income tax & NIC
Domicile - looks at the country an individual regards as their permenant home. This effect IHT mostly
Automatic overseas test
If an individual meets any one of the below they will be classed as non-UK resident:
Test 1
- resi. 1 of last 3 tax yrs but <16 days in the UK in tax yr
Test 2
- resi. 0 of last 3 tax yrs but <46 days in UK in tax yr
Test 3
- works full time over seas
- <91 days in UK
- <31 days in tax yr spent working in UK (3hr min.)
Automatic residence test
Test 1
- spent 183 days or more in UK
Test 2
- have a home in the UK and atleast one period of 91 days (30 of those days within tax yr)
AND
- have no overseas home or spend no more than 30 days in overseas home
Test 3
- work full time for any period of 365 days in UK with no significant break
Sufficient ties test (5 ties)
Family - have a spouse or minor in UK
Accommodation - having accommodation available for 91+ days in UK
Work - working 40+ days in UK
Presence - spending 90+ days in either of last 2 tax yes
More days - for leavers only specifies if spent more days in UK than other country
How to classify an arriver or leaver
Arriver - not resident in UK for previous 3 tax yrs
Leaver - resident for atleast one of last 3 tax yrs
Residence 3 part statuatory test
- Automatic overseas test
- Automatic residence test
- Sufficient ties test
Day of presence meaning regarding residence
Being present in UK after midnight
Working day classification
Working more than 3hrs
Who is domicile decided by?
By the courts under general law
4 Types of domicile
Domicile of origin - place of birth and adopt fathers domicile unless born after death of father then is mother. Usually stays with them until 16
Domicile if dependence - if legally dependent then adopt that domicile of theirs
Domicile of choice - after age 16 can choose their domicile by settling permanently in a country
Deemed domicile - for IHT purposes only so UK domicile people are liable for IHT on worldwide properties but non UK domicile people are only liable for IHT on UK properties.
What if an individual chooses a new domicile then later abandons it?
Will revert back to domicile of origin
How do you qualify for being deemed domicile as a UK domicile person?
Been resident in UK for 15 out of last 20yrs
How long do you keep UK domicile after emigrating?
Atleast 5yrs
Tax liability types based on residence and domicile for arising and remittance basis
Arising basis
- UK tax paid as it arises on income and capital gains
- UK tax paid as it arises on foreign income & foreign gains
Remittance basis
- UK tax paid as it arises on UK income and capital gains
- UK tax paid on foreign income & foreign gains that it brings in (remits) to the UK
What is a remittance basis?
- Individual is only taxable on UK income remitted (action of sending money)
- Money, service or property brought in, received in, used by the UK for a relevant person