Residence & Domicile

Question 1

Explain Domicile of Origin

Answer 1

• Taken from father at birth until age 16

Question 2

Actions to achieve Domicile of Choice (8)

Answer 2

• Acquired by moving to a new country with the objective of permanently living there
• HMRC take a number of actions into account such as….
• Living in the country of choice
• Express intention to remain in that country
• Buy a house
• Establish a business/get a job
• Involvement in local community
• Getting on electoral roll
• Making a local will/burial plan
• Severing ties with country of origin

Question 3

How does someone achieve UK deemed domicile?

Answer 3

• Long term resident treated as deemed domicile if they have been RESIDENT for 15 out of the last 20 tax years
• If domicile of origin applies and then domicile of choice, reverts to domicile of original on becoming resident again
• Once deemed domicile under 15/20 rule remain domiciled for 6 years for income tax and CGT and 4 years for IHT after leaving UK

Question 4

Explain the remittance basis charge

Answer 4

• £30k charge for residents for at least 7/9 previous tax years
• £60k charge when this rises to 12/14 previous tax years
• Applies to individuals with income or gains arising outside the UK that ‘REMIT’ this to the UK
• They lose their PA and CGT allowance

Alternatively
- They can pay tax on worldwide income and gains instead. And double taxation relief may also apply

Question 5

Tax Position for UK Resident & UK Domicile

Answer 5

• Income Tax - Taxed on worldwide earnings
• CGT - Taxed on worldwide gains
• IHT - Taxed on worldwide assets

Question 6

Tax Position for UK Resident but NOT UK Domicile

Answer 6

• Income Tax - Taxed on UK earnings
• CGT - Taxed on UK gains
• IHT - Taxed on UK assets
• Remittance basis may apply

Question 7

Tax Position for NON-uk Resident but UK Domicile

Answer 7

• Income Tax - Taxed on UK earnings
• CGT - Taxed on UK gains
• IHT - Taxed on worldwide assets

Question 8

Tax Position for NON-uk Resident and Non-UK Domicile

Answer 8

• Income Tax - Taxed on UK earnings
• CGT - No tax unless property
• IHT - Taxed on UK Assets

Question 9

Penalties for late SA payment

Answer 9

• 5% on tax unpaid after 30 days
• Further 5% after 5 months
• Further 5% after 6 months

Question 10

Penalties for late SA Return

Answer 10

• £100 if late
• More than 3 months late - £10 daily penalty up to 90 days
• More than 6 months late - Higher of £300 of 5% of tax liability

Question 11

What are the UK Residency tests (3)

Answer 11

• Automatic overseas test
• Automatic UK Tests
• Sufficient UK Ties test

Question 12

Automatic Overseas Test (3)

Answer 12

• In the UK for less than 16 days
• Not Uk resident in any of the preceding 3 tax years
• Work overseas full time, spending less than 91 days in the UK and less than 31 working in the UK

Question 13

Automatic UK Test (3)

Answer 13

• Resident for 183 or more days
• Have a home in the UK for more than 90 days and live there for at least 30 during the tax year
• Work full time in the Uk

Question 14

Sufficient Ties Tests (5)

Answer 14

• Spending more time in UK than anywhere else
• Have a spouse/CP or minor children resident in UK
• Have accommodation in the UK which is used during TY
• Spending more than 90 days in the UK during either of the previous 2 tax years
• Working for 40 days or more during a tax year in the UK

Question 15

How is someone deemed domicile?

Answer 15

• If UK resident for 15 of the last 20 tax years
• If born in UK and then have domicile of choice but become UK Resident again
• Deemed domicile under 15/20 for income tax and CGT for 6 years after leaving UK AND 4 years for IHT